Start-Up Archives

28Jul 2021 by bhandlaw

Investor Wants “Due Diligence” Fees Paid…Up Front?

Several months ago, a new-ish startup founder (we'll just call him "Chuck") came to my law firm seeking help in reviewing and possibly negotiating the terms of a seed round with their first, outside investor. Chuck was genuinely excited because this investor had proposed (let's just say a number between) $1-2 million for (let's further say) 20% of Chuck's company. A critical infusion of capital that could get the company through a few of the next developmental milestones. However, during our first call, Chuck said something that made my lawyer antennae stand on end. While we were talking about timeframes, he said something along the lines of "yeah, [Mr. Investor] is just waiting for us to sign off on the agreement and to send in our check for due diligence."…

21Nov 2019 by bhandlaw

Is My Idea Still Secret if I Tell My Lawyer?

Client Consultation, Confidentiality, Start-Up

It's Not a Secret If More Than One Person Knows It--Or Is It? Every so often, I'll have someone reach out to me on our contact form or by phone and be vague about their legal situation or what they are looking for help with. Many startup owners don't actually know what legal help they need, so this lack of detail can be understandable. However, sometimes it is out of a concern that another person (i.e., basically a complete stranger over whom they have no real control) will have knowledge of their new business, invention, or idea. Duty of Confidentiality First off, it's important to understand that actual attorneys who are licensed with a state Bar almost always owe clients what is known as a duty of confidentiality. This duty…

17Jul 2019 by bhandlaw

5 Essential Agreements Every E-Commerce Site Should Have

Contracts, E-Commerce, Privacy, Start-Up

Founders of e-commerce businesses can often be so wrapped up in getting to market and scaling as quickly as possible that they overlook legal protection for their business. Operating any business, let alone one providing goods or services over the Internet, without important legal safeguards in place is like trying to cross the 101 Freeway every day wearing a blindfold. Could you get away with it? For awhile, perhaps. However, sooner or later, the odds will catch up--with potentially catastrophic results. In this post, we'll cover the five essential legal agreements which every e-commerce site should have. Understand that this list is merely intended to describe the most basic documents that your e-commerce site should have in place. It is not meant to be exhaustive. There are other, no less…

13Dec 2017 by bhandlaw

How Many Members Are Needed to Form an LLC in Arizona?

Business Formation, Entity Formation, Limited Liability Company, Single Member LLC, Start-Up

Is there a minimum number of members required to form an Arizona LLC (limited liability company)? As a Phoenix startup and small business attorney, this is a question I am sometimes asked by entrepreneurs and expectant business owners who are new to the State and looking to form their Arizona LLC. Although most states used to require a minimum of two members to form an LLC, now all of them and the District of Columbia allow "single member" LLCs to be created. Arizona allows formation of single-member LLCs Arizona LLCs are governed by the Arizona Limited Liability Company Act (Arizona Revised Statutes, Title 29, Chapter 4). Under A.R.S. §29-601(15), a "Member" is defined as "a person who is admitted as a member in a limited liability company pursuant to this…

20Sep 2017 by bhandlaw

How Many Officers Are Required for an Arizona Corporation?

Business Formation, Corporations, Start-Up

I'm often asked by startup founders of new Arizona corporations how many corporate officers they need as part of their initial filing with the Arizona Corporation Commission (ACC). In this post, we'll look at the number---and which types---of officers are required for a new, domestic for-profit corporation in Arizona. Corporate officer requirements under The Arizona Business Corporations Act The good news? Arizona is pretty business-friendly in this regard. Arizona Revised Statutes, Title 10, Chapter 8, Article 4 of the Arizona Business Corporation Act (the "Act") tells us that a corporation shall have "the officers described in its bylaws or appointed by the board of directors in accordance with the bylaws." Subpart D of A.R.S. §10-840 goes on to explain that the same individual "may simultaneously hold more than one…

Category: Start-Up