Starting a new venture is an exciting, yet challenging undertaking. With so much to think about it can be easy to push everything non-urgent to the bottom of your to-do list. However, making sure you’ve covered the legal aspects of business is something that needs to stay at the forefront of your mind.
Whether your business is a brand-new start up or you’ve been operating for years, it’s important you’re aware of the legal factors that affect business. Knowing how to avoid costly legal proceedings can be the difference between keeping your business afloat and having to shut down operations. There are a huge number of factors that can lead to getting into hot water with the law, for example, intellectual property crime could see you face a fine of up to £50,000 and a potential custodial sentence of up to 10 years.[i]
Nicki Lynds-Xavier is founder of sportswear company, Xavier Athletica, and a former solicitor, she knows how important it is to be aware of all the legal issues in business. “The legal requirements for your business are often overlooked in the rush to get your venture off the ground. And believe me, I’ve seen it from both sides, as a solicitor and now as the founder of my own startup. In the beginning, you are full of optimism; what can go wrong? Well, pretty much everything – being fined, sued or just folding. I saw a start up make multiple millions in two years and then get brought to its knees – all because of one badly drafted contract.”
But don’t let scary-sounding phrases like incorporation, confidentiality, terms and conditions, privacy policies and data protection send you running for the hills. Remember, you don’t have to get your head around them by yourself.
That’s why, in association with Courier, we’ve created this video to provide some tips to make sure your legal requirements aren’t overlooked.
Learn the legal aspects of business
The legal aspects of starting a business, while important, shouldn’t leave you unnecessarily worried or confused. Begin by taking professional legal advice and making sure you have the right start up business insurance. Below are some of the small business legal issues you should think about.
The law: Lock down the legalities
Like it or not, when it comes to starting and running a business, there are some legal loopholes that you’ve just got to jump through. But don’t let scary-sounding phrases like incorporation, confidentiality, terms and conditions, privacy policies and data protection send you running for the hills. Remember, you don’t have to get your head around them by yourself – that’s what lawyers are for.
Get a good lawyer: Make sure they’ve got the right experience
Just because a lawyer advertises as a start up specialist, they might not be the right fit for your business. Before working with legal professionals, look at who they’ve helped before, whether those companies faced similar legal issues to yours and work out whether they could be a useful ally for your business in the long run.
Anticipate a split: Work out how to resolve disagreements
If you’re starting a company solo, forget this one. If you’re starting it with someone else, pay attention. Even with the best intentions, business relationships don’t always work out. Don’t pretend that it won’t happen to you and your partner – make sure you’ve got a clear founders’ agreement that spells out how to resolve disputes if you fall out.
Work up contracts: Have your paperwork ready to go
Write shareholder agreements and employee contracts ahead of time, making obligations, requirements and entitlements crystal clear. Draft a template supplier agreement and/or service contract to tweak as appropriate. Have a look at what others in your industry include in theirs but definitely make it clear when payment is due and where liability lies.
Protect your IP: Safeguard against copycats
Intellectual property sounds mysterious but it’s actually quite simple – it covers the unique things that your business creates, like your product design, and it’s worth protecting. Trademark your logo, register your name, copyright your media output and register your designs. This stuff can get complicated, so seek advice from someone who understands it well.
So, be sure to take professional legal help for your small business. Nicki Lynds-Xavier explains why that’s so important, “In everything I’ve done I’ve had an eye on the future. I look at those we aspire to work with, who can handle high value when we need it and then negotiate their rate down to start up level. And I do exactly the same with lawyers.”
[i] Intellectual Property Office, gov.uk, 2016
To find out more, read the full guide to managing business risks