5 Legal Prerequisites Before Establishing a Company
Whenever an entrepreneur implements an idea in the form of a tangible business, legal prerequisites need to be taken into serious consideration in order to avoid trouble. Not considering legal fundamentals can prove to be costly and can hurt any business in the long run. Research is therefore imperative in order to fully comprehend what the government requires entrepreneurs to obtain before they invest their energy, time and money into establishing a business.
The paralegal team at NIC Lahore has made it fairly simple for all our incubated start-ups with the following listicle. If you’re an entrepreneur struggling to prioritize your pressing legal tasks, here are five things that need to be addressed immediately:
- Develop Your Co-Founder Agreement
A co-founder agreement is not necessarily a legally binding contract. However, it is an agreement between founders about key issues. This entails the co-founder relationships, their responsibilities to towards the company, structure of the company including, vesting schedules, exit strategies, ownership of intellectual property and such other matters integral to the running of the Company.
- Define your Company’s Legal Structure
The company’s structure defines how it is defined legally. Primarily, there are three main business types. These include a sole proprietorship, a partnership and corporation. In most parts of the world the core impressions and functions remain the same. In a sole proprietorship all consequences fall squarely on the founder making them personally liable for possible debts et cetera. A partnership entails a legal relationship and are formed through an agreement between individuals to run a business as co-owned. Lastly, a corporation is a separate entity from the promoters and shareholders of the Company therefore liabilities of the Company are the responsibility of the Company and has no bearing on the promoters or shareholders of the Company.
- Get your Permits and Licenses in Order
If your business requires a license, then delaying the task may be a bad idea. Required licenses based on the business are usually specified by the state based on what the business entails to begin with. Where some may require special licensing, others may only require an operating license; identifying the need should be one of the first steps. Additionally, permits allow the government to regulate businesses that may be in direct correlation to the public.
- Register Your Business
If you intend to convert your startup into a company recognized under law, then you must not delay registering your business. Registering your business can save a lot of trouble for everyone involved in a platitude of ways. Registering your business enables you to ensure no one else uses the business name and it becomes a separate legal entity thereby limiting the founder’s liability. Add that they become more inevitable, enhances brand image etc.
- Be wary of Business Laws and Regulations
There are three main regulatory branches a business falls in; these are organizational, employment and taxation. Founders are required to immediately identify and define their structure. This means claiming whether their start-up runs on sole proprietorship or not. Additionally, the type of business one intends to run further defines tax laws for them and streamlines employer regulations and perquisites as well.
Therefore, starting a business and executing an idea is always exciting; but without the legal matters in place, the entire situation can go South as soon as it begins. Make sure the above 5 points are in place for your business and avoid possible damage at the hands of legal ignorance.