Startup legal basics in the USA and Australia are about choosing the right structure, putting core legal documents in place, complying with employment, privacy and consumer laws, and raising capital without breaching securities rules, all while protecting your IP, operating model and runway.
What “Startup Legal Basics” Actually Means
When founders talk about startup legal basics, they mean the minimum viable set of structures, documents and compliance steps that prevent avoidable legal, financial and operational problems as the venture grows. A high‑level introduction is the free Startup Legal Playbook, which maps how incorporation, fundraising, hiring and IP protection fit together in a typical startup lifecycle.
In practice, these basics are about making sure you do not lose your intellectual property, breach important regulations, or scare off investors with messy ownership and compliance gaps. The Legal Guide for Startup Founders in the USA shows how US investors assess entity choice, cap tables and legal risk. For Australian founders, Sprintlaw’s Legal Checklist For Australian Startups And SMEs outlines similar building blocks under local law.
Across both the USA and Australia, these basics cluster into a few pillars: business structure and incorporation, core governing and commercial documents, employment and equity arrangements, IP protection, privacy and consumer‑law compliance, and capital‑raising rules. The aim is to build a legal foundation that scales with the business and can withstand investor due diligence, cross‑border expansion and shifts in your operating model, such as going remote‑first or launching in new regulated sectors.
Core Startup Legal Concepts (USA and Australia)
Legal Structure and Limited Liability
The first legal decision is your business structure. You generally want limited liability so the company, not the founders personally, bears business risks and debts. In the USA, that usually means choosing between a limited liability company (LLC) and a corporation (typically a Delaware C‑Corporation). The Complete Guide to Startup Law explains how LLCs and corporations compare on liability, governance and funding potential.
In Australia, the high‑growth default is a proprietary limited company (Pty Ltd) registered with ASIC, rather than operating as a sole trader or partnership. MYOB’s guide on how to start a business in Australia gives a plain‑English comparison of sole trader, partnership, trust and company structures. For foreign‑owned or cross‑border ventures, AnBac Advisors’ Doing Business in Australia: Regulatory Basics for Foreign Startups outlines how overseas companies can set up in Australia.
Limited liability structures help you ring‑fence risk, issue equity and bring in investors more cleanly. They also impose governance duties on directors and officers, so part of startup legal basics is understanding your duties to the company, creditors and minority shareholders.
Governing Documents and Founders’ Arrangements
Once the entity is formed, you need to document how it is run. In the USA, this usually includes articles of incorporation or organization, corporate bylaws for a corporation, or an operating agreement for an LLC. Stripe’s guide on what legal documents do startups need in the US? breaks down articles, bylaws and shareholder arrangements in accessible terms.
In Australia, the equivalents are a company constitution and, in some cases, replaceable rules under the Corporations Act. Sprintlaw’s Legal Checklist For Australian Startups And SMEs explains how constitutions, board resolutions and shareholder agreements fit together for local startups.
Equally important is a robust founders’ or shareholders’ agreement. This document records who owns what, how decisions are made, what happens if a founder leaves, and how shares vest over time. It should address roles, equity splits, vesting schedules, IP assignment, dispute resolution and exit scenarios. UX Law’s article on 7 Legal Documents Every Australian Startup Should Have (and Why) emphasises how these governance documents interact.
Contract Hygiene and Commercial Terms
Startups live and die by their contracts. Even at the earliest stages, you should maintain clean, consistent templates for non‑disclosure agreements (NDAs), intellectual property assignment agreements, customer contracts, supplier agreements and investor documents. Stripe’s U.S.‑focused article on startup legal documents highlights NDAs, IP assignment and employee agreements as critical early‑stage templates.
For Australian companies, UX Law’s 7 Legal Documents Every Australian Startup Should Have and Sprintlaw’s legal checklist cover essential documents like website terms, privacy policies, contractor agreements and IP assignment deeds.
Your website terms of use, SaaS terms and other standard contracts must also comply with consumer‑protection laws, especially around disclaimers, limitation of liability and refund policies. Poorly drafted or copied contracts can be unenforceable or illegal if they contain unfair terms or conflict with mandatory statutory guarantees.
Regulatory, Licensing and Compliance Obligations
Beyond entity formation, most startups have sector‑specific legal obligations. Fintech businesses may need a financial services licence, health‑tech companies may need health‑regulator approvals, and any business handling personal data must address privacy and data‑protection requirements. AnBac Advisors’ Doing Business in Australia: Regulatory Basics for Foreign Startups illustrates the layers of company registration, tax, GST and regulator engagement for foreign‑owned companies.
In the USA, Wolters Kluwer’s Business Startup Checklist gives a structured view of registrations, licences and compliance tasks most new businesses face. Law‑school entrepreneurial law guides like UNC’s Entrepreneurial Law Research: Start‑Up Resources link to treatises and checklists for specific regulated sectors.
