Start-ups need to be agile and grow quickly – without falling into dangerous territory because they didn’t get legal advice. In this article, we outline some of the reasons why your start-up should work with a business lawyer like One80 Law group from the outset.
1. Get your legal paperwork completed – correctly
Setting up your business can be complicated, with a long list of seemingly endless administration to do. You want to work in the nitty gritty of your product or service but also have to navigate the numerous forms and paperwork associated with your business startup or incorporation. Filling in these documents without legal advice and careful forethought can lead to mistakes in terms of the company structure, or issuing of shares, which could have serious ramifications down the line.
You’ll want to get legal advice about how to choose your business structure to protect your personal assets and limit your liability. Do this as early as possible, as the longer you delay your potential incorporation, the more you leave yourself open to potential liability or even lose out on tax advantages.
2. Protect your intellectual property
You’ll be launching your start-up into a busy and competitive market, and you’ll want to make sure that your innovative idea is protected from day one.
You’re not just at risk of someone copying your idea. There is a risk that an employee of the start-up might use the inside information they learn working for you to launch a competitor business.
Protecting brand assets like the business name, logo and any trademarks or patents, is a large part of the value of the business. While you might be worried about the cost of protecting your intellectual property, it’s always a better investment to incur now, rather than down the line. Weigh up the potential value of your business in future compared to the potential cost of losing control of your business offering and potentially fighting a battle in court. You can’t afford not to protect your intellectual property.
3. Get the right contracts in place for hiring and firing staff employees and contractors
Hiring for your start-up is an important milestone in the business. You’ll want to have the right contracts in place to set the terms of your working relationships. Your employee contract will cover points like holiday entitlement, maternity leave, probation periods and termination of employment.
Rather than taking a relaxed, wait-and-see approach to employees, it’s better to have an employee contract drafted by a lawyer to protect the business interests. For example, what if an employee leaves to launch a business in direct competition, after having learned valuable information working with your business? While you might think this will never happen, you’d be surprised. It’s better to have the legal agreement in place on the first day of employment rather than trying to clarify or even fight about it down the line.
Likewise, legal agreements should also be put in place for contractors that you have a working relationship with. While these people or companies are working for and with your business, they could learn or create valuable information which should remain owned by your company. For example, if you have a contractor create a logo for your business, you’ll want to make sure that you’re both clear about who owns the copyright in the logo. The copyright should be released by the designer and owned by your company as it is an asset of your business that you want to retain control over.
4. Make sure you’re in the best place to attract funding
Whether you want to attract funding now, or in the future, speaking to a lawyer at One80 Law Group can help align your business in the best position to attract funding. We are happy to help you understand the types of funding available.
This also applies to receiving grants or financing. Whoever is giving or loaning the business money will want to know that their money is secure. They’ll want to see incorporation documents, bank statements and your business plan. You might also need a pitch deck, term sheet and valuation.
5. Tax compliance and planning
Another crucial aspect of launching your startup is tax compliance and planning. Your tax liability will depend on the business structure, so speak to one of our expert lawyers about this.
You’ll register for a business number with the Canada Revenue Agency (CRA) and will be required to file corporate tax returns. If your business revenue exceeds $30,000 in the quarter, you’ll also need to register for GST (and HST depending on where in Canada your place of supply is). Please note this limit may change so speak with your lawyer, accountant or check with the CRA.
Tax planning helps you understand what tax is paid by the company, and what tax is paid by you as an employee of the business. This can be an important part of your finances, so speak to your accountant about this further.
If you have more questions about your start-up or incorporation, arrange a meeting with One80 Law Group and we’d be happy to assist.
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