Finally getting round to starting up that start up
Feb 9, 2021
Author: Jean-Marc Pettigrew
2021 is here and after the horrible year that was 2020, expectations are high. Inevitably, the start of a new year is when people may be thinking about launching that start up they’ve put on the back burner. We’ve therefore put together a short guide on things you should be thinking about as you set things in motion.
1. Don’t leave it too late
We get it. As a start up, you are strapped for cash and this often means that the legal conversations are often left until last. However, that shouldn’t stop you from at least speaking to a lawyer about what you should prioritise and what can wait until a bit later (but not too late!). Most lawyers used to dealing with start ups (like us) give opportunities for free and no obligation discussions to make sure you prioritise accordingly. So give us a call!
2. Founders and shareholders
Although your business can start on good terms with your co-founders and investors, you can’t assume this will always be the case. Even successful businesses can be impacted by disputes amongst shareholders so its important you get your corporate documentation in place early. Your key document is your shareholders agreements, which will look to set expectation regarding aspects like share ownership, governance and decision making, as well as what happens if a shareholder leaves the business.
3. Intellectual property
No matter what your business, it’s more than likely you will be trading on some form of intellectual property. This could be your technology platform, documentation, pieces of software code. These may have been created by you personally, the company’s employees, for you (freelancers or contractors) or licensed from another third party (a data provider or add on). Key to your business is making sure these are all housed under the same roof, because when it comes to engaging with your customers, they’re going to want assurances that you own, or have a right to, what you sell. The answer to all these are transfer and licence agreements. They don’t need to be long or complicated, but they do need to be clear. Transfers should be effected sooner rather than later, to minimise potential tax consequences. Don’t use any third party IP without a licence agreement in place.
4. Data protection
Is there a business that doesn’t deal with data in some way these days? However, data protection only relates to personal data, which is data that identifies or is capable of identifying a living individual. If your business deals with personal data in any way, you must get some initial advice as early as possible. The potential consequences are serious, with fines capable of reaching the higher of €20 million euros or 4% of annual global turnover.
5. Customer contracts
This may be one of the last legal points on your list, but it’s more than likely that you’ve already agreed to some form of contract without realising. Contracts are not just formed by signing a piece of paper. They can be formed by ticking a box, by exchanging e-mails or even having a conversation. Written contracts don’t have to just be about rights and obligations though – they are a very useful way of setting expectations and encouraging parties to have difficult conversations early in the process, to help ensure a smoother working relationship. Of course, they’re also helpful should the relationship deteriorate and the you decide to go your separate ways.
If you’re thinking of starting up a company or have already done so, give us a call. We’re happy to have a chat with you on a free and no obligation basis and help you prioritise your legal requirements.