Welcome to the bi-monthly column in which experts from IBB solicitors answer legal questions submitted by you.
Q1 I am in the process of setting up a new business. What are the important business and or legal issues I need to consider?
Be clear on the business structure
You will need to decide on the type of business structure – for example do you want to be a sole trader at the onset and then maybe move on to becoming a limited company? The main advantage of a limited company is the liability of the shareholders is limited to the amount unpaid on their shares in the company and a company is a separate legal entity.
If you are a professional services business then you may decide on a partnership instead or a limited liability partnership (LLP).
Shareholder and partnership agreements
Do make sure you have shareholder or partnership agreements in place to protect your business. It is important to agree terms with all other shareholders at the onset. Divorce, director fallouts and life-threatening accidents may seem unlikely, but there are no guarantees. You will want to ensure you avoid the worse-case scenario of having to dissolve the business further down the line.
Q2 What are your top tips to ensure my business does not get me into legal hot water?
Terms and conditions
Don’t get caught out by not using terms and conditions (T&Cs) for clients, customers and suppliers. Using robust T&C’s for all transactions, will protect your business and prevent it from getting involved in costly and timely disagreements. Also make sure that your T&C’s are properly incorporated in your business dealings, so they can be relied upon.
Bricks and mortar
Before signing a lease on your office property, make sure you understand all the terms up-front, particularly around what the landlord will require for repairs, dilapidations and the terms of any break-clause. Make sure your business does not get tied into a long lease without a break clause – it can be difficult and costly to back out once you have signed on the dotted line.
Do make sure you protect the intangible assets of the business. Make sure the company’s copyright is protected – such as ownership of words and images. This can affect all types and parts of the business and range from your company’s website, blogs, other marketing material, presentation documents, photographs and films. Make sure that if you have used an external consultant or supplier that you confirm legal ownership in writing. Getting agreement over the phone will not work – should you ever have to prove legal rights.