I have been told that deciding how and when to incorporate my startup is best answered by speaking to an accountant or lawyer about my individual needs. Besides relying on referrals, how can I determine if a lawyer or accountant is right for me? I live in Chicago, Illinois.
Lawyers and accountants are a bit like tailors, there's a wide variety of styles and wildly varying levels of competency. The style and expertise that works perfect for me may not be at all right for you.
Here's the process I'd follow:
Treat the meeting as an interview to see if it's a good fit. You're essentially hiring this person to work for you. Be clear on your expectations and desires within the professional relationship ask the same of them. They are also deciding if you're a good fit for their practice.
Following the meeting decide if you want to continue this professional relationship. If necessary, don't be afraid to visit with 2-3 firms before making a selection. As the relationship unfolds, don't be afraid of talking to other attorneys/CPAs if you're feeling it's not a great long term fit.
That's a lot of questions in one. :-)
Basically - Referrals from other startups.
1) Finding a good startup lawyer.
Great startup lawyers are good because of their experience. Of course, any lawyer worth his name will say he knows the space. After all, they're salesmen too. So I'd go by referral.
2) When to incorporate.
Actually, when/why/how you need to incorporate isn't necessarily determined by the lawyer. There's money in doing that work, so unless your lawyer is really trustworthy, the answer will be "right now". Try talking to other founders about their experiences. And if you've got a good referral, talk to him/her. Listen but don't trust.
3) Lawyer fit.
Gut feeling. Law is actually quite preceptive/subjective. You need to like your lawyer. If their references check out and you like them, go for it.
4) Chicago area.
If you're in Chicago I'd try to grab a coffee with the guys over at 37signals. They're very helpful, and deeply engaged in the community. See what they have to say. Oh, and their offices are awesome! :-)
PS. Gunderson Dettmer is a firm that's popular with startups in the valley. They don't have Chicago offices, but I don't know how necessary that is for you.
Edit : Venture Hacks posted a list of lawyers they recommend today. There are also references to other good lists.
Regarding legal support, we use Pre-Paid Legal Services, Inc.. At first I was skeptical. A PPL rep came out and explained how it worked. It is $49/mo with no contracts or cancellation fees so I thought what the hell.
It has been one of the best investments I've made and is more than worth what I pay (it also extends to family and personal issues). The membership includes contract reviews, writing up contracts, and any legal advice, making calls or writing letters when you need to apply some pressure on vendors/customers, questions on patents and trademarks, etc.
I've actually used the service to apply some pressure on vendors and got my trademark questions answered.
Now it is so easy to speak to a lawyer and get low-friction, quick advice without worrying about a big bill.
What PPL does is partner with a reputable law firm in your local area. You actually speak to lawyers at that firm.
There are some limitations, but PPL is great for small boot strapped startups.
For a startup you probably only need to talk to a CPA. A Cpa will understand the financial structures, tax planning, and corporate structure that makes most sense. A CPA may be cheaper than an attorney, but that varies.
You dont need much. Just need to make sure that you have a good lawyer and cpa in your Rolodex in case issues arise or you need immediate advice. you could get very very far by seeking free legal help online through forums such as this. Chances are your questions are not that complex and one of us has already run into the challenge you face.
If you need legal agreements written, you could hire a paralegal at a far discounted rate to write those for you. We have a paralegal on staff, which prepares all our legal paperwork and suits when necessary. We have a law firm, and CPA which we use sparingly due to their 500-1000 per hour rate. They are comfortable with our arrangement.
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