Six things to consider before incorporating your startup

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.

2. Co-founders

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.

4. R&D

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.

5. Investment

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

Clare Hallam is a Startup Operations Specialist. Follow Clare on Twitter.

You can help keep SmartCompany free for everyone to read

Small and medium businesses and startups have never needed credible, independent journalism and information more than now.

That’s our job at SmartCompany: to keep you informed with the news, interviews and analysis you need to manage your way through this unprecedented crisis.

Now, there’s a way you can help us keep doing this: by becoming a SmartCompany Supporter.

Even a small contribution will help us to keep doing the journalism that keeps Australia’s entrepreneurs informed.

And it’s not all one-way traffic either. SmartCompany Super Supporters get to dial into our monthly editor’s meeting and attend a monthly, invite-only webinar with a big-name entrepreneur.