8 pieces of startup legal advice for rookie entrepreneurs

Essential startup legal advice

Make sure you read carefully our startup legal advice to prevent any mishaps that can cost you time and money. It’s essential to discern between good counsel and bad business advice to safeguard your startup’s legal standing and financial stability.

Contracts of employment

All small business owners when they start their business have a hundred and one things that they need to attend to.  Unfortunately, dealing with the legalities of employing people is usually at the bottom of their list?

All employers are legally bound to provide the following: they must provide a contract of employment on day one.  They must have policies that cover all statutory rights including Discipline, Grievance, Flexible Working, Maternity, Adoption, Paternity, Parental Leave and Shared Parental Leave. 

It is also useful to have policies in other areas as these set down the rules that the employer expects the employee to follow. It is an employer’s duty to protect the health, safety and welfare of their employees and other people who might be affected by their business. Employers must do whatever is reasonably practicable to achieve this: they should have a Health & Safety Policy and all the documentation that supports this.

Remote workers

Under the Health & Safety at Work Act 1974, employers must “make a suitable and sufficient assessment of the risks to the health and safety of employees to which they are exposed whilst they are at work”.

“Whilst they are at work” does not mean “on company premises”. Instead, “at work” means “whilst the employee is working”. The 1974 Act, and many other laws and regulations that have come later, does not make a distinction between workers on company property, workers in public or elsewhere, or homeworkers. The health and safety of all employees must be protected.

The Management of Health and Safety at Work Regulations 1999 goes further and states that “employers are responsible for the health and safety of homeworkers, as far as is reasonably practicable”.

Employers can be in no doubt that they owe the same duty of care to homeworkers as they do to other staff.

In summary, if you run a business and have some or all of your staff suddenly working from home, you should consider the following:

• You must carry out a risk assessment on homeworker’s workspaces
• After the assessment, you must implement the measures needed to help protect your staff. This could include supplying ergonomic furniture or tools, providing guidance about trip or fire protection and whatever other reasonable methods are required
• You should supply employees with a suitable health and safety policy
• You should review your Employer’s Liability insurance policy and update it if required

Employees should recognise that they have responsibilities too. Homeworkers must complete the assessment accurately, to the best of their knowledge.

Whether in the office or the home, even the most robust health and safety policies cannot prevent all accidents at work. Some accidents are simply not foreseeable, and others can happen even when all reasonable precautions have been taken. This is why the assessment and management of the avoidable risks is so important.

Business name

A common mistake made by startups is failing to adequately protect their business name from the beginning. A business name is the heart of the brand, and founders spend a lot of resources into creating a name that encapsulates what their startup represents. 

However, amongst all the excitement, a problem might be that another business is already trading under that name or one that is very similar. Or perhaps someone else has already registered that name under a different domain extension or in a different country.

Later down the track, the founder receives a threatening “cease and desist letter” and is forced to rebrand. All the initial funds invested in a business logo, signage, marketing material and branding are wasted. 

To avoid these issues, a founder should from the beginning:

• Consider a few potential names for the startup.
• Conduct a trademark search, company/business name search, Google search and Facebook search of the potential names. 
• Think globally from day one and do a search in the markets your start-up will target.
• Register the domain name early to avoid domain name squatters holding your domain name hostage.
• Consider registering your business name as a trademark. A trademark is usually the easiest way to protect someone from using your company name or something deceptively similar. 
• If having a trademark is crucial to your startup (for example, to protect your brand from competition already in the market), consider doing the trademark application before you invest any further money into your brand. There are some restrictions as to what business names can and cannot be registered as a trademark. 

Extra 5 quick pieces of legal advice for startups

1. Do your research when picking a business name! It sounds simple but it is a fairly common mistake – try to pick a name that isn’t already in use. Search what’s out there as much as you can using internet searches and social media searches, check Companies House if you are in the UK and consider checking the UK IPO for registered trade marks using that name.

2. If you have co-founders – consider how you allocate shares and responsibilities. Formalise the arrangement as much as you can by using a shareholders’ agreement and service agreements for directors. Any start-up that is run efficiently and effectively, keeps good records and takes ownership of their responsibilities will be a much more attractive proposition for investors in the future.

3. Protect your brand / intellectual property. Once you’ve got your business name, you can help to protect it by registering a limited company, registering it as a trade mark and buying domain names that use that name. If you have created or developed a design or technology, you may be able to register a patent or design right.

4. Put contracts in place with your customers and your suppliers. Your client contract is the most important contract in your business – as this is the one that generates revenue! Whether that’s a licence, terms and conditions or user terms, the contract needs to be reasonable but protect your business.  If your suppliers are creating, developing, supplying or manufacturing something for you – it’s best to have a contract to ensure deliverables and milestones are met and that your business owns any intellectual property created.

5. Get a good accountant and a good lawyer! Great companies need great advisers.  Advisers who know your business and offer flexible and affordable advice for entrepreneurs and startups are the dream fit and will add so much value.  A good accountant and a good lawyer will be able to help you tackle all of the points raised above and a whole lot more!