legal

What this skill does

# SaaS Legal & Business Formation

Every SaaS needs three legal documents at launch: Terms of Service, Privacy Policy, and a basic entity structure. Everything else can wait. This skill helps you handle formation, legal docs, and compliance without overspending on attorneys.

> **Disclaimer:** This skill produces informed first drafts based on common SaaS legal patterns. Always have a licensed attorney review before publishing anything that creates binding obligations.

## Core Principles

- Legal protection is insurance. You don't need everything on day one, but you need the right things at the right time.
- Solo founders overspend on legal in two ways: paying a lawyer too early for things they don't need yet, or paying a lawyer too late after a problem they could have prevented.
- Every SaaS product needs exactly three legal documents at launch: Terms of Service, Privacy Policy, and a basic entity structure. Everything else can wait.
- Legal language should be readable. If your users can't understand your ToS, it's bad legal writing, not "standard."
- Disclaimers: This skill produces informed first drafts based on common SaaS legal patterns. Always have a licensed attorney review before publishing anything that creates binding obligations.

## Business Entity Decision
### Solo Founder Entity Comparison

**LLC (Limited Liability Company)**
- Best for: Solo founders who want simplicity and are bootstrapping.
- Liability protection: Yes — separates personal and business assets.
- Tax: Pass-through by default (income on personal return). Can elect S-Corp taxation later.
- Paperwork: Minimal. Operating agreement + annual report (varies by state).
- Cost: $50-500 to form depending on state.
- When to choose: You're bootstrapping, have no plans to raise VC, want simplicity.

**S-Corp (via LLC election)**
- Best for: Solo founders earning $60K+ in profit who want to reduce self-employment tax.
- How: Form an LLC, then file IRS Form 2553 to elect S-Corp taxation.
- Benefit: Pay yourself a "reasonable salary" (subject to payroll tax), take remaining profit as distributions (no self-employment tax).
- When to choose: Once you're consistently profitable at $5K+/month.

**C-Corp (Delaware)**
- Best for: Founders who plan to raise venture capital.
- Required for: Most VC investment, issuing stock options, accelerator programs.
- Tax: Double taxation (corporate tax + personal tax on dividends).
- Cost: $400+ to form in Delaware, plus ~$400/year franchise tax minimum.
- When to choose: Only if you intend to raise institutional money or join an accelerator that requires it.

**Decision flow:**
```
Planning to raise VC money? → C-Corp (Delaware)
                          ↓ No
Earning $60K+ annual profit? → LLC with S-Corp election
                            ↓ No
Just getting started? → LLC (your home state, or Wyoming/Delaware for privacy)
```

### Formation Checklist

- [ ] Choose entity type
- [ ] File formation documents with state (Articles of Organization for LLC)
- [ ] Get EIN from IRS (free, irs.gov, takes 5 minutes)
- [ ] Draft operating agreement (LLC) or bylaws (Corp)
- [ ] Open business bank account (Mercury, Relay, or local bank)
- [ ] Set up Stripe or payment processor under business entity
- [ ] Set up separate accounting (QuickBooks Self-Employed, Xero, or Wave)
- [ ] Register for state sales tax if required (SaaS taxability varies by state)

## Terms of Service

**Tell AI:**
```
Generate Terms of Service for my SaaS product:
- Product name: [name]
- What it does: [one sentence]
- Pricing model: [free tier / paid plans / both]
- Refund policy: [e.g., 14-day full refund]
- User-generated content: [yes/no — do users upload or create content?]
- Target geography: [US only / US + EU / global]

Use the template structure below. Write in plain English, not legalese.
I'll have an attorney review before publishing.
```

### Structure for SaaS Terms of Service

```markdown
# Terms of Service

**Last updated: [Date]**

## 1. Agreement to Terms
By accessing or using [Product Name], you agree to these Terms.
If you don't agree, don't use the service.

## 2. Description of Service
[One paragraph: what the product does, that it's provided "as is" as a
cloud service, and that features may change.]

## 3. Accounts
- You must provide accurate information.
- You're responsible for your account security.
- You must be 18+ (or age of majority in your jurisdiction).
- One person per account unless on a team plan.

## 4. Acceptable Use
You agree not to:
- Violate any laws
- Infringe on intellectual property
- Attempt to access other users' data
- Use the service to send spam or malware
- Reverse engineer or scrape the service
- Resell access without permission

## 5. Payment Terms
- Pricing is as displayed on [pricing page URL].
- Subscriptions renew automatically.
- You can cancel anytime; access continues through the paid period.
- Refund policy: [state clearly — e.g., "We offer a full refund within
  14 days of initial purchase. No refunds after 14 days."]
- We may change pricing with 30 days notice.

## 6. Intellectual Property
- We own the service and its original content.
- You own your data. We claim no ownership of content you upload.
- You grant us a limited license to host and display your content
  solely to provide the service.

## 7. Your Data
- You can export your data at any time via [method].
- Upon account deletion, we remove your data within [30/60/90] days.
- See our Privacy Policy for how we handle personal data.

## 8. Service Availability
- We target [99.9%] uptime but don't guarantee it.
- We may perform maintenance with reasonable notice.
- We're not liable for downtime caused by factors outside our control.

## 9. Limitation of Liability
To the maximum extent permitted by law, [Company] is not liable for any
indirect, incidental, or consequential damages. Our total liability is
limited to the amount you've paid us in the 12 months preceding the claim.

## 10. Termination
- You can cancel your account at any time.
- We can terminate for violation of these terms with notice.
- Upon termination, your right to use the service ends.

## 11. Changes to Terms
We may update these terms. We'll notify you via email or in-app notice
at least 30 days before material changes take effect.

## 12. Governing Law
These terms are governed by the laws of [State], [Country].

## 13. Contact
Questions? Email [support email].
```

## Privacy Policy

**Tell AI:**
```
Generate a Privacy Policy for my SaaS product:
- Product name: [name]
- Data we collect: [email, name, usage data, payment via Stripe, etc.]
- Analytics tool: [PostHog / Google Analytics / Plausible / none]
- Email service: [Resend / SendGrid / none]
- Do we serve EU users? [yes/no]
- Do we serve California users? [yes/no]

Use the template structure below. Include GDPR section if EU, CCPA if California.
Write in plain English. I'll have an attorney review before publishing.
```

### Structure for SaaS Privacy Policy

```markdown
# Privacy Policy

**Last updated: [Date]**

## What We Collect
- Account information: name, email, password (hashed)
- Usage data: pages visited, features used, timestamps
- Payment data: processed by [Stripe] — we don't store card numbers
- Device data: browser type, IP address (for security and analytics)
- Cookies: [list what cookies you use and why]

## Why We Collect It
- To provide and improve the service
- To communicate with you (transactional emails, support)
- To process payments
- To analyze usage and improve the product
- To prevent fraud and abuse

## Who We Share It With
- Payment processor: [Stripe]
- Analytics: [PostHog/Google Analytics]
- Email service: [name]
- Hosting: [name]
- We do NOT sell your personal data. Ever.

## Data Retention
- Account data: retained while your account is active + [30/90] days after deletion
- Usage analytics: aggregated and anonymized after [12] months
- Payment records: retained as required by tax law

## Your Rights
- Access: Req