Three top legal tips from Douglas Cooper

When you first start up in business, it’s not just your value proposition, your marketing and how on earth you’re going to make money that you have to worry about –  there’s also a quagmire of legal issues that are almost certainly going to come your way!

That’s why we asked Douglas Cooper, former Head of the Company Commercial Department at Paris Smith LLP, to share a few words of wisdom with our Catalyst Centre winners during their weekly seminar. Here are his three top tips for start-up businesses to get you off on the right legal footing:

  1. Think about getting Limited Liability status. Although being a Sole Trader works for many companies, this will protect your personal assets when you start to hire staff, or sign contracts worth large amounts of money. It will also tend to make your business appear more professional and established, increasing your chances of attracting good calibre clients and suppliers. A well as this, it tends to be a business structure that potential investors find appealing. 
  2. If your company has more than one shareholder, consider the desirability of putting in place a Shareholder Agreement alongside your company’s Articles of Association, and also creating your own Articles rather than simply relying on the ‘standard’ ones put in place when you first register your company at Companies House. You will be able to set out the commercial arrangements and understandings between the shareholders in much more detail than is covered in the standard Articles, and that could save both you and your colleagues a great deal of time and money if disagreements arise in the future. 
  3. As your business grows, look at the potential advantages of appointing a non-executive director or directors capable of bringing with them expertise and contacts from which your business can benefit.

There were also words of warning surrounding going into business with your friends. As we’ve discussed before on the Catalyst blog, starting up with friends can be brilliant, but ensuring that you have solid agreements in place right from the start is imperative. It’s a stark reminder to record everything in writing upfront and take nothing for granted, no matter how good friends you are!