Question
Hi! We are a small team of MEMS engineers based in Austin, TX. We are planning to start a company focusing on smart systems tech. While we already have an early prototype of our product based on grad-work we did together at the university, and there are a few investors who have shown some interest, we have some trouble making the first steps. We would like to know, what the easiest way is to incorporate and which type of company would be the best for us. Does this necessarily require legal advice, or can we maybe take care of the initial hurdles ourselves? Thank you for your help! Brandon
Answers: 3 public & 1 private
Though you should assume a bunch of caveats to this general answer, the business entity of choice for most start-ups like yours in Texas is the basic Limited Liability Company. From your post, however, the most important part of your business start is to have a solid Operating Agreement, because you have a bunch of people who are unrelated and likely, eventually, to have disputes that will need to be resolved in a peaceful way. You MUST have an agreement about who owns what, how people leave, how people join, what happens when key people get hit by a bus, etc.
Not having this agreement is to ASK for a destructive lawsuit, and failure to have it tells a potential investor that you are not ready for prime time, and he can come in to tell you what to do on his terms.
These documents are easy to put together, but if you want them done right, you need someone with real experience and knows the pitfalls of doing it wrong.
There are LOTS of us out there, and you can use anyone in Texas for this kind of work. Stay in the state though, and don't anyone use a cookie-cutter document. This is not a place to skimp, but if I'm seeing the picture correctly, the whole package should be $2k or less (for the LLC filing and Operating Agreement).
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