Can you recommend one (or two) book(s) that will explain the process of creating a startup with three cofounders?

I'm not sure quite how to explain this because I'm so new to it all. I've searched this site, as well as google, for books or online resources on how to start a startup and I'm still struggling to find what I'm looking for. Basically, myself and two friends want to start a small online business and we're all clueless about the beginning steps of creating the business on paper. We're all short on cash and we're trying to avoid paying any law or business consultants to explain the very early steps of organizing and creating the business, nor do we know anyone that knows much about this stuff.

For example, I heard a guy say the other day that he and a friend started a movie production business and their first step involved going down to the city clerk and filed for an LLC. How did they know they needed to do that? Can you recommend one or two books that will explain how a small internet startup, with three cofounders, should be structured in the beginning and the paperwork that needs to be filed? We're not interested in how to market, test, or build the idea since we have a thousand books on this we're currently getting through.

Thanks so much in advance for all your wisdom!

I can relate to you, and understand exactly what you are talking about. I was in the same boat as you when we first started our business. We had an idea, and knew that we could execute it technically, but we had absolutely no clue on how to start and run a business. And we didn’t know anyone that had started a business, so we couldn’t ask people we knew. So I started by reading books on the subject, and it turned out to be exactly what I needed. I learned a lot along the way. And I think every small business owner should understand the basics, so that when they do consult a lawyer or accountant, they can ask intelligent questions, and get a feel for 1) how competent the professional is 2) how trustworthy he/she is.

All the information you need to get started can be found in NOLO books. These books are written by lawyers, but are very easy to read, and I highly recommend them. Here is a list of some of the books I’ve read:

• Legal Guide for Starting and Running a Small Business : This was the very first book I read, and I suggest you read this one first because it’s very basic, and will help you understand what you need to do next. This book gives you a checklist of things to do (including choosing a business structure i.e. LLC, Corp, etc, registering your business with the state, what you need to do for the federal government, creating a founder’s agreement, etc) It’s an excellent book for those of us that have no clue on where to start.
• Form Your Own LLC : This book will help you create your own Operating Agreement without the need to involve a lawyer. Of course if you decide to set up your business as something other than an LLC, this book isn’t for you.
• Your Limited Liability Company An Operating Manual : This book is okay, but don’t stress about reading if you don’t have the time. It’s not very critical. Most of the book is spent on talking about how to prepare for meetings.
• Nolo’s Quick LLC : This is a good book, and it’s a quick read, but it’s more of the same. So don’t waste your time reading it, if you’ve read the other books above.
• Tax Savvy for Small Business : Another really good book. Even if you don’t plan on doing the accounting and taxes on your own, it’s still worth reading. You should understand the basic tax issues involved with running a business, so you can make smarter decisions.

I’m doing all the bookkeeping myself. For accounting, I found the following books helpful:

• Small Business Accounting Simplified : This book is written for single-entry, accrual basis accounting systems, which is uncommon. But even though our business is using double-entry, cash basis, I thought it was very helpful.
• Finance and Accounting For Nonfinancial Managers : Very detailed book that goes into areas other than accounting, like strategic plans and business plans. I suggest, you skim through it.
• IRS Publications : These are very good resources, but they are terribly boring to read! You can find them on the IRS website, but you have to know what you are searching for. The link I provided is to my blog, where I list some of the more important IRS publications for small businesses. Feel free to look through those.

I’ve read other books, but some I don’t recommend, and others I can’t think of right now. But this is definitely enough to get you started. And your situation will most likely be different from mine, so you may need to read other books once you understand the basics.

Nolo has a ton of other books. If you decide to structure your business as a Corp instead of an LLC, check out the Nolo website (or Amazon) for other Nolo books. Also note that it is much easier to register an LLC than it is to register a Corporation. I don’t have any experience with corporations, but if you do decide to go that way, you may need to pay a lawyer or a service like LegalZoom to do it for you.

Another piece of advice I’ll give you is to first look to your local library for these books. If you can borrow them for free, why buy them? I was able to find all of these books at my local library. A lot of the books I listed are one time reads, you won’t ever need to go back to them, so don’t buy them unless you really have to.

Please understand that this isn’t a magic list. This is just what I read based on my specific situation and needs. Your situation may differ, so you may need to take your own path, but do start with that first book I listed.

And it’s important that you understand that you will need to involve a lawyer and an accountant at points along the way. Please don’t neglect that fact, because it can end up getting you in a lot of trouble later on. But I do think you can do a big portion of it on your own.

Also, this takes a lot of time to do. I was able to do all of this on my own because this is my role in the business. If I also had to work on developing the product, I don’t think I would have had the time to do all of this. So keep that in mind.

Sorry this is so long. But I hope it helps! Good luck, and feel free to come back to this site and ask questions as they come up.

and welcome to this site! :-)

Mnn, I do no think there is a "process" as you talk about it; there isn't a consistent set of steps that everyone needs to undertake in the same way. How you want to structure ownership, who gets which job functions and titles etc, this all depends on the facts and specifics of each case.

There are some things that are common, fx. how to file the papers to create a company. These administrative issues are only done once, and not really interesting enough to require a full book.

Maybe you're really asking "I would like to have more understanding of all this business-stuff " ? If so, then I don't think there is a magical shortcut to this knowledge. I got mine from taking courses (offered for free by various organizations) and targeted reading of books, while working in management positions in the industry. Most entrepreneurs that I know did something similar.

For general learning the ropes of business, I'm a big fan of entrepreneur mentoring non-profits, such as the US SCORE, where older entrepreneurs donate their time to mentor the next generation of entrepreneurs. Look for something similar in your area.

For your specific project, you could have a look at fairsoftware.net. You will still have to incorporate eventually, but this could maybe buy you some time.

Can you recommend one or two books

• If you're in the US, then books from Nolo are frequently advised for this. Have a look at Dana Shultz' blog entry about Nolo vs online incorporation.
• Personally, I never skimp on the legal & accounting stuff, and I would myself use well reputed law firm for incorporation and bylaws.
• Last but certainly not least, consider if you can get in to Y Combinator like programmes. In these you typically get both exposure & seed capital & professional legal help as part of their investment.

Honestly speaking, IMHO, every software startup beginner should read Eric Sinc's Business of software.

http://www.amazon.com/Eric-Business-Software-Experts-Voice/dp/1590596234 I run a startup from last 2.5 years in India and trust me, I read that book more than 100 times in this period.

Lots of his material from the book is also available on his blog

http://www.ericsink.com/bos/Business_of_Software.html Its true that no one can teach you business and you can not read business from books, but its always good to listen people who have been there and done it.

Thanks,
Mahin