What should I consider before I incorporate my startup? It’s a good question, right? Lots of people of have asked me this and I rarely have to stop and think about my response.
I tend to reply with a bunch of questions as I find this helps individuals think things through their own personal needs. I figured there are likely to be quite a few entrepreneurs out there wanting some pointers on this subject, so here’s my checklist, I hope you find it helpful:
1. Intellectual property
Have you thought about how to protect your intellectual property (IP)? If you engage contractors or employees or you plan to do so soon, how are you ensuring that any IP created by them is assigned to your business? Also, without a company, to whom is the IP currently assigned to? This also applies to volunteers and interns.
Do you have a co-founder? If you do, have you thought about how you will each protect your equity if the partnership doesn’t work out?
3. Sole trader
If you’re a sole trader, have you considered how your personal assets might be at risk? If your product or service has customers, a founder’s liability increases.
For a business based in Australia, have you thought about research and development grants (R&D)? An R&D claim may be a good way to cash flow your business but you will need to be a company to apply.
How do you plan to fund your business? If you plan to raise money from investors you will need a company so that you are able to sell shares.
6. Legal obligations
Do you understand the legal obligations of being a director once you incorporate? It’s quite a big responsibility to be a company director, so having a good understanding of what you’ll be in for is advisable. You find out more on this for Australian companies on the ASIC website.
As you can see, you need to allow yourself time to consider many things before you incorporate a company. By the way, the questions that I’ve listed are in no particular order of priority or relevance. It might help to ask mentors and other entrepreneurs to share their experiences with you; this is a great way to learn. Research as much as you can and always consider seeking professional help to get the foundations right from the start.
It is important to ensure that you are legally covered and protected in every aspect of your business. This can be difficult, especially if you don’t know what you need. I recommend that you take advantage of Lawpath’s free legal health check, it may help you to get started.
Image credit: Flickr/ter-burg