Legal start-up essentials
By Daniel Burns, Partner and Head of Company Commercial
If you have recently made the step to start up a new business, you are not alone. Last year more than 650,000 new businesses and start ups were established in the UK.
Here are three essential legal considerations should you have in mind before you start trading in earnest.
1. Protect Yourself
One of the most common and easiest ways for individuals to protect themselves and their assets is by incorporating a limited company and running the business through it. A limited company gives the company’s owners ‘limited liability protection’, so if your business does run into trouble creditors will not be able to recover from your personal assets they can only come after the company.
As well as incorporating a limited company, there are other options available, such as starting a partnership, a limited liability partnership or a company limited by guarantee and we can discuss whether these are suitable for you.
2. Two’s a crowd
If your business involves two or more founders it is vital that everyone is clear about their obligations and expectations moving forward, and the best way to do this is to have it written down. If you running a limited company you will need a Shareholders’ Agreement (if you are in a partnership a Partnership Agreement may be required).
The Shareholders’ Agreement is great for setting out how the business will be run going forwards, including how key decisions are made in the business (do all shareholders have to agree?), what shareholders are expected to do on daily basis and what happens if you want to part ways. We are able to draft a bespoke Shareholders’ Agreement to meet your needs as an individual as well as your needs in running a business.
3. Dealing with clients
You should also take some time to carefully consider your legal relationship with your clients and customers. You want to make sure that you have a well drafted contract or set of terms and conditions that reduces your exposure to liability, sets out clearly what you and your clients’ obligations are, and of course deals with payment.
Please note the contents of this blog are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.