Starting up a new business is undoubtedly one of the most exciting and challenging things you could do in your career. Once you have decided to start up a business, enthusiasm and desire to succeed can tempt you into heading straight into selling your products and services. Although you may be itching to get started, there are several important legal matters that need consideration first. These include:
- How are you going to protect your personal assets from the risks of the business?
One of the first things to decide is how your business will be incorporated. Different business structures carry different risks which can be avoided by seeking legal and accounting advice at the outset. For example, if you incorporate your business as a limited company the trading risks of your business will generally be the risks of your company and not your own.
2. Are you going it alone or will you be working with others in your new venture?
If you are to have business partners, you should discuss matters such as share of profits, holidays, capital contributions, and how business decisions will be made at the outset. These should then be formally documented within a Partnership or Shareholders Agreement. This will form a legal relationship between the partners of the company and help to govern how the business will be run.
3. On what terms will you contract with customers/suppliers?
As a start-up, a balance needs to be struck between producing complex commercial contracts and ones which are sufficient to provide you with the level of cover you need to ensure that you are dealing on safe terms with customers and suppliers.
As your business develops you will need more complex commercial agreements. As a minimum at the outset, you should have your own terms and conditions and a contract to be used when dealing with third parties. Importantly, legal advice should be sought to ensure that your contracts and terms and conditions are properly incorporated into your overall agreement with third parties. A thoroughly comprehensive set of terms and conditions is worth nothing if it has not been brought to the attention of the parties you deal with and if they have not accepted them as part of your agreement.
For more information on the legalities of starting up a business, don’t hesitate to contact a company formation solicitor in our commercial team.
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