Seeking legal advice is a great way to ensure your startup has strong legal foundations and will not encounter issues further down the line. While every startup will be unique and your requirements will vary depending on your business and industry, our legal checklist for startups outlines the most common points you’ll need to consider.
How much does a startup lawyer cost?
Before we get into the checklist, you’re probably wondering how much a startup lawyer costs. At Scott Bailey, in addition to our usual fixed fee charges for legal work, we’ve designed a range of startup packages to cover a variety of startups. Depending on the requirements of your business, these packages range in price from £1,500 to £3,500 + VAT. During your initial consultation, we can assist you in understanding which package is the most suitable for you.
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Legal checklist for startups
Speak to an expert
It is always worthwhile consulting a lawyer when launching a startup business. This gives you the opportunity to discuss your plans, ask any questions you may have, and receive quality advice on the best way to proceed. You may not require everything on this checklist, but more importantly, you might need something that is not on the list. Without seeking legal advice, it is easy to miss things that could cause issues for your business further down the line and land you in hot water.
At Scott Bailey, all our startup packages include a one-hour consultation with one of our expert business solicitors. This will provide you with reliable, bespoke legal advice when launching your startup. It also allows our team to collect all the information they need to expedite the process of setting up your business and preparing your business documentation.
One aspect that will be covered during your consultation is the most appropriate business structure for your startup. If you have ambitions to grow your business, seek investment, and be perceived as corporate, this is likely to be a company limited by shares or a company limited by guarantee.
If this is the route you decide to go down, you will need to go through the process of incorporating your company. To do this, you must register with Companies House, file documents, including your memorandum of association and articles of association, and ensure all shareholders and directors have been correctly recorded.
Many new businesses make the mistake of trying to handle this process themselves to save costs or have an accountant do it for them. While incorporating a company can appear simple, some errors can have serious consequences should your business grow significantly without the correct foundations or become insolvent without appropriate limitations.
Having an experienced business solicitor incorporate your company can help you avoid issues that may hamper the growth of your business or leave you on the line with an overvalued insolvent company.
Terms and Conditions
Terms and conditions may seem mundane to some, but they are crucial to any business. If they are not on your list of priorities already, they should be.
Your terms and conditions are the spine of your business documentation and protection. They can be put on all your invoices and sent out with all quotes, providing a framework for what your clients can reasonably expect when you supply them with goods and services. Many insurance providers expect businesses to have properly drawn-up terms and conditions as part of their cover.
Your shareholders’ agreement sits alongside your articles of association. Together these documents set out rules for how your business is run, the relationship between directors and shareholders, and how decisions regarding your business are made. While articles of association are public, your shareholders’ agreement is private and will generally only be seen by parties who have signed up to it.
A shareholders’ agreement will often address key areas such as:
- How directors and shareholders vote in particular situations.
- What happens if there is a deadlock between the members or directors.
- What happens if a shareholder steps down or dies.
- Under what circumstances a shareholder might be paid market value, or much less, for their shares should they decide to leave – known as good leaver and bad leaver clauses.
- The amount individuals can spend or borrow without getting everyone’s consent.
It can also be used to deal with dispute resolution and to protect minority shareholders’ interests.
Having employment contracts in place can protect your business from common employment issues. When you launch your startup, you may only need one employment contract covering all employees. However, as your startup grows or if you need different levels of employment contracts for junior and senior roles, you may need more comprehensive contracts or a range of them, as well as a staff handbook, and contracts for self-employed individuals also.
The legal decisions you make when launching a startup will have long-lasting implications. Getting these decisions right will help you establish strong foundations for your business’s growth and future success. Whilst our legal checklist for startups is a great place to start, nothing compares to seeking expert legal advice. At Scott Bailey, our team of specialist startup lawyers has extensive experience assisting ambitious entrepreneurs as they launch their businesses. Our packages are designed to provide your startup with much of what it needs to get off the ground. If you would like to find out which package is right for your business, get in touch.