Brewery

Legal Basics: Starting a Brewery 101

Breweries are sprouting up all over, just like we hope spring is!

If you are contemplating joining the craze, here are a few tips to keep in mind:

  • Get your limited liability entity set up properly at the start. Do you want it to be a C corporation? S corporation? Limited liability company? Various factors including tax treatment and your long-term plans will affect this decision. The C corporation may involve some double taxation, but did you know that under certain circumstances you might be able to pay zero tax on a sale of the company down the road if the company is set up as a C corporation?
  • Make sure that equity ownership in your brewery is documented properly. You don’t want to let your co-founder own half the company unless his ownership is tied to continued provision of services. What if your pal has a change of heart after 6 months and leaves for Timbuktu? The company needs to be able to take back that equity if your pal flakes out on you (or gets hit by a bus).
  • Make sure you have enough funding. Building out a brewery is expensive. You may need to raise funds by selling equity in the company, selling convertible or non-convertible notes, or getting a bank loan. Raising money from friends and family can work, but be sure to comply with federal and state securities laws.
  • Put a good operating agreement or stockholders’ agreement in place, to make sure that you don’t end up with co-owners you weren’t looking for and to maintain control of your board.
  • Protect your intellectual property. File to register your trademarks and make sure that any employee creating website content, brew recipes, or any other intellectual property has signed a proper assignment of that work.
  • Get your licensing in place. No beer can flow without that!

If you follow these tips, you may soon see your brewery “spring” to life!

Categorized: Owning the Brewery

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Julie K. O’Neill

Julie O’Neill focuses her practice on business, corporate and securities law, and counseling individuals and entities at all stages of the corporate life cycle on a wide variety of sophisticated transactions in the U.S., Canada, and abroad. Julie regularly handles:

  • Entity selection and formation
  • Private placements including angel and venture capital equity financings
  • Limited liability company operating agreements and shareholders’ agreements
  • Mergers and acquisitions
  • Recapitalizations
  • Secured transactions
  • Employment issues and partnership disputes
  • Licensing arrangements and general contract matters
  • Trademark and copyright registrations
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About the Authors

Stay Connected

Partner

Julie K. O’Neill

Julie O’Neill focuses her practice on business, corporate and securities law, and counseling individuals and entities at all stages of the corporate life cycle on a wide variety of sophisticated transactions in the U.S., Canada, and abroad. Julie regularly handles:

  • Entity selection and formation
  • Private placements including angel and venture capital equity financings
  • Limited liability company operating agreements and shareholders’ agreements
  • Mergers and acquisitions
  • Recapitalizations
  • Secured transactions
  • Employment issues and partnership disputes
  • Licensing arrangements and general contract matters
  • Trademark and copyright registrations
Stay Connected

More Posts by Author ›

Stay Connected

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