In most instances it is best to hire a small business/corporate attorney and set up an entity at the outset. You should choose a lawyer that is familiar with your industry and all the pitfalls associated with it as well as a person you feel comfortable working with. The type of entity will depend on your industry, goals, and possible exit strategies.
There are many lawyers in Chicago that love working with tech start-ups, so finding competent representation should not be hard.
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You absolutely need legal representation at the startup of your business. Hire an attorney who is experienced in starting businesses such as yours. You are wise to involve counsel from the startup phase to avoid any future problems. Best wishes in your new venture.
You absolutely need legal counsel. You need corporate counsel to take care of the ownership structure of your business. You need intellectual property counsel for many reasons, including to conduct patent, trademark,. copyright clearance analysis, procure licenses you will need, and procure any IP rights to which you are entitled. Laying the proper legal foundation for your business is critical---particularly in the social networking/internet space.
And perhaps most important of all is your patent, trademark, copyright clearance analysis---before you invest substantial time and money into this project, you need to know whether you are free to operate your web-site without violating IP rights owned by others, and you need to procure licenses to the extent you would otherwise violate IP rights. And your branding decisions are fraught with risk---you need IP counsel to conduct trademark clearance analysis for your branding.
All of this means that in developing a budget, you must have adequate resources for legal counsel---and you need to be realistic. The legal work you need is not a matter of a few hundred or even a few thousand dollars. Think $50,000 and you are in the ballpark. If you don't have a budget for this, then frankly you need to raise the money.
Finally, you should probably retain a law firm rather than a single lawyer---lawyers work in teams and law firms have lawyers with different expertise that you will need. You will need a corporate lawyer, a tax lawyer, an internet lawyer, and an IP/patent/trademark/copyright lawyer. You will soon also need to deal with issues under employment law, securities law, environmental law, international law and many others. You should find a "boutique" firm that regularly represents start-ups such as this---preferably in Chicago (but not necessarily). My firm works in this area, but there are many fine law firms in Chicago and the Illinois area who you can call upon to represent you. Please be realistic about the economics and be careful---there are a lot of young lawyers with little experience who will offer what may seem like a very good deal for you---but you get what you pay for in legal services. You want quality even if it costs a lot more----whether we like it or not, we live in a highly regulated economy, where intellectual property rights drive economic success. Therefore, your highest priority should be laying the proper legal foundation for your business.
You need two types of lawyers, business and Intellectual property law. You will discuss the particulars with them to get the best business clearance and structure and the best patent, trademark and copyright clearance and protection, respectively.
I am not your lawyer and you are not my client. Free advice here is without recourse and any reliance thereupon is at your sole risk. This is done without compensation as a free public service. I am licensed in IL, MO, TX and I am a Reg. Pat. Atty. so advice in any other jurisdiction is strictly general advice and should be confirmed with an attorney licensed in that jurisdiction.