Startup Legal Checklist for the First Year
Legal work is rarely the exciting part of starting a company, but the first year is when small gaps quietly turn into expensive problems. This startup legal checklist walks you through the essentials month by month, from founder equity and IP to contracts, hiring, privacy and annual filings, so you can build on solid ground and get back to customers.
Key takeaways
- Get founder equity, vesting and IP assignment signed early, ideally in the first month, while everyone still agrees.
- In the US, an 83(b) election for restricted stock must be filed within 30 days. Missing it cannot usually be fixed.
- Use written agreements for customers, suppliers, contractors and employees, and keep signed copies in one organized folder.
- Privacy, security and recurring filings are ongoing jobs, so put them on a calendar instead of relying on memory.
Most founders do not ignore legal work on purpose. The paperwork just keeps sliding to next week, until an investor asks for a data room or a co-founder leaves. The good news is that a first-year legal foundation is a defined list of documents, decisions and deadlines, and you can work through it steadily. A quick note before we start: this guide is general information, not legal or tax advice. Rules vary by country and state, so use it to prepare good questions for a qualified startup lawyer and accountant.
Month one: set up the company properly
The decisions you make in the first few weeks shape everything that follows, so give them real attention.
Choose a structure that fits your plans
Your structure should match how you plan to grow. In the US, most venture investors expect a Delaware C-Corp, because it allows preferred stock and option pools. An LLC offers pass-through taxation and simpler early admin, which can suit a bootstrapped or lifestyle business. In the UK, most startups form a private company limited by shares. If you are unsure, talk through your funding plans with a lawyer before you file, since converting later is possible but adds cost and work.
Register, license and open accounts
After you form the entity, complete the basics: register for the taxes that apply to you, check whether your activity needs any local licenses or permits (these vary by location), get a tax ID, and open a dedicated business bank account. Keep business and personal money separate from day one. It protects your limited liability and makes your accountant much happier.
Get founder equity and vesting in writing
Every founder should sign a stock purchase or share subscription agreement that records how many shares they hold and on what terms. Vesting protects the company and the remaining founders if someone leaves early.
If US founders receive restricted stock that vests over time, they may want to file an 83(b) election with the IRS. It must be filed within 30 days of receiving the stock, and the deadline is strict. Ask your lawyer or accountant whether it applies to you and how to file, then keep proof of filing with your company records.
Common mistake
Agreeing on a handshake equity split and "sorting it out later." Later is usually when someone has left, a key relationship has soured, or an investor is waiting. Sign founder agreements with vesting while everyone is still excited and aligned.
Protect your intellectual property early
For many startups, the product, code, brand and know-how are the most valuable assets. Investors and acquirers will want to see that the company, not an individual, owns them.
- IP assignment from founders. Each founder should assign to the company any IP they created for the business, including work done before the company was formed.
- IP terms for contractors. Freelancers and agencies may own what they create unless the contract says otherwise. Include a clear assignment clause in every contractor agreement.
- IP terms for employees. Employment contracts should cover IP created in the course of the job. Local law can affect what is automatic, so check with your lawyer.
- Brand checks. Before you invest in a name and logo, search existing trademarks in your key markets and consider registering your mark.
- Domains and accounts. Register domains and social handles in the company's name, with company email logins, not a founder's personal account.
Pro tip
Create a shared folder called "IP and ownership" on day one. Every time a founder, employee or contractor signs something that touches IP, save the signed copy there. When a data room request arrives, half the work is already done.
Contracts with customers, suppliers and partners
Written contracts are not about distrust. They make expectations clear, reduce arguments and help you get paid. In your first year, focus on a small set of reusable documents.
Your core contract set
- Customer terms. Terms of service for a self-serve product, or a master services agreement plus order forms for business clients. Cover scope, payment terms, liability limits and how either side can end the deal.
- Website terms and privacy notice. Explain how people may use your site and what personal data you collect and why.
- Non-disclosure agreement. A simple mutual NDA for early partnership or supplier talks. Use it sparingly, since many investors will not sign one.
- Contractor agreement. Scope, payment, confidentiality and IP assignment, plus a clear statement that the person is not an employee.
- Supplier and software reviews. Read the terms of the key services you rely on, especially around data, uptime and price changes.
Have a lawyer draft or review your core templates once, then reuse them. Track every signed agreement in a simple register so you know renewal dates, notice periods and who owns each relationship.
A first-year legal register template
Copy these columns into a spreadsheet and add a row for each document or obligation. The entries below are made-up examples.
| Item | Type | Owner | Signed or filed on | Next action date | Where stored | Notes |
|---|---|---|---|---|---|---|
| Founder stock agreements | Equity | CEO | 2027-01-10 (example) | Vesting cliff: 2028-01-10 | Legal / Equity | 83(b) proof saved |
| Design agency contract | Contractor | Head of product | 2027-02-03 (example) | Ends 2027-06-30 | Legal / Contractors | IP assignment clause included |
| Annual company filing | Compliance | Finance lead | Not yet due | Check official deadline | Legal / Filings | Accountant to confirm date |
Hiring your first people the right way
Your first hires bring a new set of obligations. Employment law varies a lot by country and state, so this is an area where advice from a local employment lawyer or a reputable HR provider is worth the cost.
