Questions we hear most often.
Plain-English answers to the questions Austin founders, owner-operators, and growing small businesses ask the Sterling & Hayes team. If you don't see yours here, write to us and we'll add it.
Engagement, consultations, and what to expect.
How does the initial consultation work?
We schedule a 30-minute video or in-office consultation at our Congress Avenue office to understand your business, the legal question on the table, and whether we are the right fit. You leave with our honest read on the situation, even if the answer is that you don't need a lawyer yet. We do not collect payment information to book the consultation.
What happens after the consultation?
If we proceed together, you receive a written engagement letter that defines the scope of work, who will do it, how we communicate, and how billing is structured. Nothing starts until that letter is signed and any agreed retainer is in place. If the work falls outside what we handle, we will refer you to another Austin firm we trust.
How do you communicate with clients?
By the channel that fits the matter — email for documents and substantive updates, encrypted client portal for sensitive materials, scheduled phone or video calls for working sessions. You will always have direct access to the attorney leading your matter, not just a paralegal or intake coordinator.
How do you check for conflicts of interest?
We run a conflict check against all parties you identify — including counterparties, affiliated entities, and key individuals — before we agree to engage. If a conflict appears, we will either decline the matter or seek your informed written consent under the Texas Disciplinary Rules of Professional Conduct, depending on the nature of the conflict.
Do you take on businesses outside of Texas?
We regularly represent companies headquartered elsewhere when their business touches Texas — for example, an out-of-state company opening an Austin office, hiring Texas employees, or contracting with a Texas counterparty. For purely out-of-state work, we will refer you to qualified counsel in the appropriate jurisdiction.
Is everything I tell you confidential?
Information you share during the consultation is treated as confidential under the Texas Rules of Evidence and our professional duties, even if you do not ultimately retain the firm. The attorney-client privilege applies once an attorney-client relationship is formed in writing.
What kinds of businesses do you typically serve?
Owner-led companies and startups in the Austin metro and across Texas — including SaaS and technology businesses, professional services firms, restaurants and hospitality, e-commerce sellers, and family-owned operating companies. We do not represent publicly traded companies, large institutions, or matters that require capability we cannot honestly provide.
LLCs, S-Corp elections, registered agents.
Should I form an LLC or a corporation in Texas?
For most owner-operated Texas businesses, an LLC offers more flexibility and fewer formalities than a corporation while providing the same liability shielding. For companies planning to raise priced equity from institutional investors, a Delaware C-Corporation is usually the right structure. The right answer depends on your fundraising plans, the number of owners, and how you intend to allocate profits and losses.
Should I incorporate in Delaware instead of Texas?
If you plan to raise venture capital or grant equity broadly, almost every institutional investor and stock-plan administrator expects to see a Delaware C-Corporation. If you are an owner-operated business with no current plans to raise priced equity, forming in Texas keeps annual filings simpler and avoids the cost of foreign-qualifying a Delaware entity back into Texas.
What is an S-Corp election, and do I need one?
An S-Corp election is a federal tax classification that allows profit above a reasonable owner wage to pass through without self-employment tax. It is filed on IRS Form 2553 and is independent of your state-law entity choice. Whether it pays for itself depends on your profit level, the cost of payroll administration, and your willingness to run a more disciplined back office. See our LLC vs S-Corp guide for the long version.
Do I need a registered agent in Texas?
Yes. Every Texas business entity must designate a registered agent with a physical Texas address (not a P.O. box) available during normal business hours. You can serve as your own agent, designate an owner or officer, or use a commercial registered agent service. We can serve as registered agent for clients we represent on an ongoing basis.
How do I get an EIN, and when do I need one?
You apply directly to the IRS, usually online, and receive the Employer Identification Number the same day. You need an EIN before you open a business bank account, hire your first employee, or file an S-Corp election. We typically obtain the EIN as part of the formation engagement.
What ongoing filings does a Texas LLC have?
The two most important annual obligations are the Texas franchise tax filing with the Texas Comptroller (which may be a No Tax Due Report or a full return depending on revenue) and the Public Information Report. Failure to file leads to forfeiture of the entity's right to do business in Texas — a fixable but inconvenient problem.
Drafting, review, and negotiation.
How quickly can you turn around a contract review?
For typical commercial agreements — SaaS subscriptions, professional services contracts, NDAs, standard vendor paper — initial turnaround is usually two to five business days from receipt of the document and your business context. Time-sensitive matters can be expedited; tell us the deadline when you send it over.
Do you negotiate contracts directly with the other side?
Yes, when you want us to. For inbound paper from larger counterparties, founder-side negotiation often benefits from outside counsel because it sets a different tone and produces a cleaner audit trail. For routine contracts, we are happy to mark up the document and let you handle the back-and-forth.
Can you build a template library for our business?
Yes. For clients with repeating contract needs — services agreements, NDAs, work-for-hire engagements, statements of work — we build a tailored template set so your team can self-serve routine deals and bring us in only on the negotiated ones. This typically pays for itself within the first quarter of use.
Are online contract templates safe to use?
For very simple, low-stakes documents between trusted parties, sometimes. For anything that allocates meaningful money, IP ownership, or liability, we strongly recommend either a tailored template or a one-time review by counsel. Generic templates frequently miss Texas-specific issues and are often years behind current case law.
