Legal Question in Technology Law in California

Re: ecommerce start up

If you plan on taking your company public you should probably incorporate as a regular corporation. You may elect subchapter S from the IRS to give you and other shareholders tax breaks until you issue the IPO, at which time you would rescind the subchapter S.

You protect your ideas through non-disclosure and non-competition agreements. These agreements provide that the idea is confidential and the signators to the agreements agree to not disclose or use the ideas other than for your benefit under certain penalties.

You should have an attorney familiar with corporations and non-disclosure agreements prepare these documents. There are several ways to proceed and an experienced attorney can help you set up the structure so when a VC looks at it everything is in place. Without these things present a VC will insist and may demand that the VC set it up which may not be to your advantage.