Lori McLeese – HR Consultant
Craig Menden – Lawyer
Heidi Link – CPA

Working on a side project that gets traction – what next when they make it a full time gig?

Legal protection, money management, accounting, etc.

First thing to do is look at legal situation with current employer – do you own what you created? IP ownership is a HUGE issue.

You should assume that if you are at a large company, any IP you create while working for the employer is owned by the employer.

Later when you are faced with an exit even, the last thing you want is your old employer coming back to haunt you.

You also need to investigate none-compete situations.

If you handle these issues early they cost a lot less money. Struggle between spending money early (when you don’t have it) or later when it is much more expensive.

You should at the very least form a basic company and spend a couple thousand dollars early to setup the basic documentation and make sure you can move ahead safely.

For many, an LLC is a simple and easy first step.

The LLC is becoming the default of choice b/c it’s very flexible. Each situation is different, but it works for many.

When you start to get some volume and you feel like you can feel the future coming, you need to start thinking about the team you want to work with and start to get your “ducks in a row”.

When figuring out your finance and legal situation, it can be very helpful for a small organization to find lawyers, accountants, etc. who have worked together previously.

In many cases, taxes and tax options may inform your decision – especially if you are not profitable yet.

When you want to start hiring people, you need to get it right up front

You need things like workers comp, pay taxes, social security, basic HR stuff, etc.

You can always start out with contractors, but governments prefer you have actual employees because they want to collect taxes.

The panel cannot over state how important it is to make sure you own what you create. Don’t do side projects on your current employers hardware, etc. When in doubt, check with a lawyer.

Also consider – what would happen to my company/idea if my current employer took away my laptop without notice?

When you are building your company and starting to dole out equity and shares you need to make sure you are thinking long term. Having lots of minority share holders can be a big pain when you get to your exit event in the future.

HR issues can be tricky. Need to watch out for discrimination.

If you have a bad employee you need to talk to them and give them a chance to improve. If they still suck you need to document the lack of improvement and give them one last chance to improve. If they fail the third time you can fire them. You need to paper it and have something to fall back on that you did everything possible to give the employee a chance to improve.

When you do fire someone make sure you have a separation agreement. This might even mean you need to pay them in certain cases.

You cannot do it all on your own. At the very least find people you can leverage to help with this sort of thing. You’ll be much happier in the long run. It never hurts to ask, and in many cases you can get pretty far along without having to go to a large legal/finance firm.