Should your business be established with limited liability? If so, would a limited company or a limited liability partnership be better?
Is being a sole trader or a general partnership the best choice?
How is the process for incorporation best handled?
Does an “off-the-shelf” company need to be tailored?
What are the tax issues?
If you’re asking any of these questions - or even if you’re not - the point at which you form your business is the ideal starting point for finding the right lawyer. Finding a legal partner that can help you navigate the waters of forming and running your business will set you up for success long into the future.
Whatever business medium is selected (other than being a sole trader), one of the most valuable things you can do at the very start of your business is to set out the arrangements between all of the parties involved.
It stands to reason. At the beginning, relationships are good but you can’t possibly predict how things will be down the line. Striking a fair balance as to how future hypothetical situations would be dealt with, should that be necessary, is much easier at the beginning. Getting the right paperwork in place can help you manage all sorts of things, such as arguments between stakeholders; disputes arising from uncertainty as to what was informally agreed; the ganging up of a majority of stakeholders against an individual; the unintended distribution of rewards or liabilities in the event that the business is a great success or a failure; and avoiding defaulting to unintended legal positions that apply as a matter of law, rather than following everyone’s wishes. You need to balance the interests of those who put money into the business to buy a stake (shareholders or partners) and those who lend money to the business and will expect it to be repaid.
Depending on the medium, typical early stage documents include: Articles of Association; Shareholders Agreements; Loan Agreements; Partnership Agreements or Limited Partnership Agreements.
Choosing the wrong business name can be costly later. If it infringes the rights of an existing business it may become unusable at the very time that the business is becoming known and established. You should consider registering your rights in the name at an early stage. Ensuring that you own and can use your chosen brand in your chosen business requires legal advice.
It’s not just incorporation that has to be registered. Many types of business activity require licensing or other forms of registration.
For example, all businesses in the UK need to consider data protection and Value Added Tax registration. In many cases the question of VAT registration is straightforward but for a minority of businesses it can raise difficult questions such as the timing of revenue, exemptions or agency. Similarly, getting the correct data protection registration and setting up systems for compliance can for some businesses be central to their viability. Often collecting and using customer data won’t be possible unless you have the right registration.
Want to find the right lawyer for your business? Book your free 30-minute consultation with one of our advisors by clicking here. We’ll talk through the options and suggest at least two law firms that we think are a good fit for your business. We aren’t paid any commission and you won’t be under any pressure to work with any law firms we put forward.