What is the most commonly overlooked clause in startup contracts?
Limitation of liability — particularly the carve-outs from the liability cap. Most templates include the cap but bury or omit the carve-outs for IP infringement, breach of confidentiality, and gross negligence. Those carve-outs are where the real exposure lives.
Texas non-competes, contractors, handbooks.
Are non-compete agreements enforceable in Texas?
Yes — subject to important limitations. Texas Business and Commerce Code Section 15.50 requires that a non-compete be ancillary to an otherwise enforceable agreement and reasonable in time, geographic area, and scope of activity restrained. Courts routinely reform overbroad non-competes rather than throw them out entirely, but a poorly drafted clause is still worth challenging. Federal developments since 2024 have not changed Texas's basic framework.
How do I properly classify a worker as an independent contractor?
The U.S. Department of Labor uses an "economic realities" test that examines opportunity for profit and loss, investment in the work, permanence of the relationship, degree of control, integration into the business, and skill required. The Texas Workforce Commission applies a similar multi-factor test for unemployment tax purposes. The IRS uses its own three-factor framework. Misclassification creates exposure across all three, plus potential wage-and-hour claims.
Do I need an employee handbook?
Once you have employees in Texas, yes — even for very small teams. A well-drafted handbook sets clear expectations, satisfies legal notice requirements (FMLA where applicable, EEO policies, sexual-harassment policies, the Texas Pregnant Workers Fairness Act), and creates a documented basis for consistent employment decisions. It does not have to be long.
What employment law claims should small Texas businesses worry about most?
Wage-and-hour exposure under the Fair Labor Standards Act (misclassification of exempt employees, off-the-clock work, miscalculated overtime), discrimination and retaliation claims under Texas Labor Code Chapter 21 and federal counterparts, and unpaid commissions or bonuses. Documentation and a clean handbook are the cheapest insurance against all three.
Can I offer equity to employees of my Texas LLC?
Yes, typically through "profits interests" or "unit options," which can be structured to give employees upside in the company's growth without immediate tax consequences. The mechanics are more complex than corporate stock options and require a thoughtful plan document and tax election strategy.
Trademarks, copyrights, and AI.
What's the difference between a trademark and a copyright?
Trademarks protect brand identifiers — names, logos, taglines — used to distinguish your goods or services in commerce. Copyrights protect original creative works fixed in a tangible medium, including code, written content, designs, and recordings. They are different regimes with different filing offices, different durations, and different rights.
When should I register my trademark?
As soon as you have a name or logo you are committed to and you are using it (or have a bona fide intent to use it) in commerce. Federal registration with the USPTO gives you nationwide rights, statutory presumptions, and the ability to use the ® symbol. Filing earlier rather than later is almost always less expensive than fixing a conflict you discover after you have built a brand.
Should I federally register my copyright?
For materials you actively enforce or license — code, published written content, photography, music — yes. Federal registration is a prerequisite to filing a U.S. infringement suit and gives you access to statutory damages and attorneys' fees if you register early enough. For internal or transient materials, registration is usually not necessary.
Who owns AI-generated content my business creates?
This area is moving fast. The U.S. Copyright Office's current guidance is that purely AI-generated content without meaningful human authorship is not copyrightable, but works incorporating substantial human creative contribution can be protected to the extent of that contribution. For business purposes, we recommend documenting the human creative process behind any output you intend to assert ownership over, and being thoughtful about your contracts with AI vendors regarding training data and output rights.
What if my employee or contractor uses AI tools on our work?
Your IP assignment agreements should clearly cover output created with the assistance of AI tools and your acceptable-use policy should address what tools may be used on what materials. We typically recommend prohibiting use of AI tools that train on submitted content for any confidential or proprietary work.
When something goes wrong.
When should I send a demand letter?
When you have a documented basis for the claim, you have given the other side a reasonable chance to cure informally, and you are prepared to actually pursue the claim if the demand is ignored. A demand letter is not a bluffing tool — it is a formal predicate to litigation that will be quoted back to you if the matter ends up in court.
What is the statute of limitations for breach of contract in Texas?
Generally four years from the date of breach for a written contract under Texas Civil Practice and Remedies Code Section 16.051. Shorter periods apply to certain types of claims (two years for fraud, four years for most business torts), and contracts can sometimes shorten the period by agreement. The earlier you raise a potential claim, the more options you have.
Should I mediate, arbitrate, or litigate?
It depends on the dispute, the relationship you want to preserve, and what the underlying contract requires. Mediation is fast and cheap and works when both sides are negotiating in good faith. Arbitration is private and final but increasingly expensive. Litigation is public and slower but provides discovery tools and appellate review. We help clients pick the right venue early — and often draft contracts that pre-select the right path.
If we get sued, what should we do first?
Preserve documents (do not delete anything potentially relevant — this is a separate legal duty), notify your insurance broker so any applicable coverage is triggered, and engage counsel before responding to the complaint. The 21-day window to file an answer in Texas state court (or 21 days in federal court) goes faster than you expect.
Do you handle litigation in-house?
We handle commercial disputes through trial in state and federal court in Texas, with a deliberate preference for resolving matters early when that produces a better outcome for the client. For specialized matters — patent litigation, complex class actions — we partner with experienced co-counsel.
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