Fundraising, Securities Law and Runway
Whenever you raise money from investors, you step into securities‑law territory, whether you are issuing shares directly, using convertible notes, or offering SAFEs. The US‑oriented Legal Guide for Startup Founders in the USA explains how Regulation D exemptions and accredited investor rules shape early‑stage fundraising. In Australia, Lawpath’s Legal Documents for All Stages of Startup Funding maps the term sheets, subscription agreements and shareholders’ agreements you need from seed through later rounds. Company Setup Australia’s article on Top Legal Requirements for Startups Raising Capital in Australia adds detail on disclosure exemptions and ASIC expectations.
Closely linked is the concept of startup burn rate and runway. Legal and financial risk are intertwined: if you run out of cash, obligations to employees, creditors and regulators may go unmet. The Real CEO Stories guide on Startup Burn Rate: How to Calculate and Control It explains how to compute gross and net burn and extend runway in a way that supports, rather than undermines, your legal and fundraising strategy.
USA Startup Legal Basics
Structures, Incorporation and Registration
For US‑based or US‑facing startups, the default venture‑backable choice is a Delaware C‑Corporation, though some founders start as an LLC and later convert. The Legal Guide for Startup Founders in the USA walks through why investors prefer Delaware C‑Corps and how that affects governance and funding.
Practical checklists for the core legal requirements for starting a business are found in resources like the Business Startup Checklist, which covers name selection, state filings, licences and tax registrations. Typical steps include:
- Filing articles of incorporation or organization with the relevant state.
- Adopting bylaws (corporations) or an operating agreement (LLCs).
- Obtaining an EIN from the IRS.
- Registering for state and local taxes and obtaining business licences and permits.
Core US Startup Legal Documents
US startups should prepare a set of core legal documents that investors and accelerators expect:
- Incorporation documents (articles, bylaws, initial board resolutions).
- Founders’ stock purchase agreements, vesting schedules and IP assignment agreements.
- Confidentiality and invention‑assignment agreements for employees and contractors.
- Standard NDAs for third‑party discussions.
- Customer contracts and SaaS terms tailored to your product.
- A stock‑option or equity‑incentive plan for employees and advisors.
Stripe’s article What legal documents do startups need in the US? gives an accessible breakdown of each of these categories and why they matter. For deeper context on financing documents, CGL’s Complete Guide to Startup Law sets expectations for SAFEs, notes and priced rounds.
Employment, Equity and Remote‑First Teams
US employment law combines federal rules with state‑level variations on wage, hour, leave and non‑compete rules. Resources like the Business Startup Checklist and UC Law SF’s Start‑up Information guide help you identify core obligations in your operating states.
Many modern startups operate as distributed or remote‑first teams, which introduces complexity around payroll, tax nexus and employment law. Real CEO Stories’ Remote‑First Startups: Pros and Cons outlines how remote‑first models affect hiring, culture, collaboration and risk, which ties directly into legal issues such as cross‑state registrations, benefits and mandatory insurance.
Equity compensation is another core piece. Stock option plans, RSUs and other equity tools must comply with securities, tax and employment laws. CGL’s Complete Guide to Startup Law and Stripe’s legal docs guide explain how equity incentive plans are structured, documented and disclosed to employees in a compliant way.
IP, Privacy and Consumer Protection in the US
US startups should identify which assets need protection: trademarks for brand names and logos, patents for inventions where appropriate, and copyright for code and content. IP strategy involves both registration (e.g., USPTO filings) and contracts: every founder, employee and contractor should sign agreements assigning IP to the company and agreeing to keep trade secrets confidential.
On privacy and data protection, US law is a patchwork of sector‑specific and state‑specific regimes, such as the California Consumer Privacy Act (CCPA) and other state privacy laws. The UNC Entrepreneurial Law Research: Start‑Up Resources guide links to treatises that explain how these regimes intersect with startup data practices.
Consumer‑facing startups must also avoid unfair or deceptive practices under FTC rules and state consumer‑protection statutes. This has implications for marketing claims, refund policies, subscription practices and how you handle complaints and support.
US Fundraising Instruments and Compliance
US startups commonly use a progression of financing instruments:
- SAFEs or convertible notes at very early stages.
- Seed‑stage preferred equity rounds with relatively simple terms.
- Larger priced rounds (Series A and beyond) with more complex rights.
Each involves securities‑law considerations, including which exemptions (e.g., Regulation D) you rely on, how you treat accredited vs non‑accredited investors and what information you must provide. Buzko Legal’s Legal Guide for Startup Founders in the USA and CGL’s Complete Guide to Startup Law walk through these structures and typical investor expectations.
Australian Startup Legal Basics
Structures, ASIC and the ATO
In Australia, serious startups almost always incorporate a proprietary limited company (Pty Ltd) with ASIC. MYOB’s How to start a business in Australia explains how to choose a structure, register a company, and obtain ABN, TFN and GST registrations. For foreign‑owned startups, AnBac Advisors’ Doing Business in Australia: Regulatory Basics for Foreign Startups sets out local director, registration and tax basics.
Sprintlaw’s Legal Checklist For Australian Startups And SMEs ties these structural decisions into broader legal needs like contracts, IP and compliance.
