Legality and Registrations
Lesson
It can be daunting to move from the abstract idea stage to the realm of bank accounts, taxes, and liability. Sometimes, it can feel like you’re making arbitrary decisions, but we’re going to wade through the legalese together. Watch the video to learn all about the legal basics of a startup.
Legal Basics and Business Entity Formation: Crash Course Business Entrepreneurship #5
Project Description
Legal Terms Flashcards. This activity helps you learn important legal terms used in startups and understand their meanings and usage, preparing you to effectively communicate and understand legal concepts in the business world.
Below is a list of legal terms used in startups. Each term is followed by its meaning and usage.
- Incorporation: The process of legally forming a company or business entity. Usage: The startup completed its incorporation process by filing the necessary documents with the state government.
- Liability: Liability: Legal responsibility for something, such as debts or damages. Usage: The founder’s personal assets were protected from business liabilities due to the limited liability of the company.
- Intellectual Property: Creations of the mind, such as inventions, literary and artistic works, designs, and symbols. Usage: The startup applied for a patent to protect its intellectual property rights for a new invention.
- Contract: A legally binding agreement between two or more parties. Usage: The startup signed a contract with a supplier to ensure a steady flow of raw materials for production.
- Compliance: The act of following rules, regulations, or laws. Usage: The startup hired a compliance officer to ensure that the company adhered to all relevant laws and regulations.
- Equity: Ownership interest in a company, typically represented by shares of stock. Usage: The founders divided the equity of the company among themselves based on their contributions.
- Non-disclosure Agreement (NDA): A legal contract that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but wish to restrict access to or by third parties. Usage: The startup required all employees to sign an NDA to protect its trade secrets.
- Vesting: The process by which an employee accrues non-forfeitable rights over employer-provided stock incentives or employer contributions made to the employee’s retirement account or pension plan. Usage: The founder’s shares vest over a four-year period with a one-year cliff.
- Trademark: A recognizable sign, design, or expression which identifies products or services of a particular source from those of others. Usage: The company registered its logo as a trademark to protect its brand identity.
- Due Diligence: The investigation or exercise of care that a reasonable business or person is normally expected to take before entering into an agreement or contract with another party or an act with a certain standard of care. Usage: The investor conducted due diligence on the startup before making an investment.
Instructions
- Create Flashcards: Using index cards or a flashcard app, create flashcards for each legal term. Write the term on one side of the card and its meaning and usage on the other side.
- Study the Flashcards: Review the flashcards regularly to memorize the legal terms and their meanings. Use them in sentences to understand their usage in context.
- Test Your Knowledge: Once you feel comfortable with the terms, test your knowledge by covering the meanings and trying to recall them from memory.
- Reflect on Learnings: Reflect on how learning these legal terms can help you navigate the legal aspects of starting and running a startup. Consider how you can apply this knowledge in real-life scenarios.