For founders: Adapting to the legal frameworks for your new business
Entrepreneurship… the milestone for boomers and millennials to become the next big thing. The big “C”s in resumes we all have dreamed of… and the huge amount of failure, stress, drama, and disappointment that comes with it and no one told you about.
Launching a new business can be both exciting and outrageously confusing. There are the highs of coming up with an amazing idea that will solve the world’s biggest problems combined with the perplexities of the paperwork involved that will leave you drained of any hope in governments, bureaucracy and all those that will come along. That’s why it’s always important to obtain expert legal advice when you are starting a new venture. Having a lawyer check over your documents, business plans, financials and expectations can potentially save you costs in the future.
For any first-time founder, the cash available might be automatically redirected to technology, marketing, merchandise, stockage… but not to legal matters, an operation that requires too much time and money, and that is usually left to last minute until it becomes a necessity. This might be the first mistake! The investment in legal advice is as necessary as the others we mentioned before to ensure that your new company is built on stable foundations.
From INLEA LEGAL, we always recommend visualizing the big picture. From zero to a hundred, which are the main hurdles you will be encountering down the stretch and we always try to plan ahead. A house is built on solid foundations.
Here are some of the key points to keep in mind and to prepare for:
Company structure
Your legal counsel should be able to fully explain the different options you may have at your disposal and advise on the best one for your partnership, limited company or limited liability partnership. We can set it up for you once you have made an informed decision.
Shareholders’ Agreement
If your new business venture is going to be with someone else, you should definitely consider drawing up a Shareholders’ Agreement, which shall outline how you are going to run the company, how much time and money each of you are going to invest into the company and how each of you are protected should you and your business partner/s decide to part ways.
Contracts with Clients/Suppliers
Just like your office lease, contracts with clients and suppliers are agreements that, no matter the business, will need to be in place at some point. These contracts should be reviewed and negotiated by a lawyer to ensure that they are drafted according to law and that they reflect exactly the interest the parties have in the business. Failing to have adequate contracts in place (or even worse, no contracts) can be detrimental and, potentially, could have a harmful impact on your business. No matter the business, it’s important to have a professionally drawn up contract in place.
Taxation
Tax structuring advice can help minimize tax obligations and inter-company agreements can clarify responsibilities under global transfer pricing rules.
As an example, many companies can opt for a reduced rate of corporation tax, and it may also be necessary to take into account reductions for intangibles as well as tax deductions for R + D + I, which may reach up to a 50%.
If you are planning on incentivizing your employees using stock options, you should check the local tax laws to ensure you localize your company where legally required and you should also check if there is a tax efficient plan which can be used for both your locals and your overseas employees.
Intellectual Property (IP)
Your IP (trademarks, patents and design rights) should be registered in the markets in which you are planning to operate. From patents and copyrights to industrial designs and trade secrets.
Flavio Soares, Chairman and Head of ICT and International Department at Inlea/Legal highlights that “IP can be the distinguishing factor and main driver of revenue for an organization”.
Data Protection
The General Data Protection Regulation (GDPR) law in the European Union has imposed large penalties for not properly processing the personal data registered by businesses.
If your start-up develops websites or apps that process personal data of users or clients, you should treat this issue carefully.
Early advice from a law firm specialized in business and tech law can help prevent future legal problems, protect your business and most definitely can save you money. Lawyer fees may seem expensive at first, but let me tell you, down the road, if anything was to happen, you will be looking back thinking I should’ve splurged back then.
Lawyer up! Before it’s too late…
