Establishing a startup’s business infrastructure early — that is, establishing support in the areas of legal, accounting, tax, insurance, and human resources (HR) — provides a number of critical benefits, including:
- Minimizing risk
- Increasing efficiency
- Standardizing contracts
- Quickly processing one-off contracts and special circumstances
- Safe harbors
- Advice on new business practices and new jurisdictions
- Providing a sounding board
- Facilitating tax benefits and avoiding tax problems
- Building wealth (e.g., founders’ ownership and intellectual property rights)
- Smoother financings
- Effective employee management (i.e., avoiding employment-law issues)
Sections of this paper discuss each of the above benefits and provide suggestions for management teams that will facilitate establishment of an appropriate infrastructure.
Note: The situations described in this note are given only to illustrate concepts and should not be taken as providing legal, tax, or accounting advice.