Have you found the right idea and are you ready to start your business? Congratulations, but did you take the time to think about the legal aspect of this new adventure? Will you make the jump alone or with multiple partners? And what about your intellectual property?
Here are four easy steps to get your business off the ground, legally!
1- Choose an appropriate legal structure
“You must first choose a legal structure that meets your needs,” says Gilles de Saint-Exupéry, lawyer and partner at Lex Start, a Quebec start-up specializing in legal services for SMEs.
There are typically four types of corporate structures: a sole proprietorship, a partnership, a corporation, and a cooperative. Of course, each of them has its own advantages and disadvantages.
This choice will have an impact on your tax obligations and the degree of liability you will assume for the company’s debts.
2- Coach the professional relationship between the partners
You start the project with four people, and one of your partners decides to leave the ship. Do you know who owns the name of the company, the business model or the work done by the partner who just left? “It is not the fact of separating that poses a problem, but rather the fact of not having planned in advance the modalities of a separation,” explains Mr. Gilles de Saint-Exupéry.
The lawyer suggests an agreement between co-founders to supervise business relations until the formation of a joint-stock company.
“The partners must agree that all efforts belong to the project for a certain time. At the time of incorporation, the sum of all this work must be transferred to society. If the company is still not incorporated after a set deadline, each co-founder then leaves with his own contribution. And if one of them withdraws before the deadline, it will be impossible for him to leave with one of the pieces of the puzzle. Other modalities should be attached to this document, such as a confidentiality, non-competition and non-solicitation clause” adds the expert.
3- Hire a Legal Expert
Adam Morris is the CEO and owner of Copperblock Capital, one of the largest real estate investment firms in Canada. When he created his business, he decided to hire a legal expert who would be available and could guide him regarding the legal structure of his company so that he could avoid legal exposure as much as possible. Today, you can contact him for anything that falls under the umbrella of Real Estate.