Over 65 people attended the Startup Leadership session titled "Nuts and Bolts of Start-Ups" on December 6th at MIT organized by the Society for Asian Scientists and Engineers (SASE)  and TIE-Boston. The session offered an inside look at the dos and don’ts in four critical areas that every new business must work through: Incorporation, Finding space, Insurance and Accounting.  After a brief welcome by Arun Saigal, who serves as the corporate outreach coordinator for SASE ,  the panel plunged into discussing details of the different aspects of starting a company.

Paul Sweeney, Partner at Foley Hoag LLP, emphasized that the key to any start-up are the people followed by the business model. Hence it is essential to incorporate the company as soon as possible to protect yourself and your assets from personal liability by limiting liability to invested capital, establishing ownership rights in assets, issuing equity to founders, providing equity incentives to employees and finally in order to raise capital. It is also important not to promise a percentage of the company to anyone or say split equity equally initially with an intention to adjust it later.

Scott Goodwin, Certified Public Accountant at Wolf & Company, talked about the importance of getting your accounting off on the right foot, outsourcing your payroll and figuring out the proper accounting system for your particular revenue model. On the other hand co-mingling personal and business finances, playing fast and loose with equity grants and treating employees as independent contractors in order to avoid certain payroll and worker compensation taxes are not recommended as the more often than not lead to trouble.

Sean Coady, Senior Partner at EBS Capstone Insurance, focused on the need to understand what exposure and liabilities you have and contracts often have certain clauses regarding indemnification. Three things which people tend to underestimate the value of are using a wrong broker, signing contracts prior to reviewing insurance requirements and the time and effort to add features at a later date.

Ty Janney, Principal Partner at Landmark Real Estate Advisors, LLC, discussed the need to establish an occupancy budget including security deposit, develop a timeline and exit strategy in advance dealing with at what point you expect your head count to exceed the current square footage and allowing extra time to negotiate a detailed Letter of Intent which includes options for sub-lease, extension and expansion. To put this in perspective, a typical 4000 sq.ft. lease today costs about $6,700 per month. It can house about 15-17 employees. In addition, IT infrastructure costs around $3-5/sq.ft., moving expenses costs about $2/sq.ft. and furniture cost about $500-2,500 per employee. This means that one should be prepared for an initial outlay of about $54,000 including security deposit.

Congratulations to TiE Boston, SASE and SLP for presenting this well-organized event.

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