Usually “billed to G&A,” these are costs you incur when you retain services of external attorneys. These services could include counsel and document preparation on general legal issues, company formation, investment rounds, stock option pools, board of director actions, employment contracts, supplier contracts, license agreements, litigation, and many others. To get started, find yourself a good corporate attorney who you trust and who specializes in start-ups. Acknowledge that this individual's hourly rate is not going to be low, but the money s/he will save you in the long term will be well worth it.

The number of legal pitfalls you can create for yourself when starting a company is enormous. Communicate with the attorney and make sure s/he knows your financial situation. The attorney should agree to (a) what each activity will cost you ahead of time, (b) let you know when there are items you can do yourself and what the associated risks, if any, are, and (c) give some of your corporate work to paralegals, whose hours will cost you a lot less, but whose output will be reviewed by your attorney. In very rare instances, you may even find an attorney who is willing to take an equity stake in your company in lieu of cash. This may seem ideal from your perspective (after all, it preserves cash), but it can create a conflict of interest for the attorney. Ask around to see what local attorneys charge per hour. Most attorneys will provide a 30-60 minute get-to-know-each-other session for free.

Note that fees you pay a patent attorney are generally treated as fixed assets that are not expensed in the year they are incurred. These should be recorded as “major purchases.”

Related Questions:

How do I add/change attorney fees?

How do I add/change major purchases (i.e., fixed assets such as patent attorney fees)?