Excellent, lengthy presentation from Mike_FTW about doing business as a freelancer designer (via Zeldman). This applies to any field, especially startups. I am not a lawyer, nothing here is legal advice.

2011/03 Mike Monteiro | F*ck You. Pay Me. from SanFrancisco/CreativeMornings on Vimeo.

TL;DR:

Get a contract in place before you perform any work that is reviewed by your own lawyer. Contracts are in place to benefit both parties and remove uncertainty.