START UP" CORPORATE STRUCTURE
SOME PRACTICAL TIPS Why should you follow these suggestions? The lost opportunity cost involved in fixing what could have been avoided can be enormous - time is also money". Secondly, when you are competing against other start-up companies for financing, being well run (both in appearance and fact) will give you an advantage over a competitor.
1. Do seek experienced legal and accounting assistance. Like many things in this world, traps for the unwary exist that can be easily avoided.
2. Do pay careful attention to searching the name under which you intend to incorporate, and the names under which you will offer your products or services. Significant costs can result from a failure to do so, including lost advertising, damages for improper use, etc.
3. The majority of businesses end up choosing to incorporate. Carrying on business prior to incorporation depends largely on issues of tax and the potential for personal liability.
4. The concept of a limited company was invented to facilitate raising capital. The two main issues at start-up are (1) control of the company and (2) equity (how the profits are to be shared). Do ensure that you get what you bargained for.
5. Limited liability can be lost if you agree to guarantee the debts of the company, or in the case of a director, if you have statutory liability.
6. Do keep (and maintain) good financial records from the beginning of your business, including a balance sheet. Do seek advise from your accountant on how to book transactions to give you the maximum benefit (either from the point of view of tax or balance sheet presentation).
7. Do ensure that the ownership of your intellectual property is supported in writing from the beginning.
8. Do enter into written agreements with your employees, and do make use of probation periods for new employees. Maintain complete files regarding your employees, and seek legal advice if you should have to dismiss an employee. Do favour cash bonuses over stock ownership when compensating employees.
© 1997 Gary Dunn[an error occurred while processing this directive]