The Top 3 Things (legally speaking) to think about when starting your new business!
As the end of year approaches a lot of people are evaluating where they are and coming to the conclusion that 2018 is the year they start their new business (or side hustle!)
There are lots of things to consider both from a financial and lifestyle point of view and also from a legal point of view.
Here are our top three:
1. How are you going to trade?
For the majority of business owners their choice is whether they will trade as a “Sole Trader” or as a limited company.
There are pros and cons to both options from both a legal and accounting point of view and the choice will often depend on both you and the type of business you are running and you should discuss your options with your accountant.
If you do decide to go down the limited company route your next decision is the type of company that you are going to form. The two most popular company types are what is known as a Limited Company and a Designated Activity Company. A comparison of the main differences between these two company types is set out below.
If you hope to get investors or funding for your fledgling business this may influence the type of company you choose. A Limited Company has no limitation on the types of business it can engage in whereas a Designated Activity Company can only engage in activities which are required to fulfil its objectives stated in the Objects Clause. A lot of investors prefer the limitations imposed on Designated Activity Companies in relation to the type of business they can engage in to the freedom that a Limited Company has.
If you do choose to go down the route of a limited company there are significant requirements in relation to the filing of annual accounts and other such documentation with the CRO. Failure to comply with these requirements can have serious consequences both for the company and its Directors. For example if a company’s annual return isn’t filed on time the company may lose its audit exemption (if it has one), pay a penalty for the late filing or even been dissolved as a result of it’s failure. It is therefore vital that you familiarise yourself with the legal requirements of a limited company and ensure these are complied with.
2. Protecting Your Intellectual Property aka IP
You might ask what IP? I’m not a tech company and so my business doesn’t have any IP. And this is where you would be wrong. The majority of business owners expend significant time (and blood, sweat and tears) in building up their business’s name but very few think to protect it! If you have a business name and/or a logo you should trademark it in the geographic areas that your business is active in or areas you are considering trading in (think World Domination!)
So what is a Trade Mark? According to the Irish Patents Office (where you’ll initially be registering it) a Trade Mark is the means by which a business identifies the goods or services it is involved in and distinguishes these from other businesses. It is how your customers know that it is you that is behind the goods/services they are purchasing.
Depending on the type of business you are involved in your business may have other types of intellectual property for example: if you sell handbags that you have designed yourself you may want to register the design or if your business has proprietary training materials they should own the copyright for these.
It is important not only to ensure that all your businesses IP is registered correctly but also that any use of your IP by a Third Party is property licensed.
If your business has employees you need to ensure that each employee has been given their terms and conditions of employment and also been made aware of the various policies, such as bullying and harassment, internet usage and grievance policies that they are subject to.
In addition as well as ensuring your employees are properly compensated and provided with payslips detailing the wages paid and deductions made, you will need to ensure that you adhere to the Organisation of Working Time Act 1997 in relation to the hours of work and rest that your employees have. You also need to ensure that you compensate them properly for the hours worked, and in particular Sunday work and Public Holidays. The Workplace Relations Commission is tasked with among other things monitoring employers compliance with employment legislation and providing information.
As always if you have any questions or comments on this subject please do not hesitate to Contact Us.