- Classify workers correctly. Treating someone as a contractor when they work like an employee can lead to back taxes and penalties. Look at control, hours, tools and exclusivity.
- Written contracts and offer letters. Set out pay, hours, duties, confidentiality and IP terms in writing.
- Right to work and payroll. Check each hire's right to work, register as an employer where required and set up payroll with the correct withholdings.
- Equity for employees. In the US, options are usually ISOs or NSOs, priced at fair market value based on a 409A valuation. In the UK, EMI options are the main tax-advantaged scheme for small companies. Exercising and taxes can be complex, so get advice before you grant.
- Workplace safety. In the US, OSHA's general duty clause applies. In the UK, the Health and Safety at Work Act applies, and employers with 5 or more employees must have a written health and safety policy and a written risk assessment.
- Remote work. If your team works remotely, a short policy should cover hours, equipment, data security and expenses.
Hypothetical example
Imagine Lena and Marco, who start a scheduling software company in January. In month one they form the company, sign founder agreements with standard vesting and file their 83(b) elections within the deadline. In month three they hire a freelance developer, using a contractor agreement with an IP assignment. In month eight they hire their first employee, with a written contract and an option grant after a valuation. When an investor asks for a data room in month ten, they share an organized folder in an afternoon instead of spending two weeks chasing signatures.
Privacy, security and marketing rules
As soon as you collect personal data from customers, users or employees, data protection rules apply. In the UK and EU, that means UK GDPR and GDPR. In the US, a growing number of state privacy laws apply depending on where your users are and how much data you handle.
A sensible first-year approach looks like this:
- Map your data. List what personal data you collect, why, where it is stored and who can access it.
- Publish a clear privacy notice that matches what you actually do.
- Set up basic security: two-factor authentication on every important account, a password manager, least-privilege access and regular backups.
- Sign data processing terms with key suppliers that handle personal data for you.
- Follow email marketing rules. In the US, CAN-SPAM requires a clear unsubscribe option and a valid physical postal address in commercial emails. In the UK and EU, PECR and GDPR rules on consent apply.
- Get cookie consent where required before you run analytics or retargeting on UK and EU visitors.
Annual filings, taxes and governance
Companies have recurring obligations that do not care how busy you are. Put each one in a shared calendar with a reminder a month ahead.
- Annual reports and returns. Most jurisdictions require some form of annual filing. Delaware charges an annual franchise tax, and UK companies file annual accounts and a confirmation statement with Companies House. Check the official sources for your exact dates.
- Tax deadlines. Since this guide is published in early April, it is a good moment to check: in the US, federal income tax returns for C-corps are due 15 April 2027, and Form 7004 gives an automatic extension to file, not to pay. In the UK, the new tax year starts on 6 April 2027. Confirm what applies to your company with your accountant.
- Board and shareholder decisions. Record big decisions, such as issuing shares, approving option grants or taking on debt, in written board minutes or resolutions.
Common mistake
Issuing shares or promising options in an email without board approval or signed documents. It creates confusion about who owns what, and fixing it during due diligence is slow and stressful.
Someone will eventually ask to see your documents, whether an investor, a large customer or a buyer. A tidy data room usually includes incorporation documents, the cap table, financials, contracts, IP assignments, employment agreements, board minutes and policies. Review your legal register once a quarter and building one becomes a quick copy job.
Your first-year startup legal checklist
- Choose and form the right entity for your funding plans
- Register for taxes, licenses and permits, and open a business bank account
- Sign founder agreements with vesting, and file any 83(b) election within 30 days
- Collect IP assignments from founders, contractors and employees
- Run trademark searches and register domains in the company's name
- Prepare customer terms, a privacy notice, an NDA and a contractor agreement
- Classify workers correctly and use written employment contracts
- Set up two-factor authentication, a password manager and backups
- Add annual filings and tax deadlines to a shared calendar
- Record board decisions and keep ownership records up to date
- Review your legal register once a quarter
Frequently asked questions
Do I need a lawyer in my first year?
Most startups benefit from a lawyer for a few key moments: forming the company, founder equity, core contract templates and the first hires. You do not need one for every small task, but those foundations are worth getting right. Many startup lawyers offer fixed-fee packages, so ask about options.
Can I use free online templates for contracts?
Templates can be a useful starting point, especially for understanding what a contract should cover. The risk is that they may not fit your country, your business model or current law. Have your most-used templates reviewed once, then reuse them with confidence.
What happens if a co-founder leaves in the first year?
If you have signed vesting with a one-year cliff, a founder who leaves before the cliff usually leaves without vested shares, and the company can typically buy back unvested stock under the agreement. Without vesting, they may keep everything, which can make the company hard to fund. Check your agreements and get legal advice.
How do I know which filings apply to my company?
Start with your company registry and tax authority, which publish the main deadlines. Then ask your accountant to confirm the full list for your structure and location, and record each one in a shared calendar.
Related reading
The bottom line
A first-year legal foundation comes down to a handful of steady habits: set up the company carefully, put founder equity and IP in writing, use clear contracts, hire properly, protect personal data and never miss a filing. None of it is glamorous, but all of it makes your startup easier to fund, sell to and grow.
Pick three items from the checklist and finish them this week. Then book a short call with a startup lawyer to fill the gaps, and give your future self the gift of a company that is ready when opportunity knocks.