Key Australian Startup Legal Documents
Australian startups should assemble their own document stack:
- Company constitution or reliance on replaceable rules under the Corporations Act.
- Shareholders’ agreement (governance, information rights, drag/tag, exits).
- Founders’ agreement (roles, equity, vesting, IP assignment).
- Website terms of use, terms and conditions and a privacy policy consistent with the Australian Privacy Principles.
- Employment and contractor agreements with IP, confidentiality and restraint clauses.
- IP assignment deeds transferring pre‑existing IP from founders and contractors.
UX Law’s 7 Legal Documents Every Australian Startup Should Have (and Why) and Sprintlaw’s legal checklist give practical summaries of these documents and when to implement them.
Employment, Workplace Policies and the Australian Consumer Law
Australian employment law is built on the Fair Work Act, National Employment Standards and Modern Awards. Prosper Law’s Ultimate Legal Guide to Starting a Business in Australia and other startup‑law blogs explain how minimum standards, awards and anti‑discrimination rules apply to early‑stage ventures.
Workplace policies on bullying, harassment, discrimination and health and safety are strongly recommended even for small teams. Consumer‑facing startups must also comply with the Australian Consumer Law (ACL) on misleading or deceptive conduct, unfair contract terms and consumer guarantees. Lawpath’s and Sprintlaw’s startup articles incorporate ACL considerations into template terms and refund policies.
IP, ESOPs and Capital Raising in Australia
Australian startups should secure their IP via registration and contract: registering trademarks with IP Australia, using NDAs, employment contracts and IP assignment deeds to consolidate ownership in the company. UX Law’s 7 Legal Documents Every Australian Startup Should Have explains how these deeds operate alongside employment agreements.
For equity incentives, Employee Share Option Plans (ESOPs) must align with Corporations Act and ATO rules. Lawpath’s Legal Documents for All Stages of Startup Funding and Company Setup Australia’s Top Legal Requirements for Startups Raising Capital in Australia address ESOP structures and disclosure.
Capital raising is governed by the Corporations Act and overseen by ASIC. Early‑stage rounds commonly use small‑scale personal offers, sophisticated investor exemptions or equity‑crowdfunding structures to avoid a full prospectus. Lawpath’s funding‑document guide sets out the term sheets, subscription agreements, shareholder‑agreement updates and resolutions needed at each stage.
Cross‑Border and Operational Considerations
Flips, Subsidiaries and Cross‑Border Structures
Many Australian startups eventually “flip” into a US holding company, and US startups may create Australian subsidiaries when entering local markets. LegalVision’s Party in the USA: How to Flip Up Your Startup explains typical flip structures, including share swaps and intercompany arrangements. Sprintlaw’s article on Expanding to the US: What Australian Founders Need to Know Legally complements this with ongoing compliance issues in both countries.
Conversely, US companies entering Australia must decide whether to register as a foreign company or form a local Pty Ltd subsidiary. AnBac Advisors’ Doing Business in Australia: Regulatory Basics for Foreign Startups walks through ASIC registration, ABN/TFN/GST requirements and local director rules.
Remote‑First, Distributed Teams and Compliance
Remote‑first and hybrid models complicate legal basics because employees and contractors may be scattered across multiple states or countries. Where your people sit often determines which employment laws, payroll rules and social‑security regimes apply. The article on Remote‑First Startups: Pros and Cons outlines operational benefits such as wider talent pools and lower office costs alongside challenges like time‑zone friction, culture building and compliance fragmentation, all of which have legal implications.
From a legal standpoint, remote‑first founders must think about cross‑jurisdiction employment standards, tax nexus and permanent‑establishment risk, data‑protection implications of cross‑border processing, and local requirements for benefits and insurance. Coordinated advice from startup‑savvy lawyers and accountants in each key jurisdiction is often essential.
Cash Runway, Burn Rate and Legal Risk
Legal basics are easier to maintain when your finances are under control. Short runway leads to rushed fundraising, weak negotiation positions and potential non‑compliance with obligations like payroll, tax and supplier payments. The Real CEO Stories guide on Startup Burn Rate: How to Calculate and Control It explains how to calculate gross and net burn, understand your runway and apply tactics to extend it. When you combine this with sound legal planning—sequencing fundraising rounds, managing board approvals, tracking investor rights—you reduce the chance that financial pressure will push you into legally risky shortcuts.
Combining Public Resources and Professional Advice
There is now a rich ecosystem of startup legal playbooks and toolkits you can use to get smart before speaking to lawyers. In addition to the Startup Legal Playbook from Founder Institute, there are PDF toolkits like ITechLaw’s Startup Legal Playbook and regional resources such as the Parry Field Startups Legal Toolkit. Law‑library guides like UNC’s Entrepreneurial Law Research: Start‑Up Resources and UC Law SF’s Business & Company Research Guide: Start-up Information curate further specialist materials on incorporation, securities law and cross‑border operations.
The winning approach is to combine these high‑quality public resources with tailored advice from startup‑savvy lawyers and accountants in each key jurisdiction. That lets you stay lean and fast while still giving investors, regulators and customers confidence in how your business is structured, documented and run.
