Clearing legal matters

Zero business action before clearing legal matters

There is plenty to think about – including legal matters and necessary contracts – once you set out to make your business idea come true. That’s why new companies must solve also legal matters within the first year or so. You are focused on making this amazing idea become a reality; you make plans, find a business location, maybe set-up a production, get investors or a partner on board. It all happens so fast, and as days turn to weeks and months, you can simply forget to get the pivotal deals you make in writing. Then suddenly, one of your suppliers fails to deliver, or your lease is cancelled, or your partner quits and copies your business idea. Now, even if you can’t avoid such scenarios, you can try to prevent them from hurting your business. The following videos and articles are created to help and inspire you to make the right choices and clear all legal matters in due time.

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To get everything in writing

We had a chat with one of our business advisors and a handful of Scandinavian entrepreneurs about the importance of getting everything down in writing regarding all the essential operations of your business – as early as possible. 

There’s a contract for almost anything

Depending on the type of business you are in and the way you plan to develop it, whether it is having partners, taking in investors, hiring new employees or maybe partnering with a range of suppliers, it’s always recommended to create a contract. This article will give you an introduction to the most important contracts you may come across as an entrepreneur and what they should cover as a minimum. As all business areas are different, we recommend that you hire a lawyer to create your contracts. 

Before diving into the specific contracts, here is the basic information that you’ll find in just about any kind of agreement:

  • Names and roles of the parties
  • Term of the agreement (the start and end dates within which the agreement should be in effect)
  • Pricing and payment terms
  • Confidentiality (how commercially sensitive information that the parties receive about each other can be used) 
  • Consequences for breaches of the agreement
  • Governing Law (what rules that will be used to interpret the meaning of the agreement)
  • Dispute resolution rules

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Partnership Agreement

Shareholders' Agreement

When you start your company together with someone else, this is one of the most important documents. Even though legal matters might be the last thing on your mind, it is important that you take the time to agree upon what your ownership should look like by creating a Shareholders' Agreement. A Shareholders' Agreement usually takes every possible contingency into account - among others it includes information such as:

● Responsibilities and workload split between the owners.

● Ownership split.

● Profit and loss compensation and distribution among owners.

● Decision making rules.

● Buy and sell rights (if an owner leaves, dies or is unable to work).

Non-Disclosure Agreement
Employment Agreement
Manufacturing Agreement
Distribution Agreement
Sales Agency Agreement
Licensing Agreement
Subcontracting Agreement

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We asked a couple of our business advisors and three entrepreneurs about their experiences with handling contracts. Learn from them, why working out contracts for every action, deal or agreement can be of value to your business.

Mistakes your business can’t afford

Not all legal matters can be solved with having the right contracts in place. Already when registering your business, you need to consider legal structures. Registering the wrong type of business might cost a lot to you. The consequences depend on the type of mistake, but could be anything from having to repay taxes, getting a fine from the authorities or being sued by e.g. a business partner. Make sure to re-register your business with the business authorities, when your business structure or demands change e.g. you get a co-owner, want to import and export or want to hire employees.

Speaking of the latter, when taking on employees the Employment Agreement is not the only important paper: An employee handbook or human resource manual should also be made to ensure that every employee receives the same information. Even though these are not legal documents, they should contain the policies, conducts and procedures of your company as well as how certain legal issues are dealt with (such as discrimination or sexual harassment).

Make sure to avoid these legal mistakes

  1. Failing to protect the privacy of your customer data in accordance to current rules.
  2. Having no legal document stating how issues will be resolved among shareholders. 
  3. Not considering what to do if a business partner leaves, dies or gets divorced.
  4. Failing to establish the right legal structure for your company.
  5. Publicly (even if anonymously done) trashing your competitors on the web.
  6. Failing to protect property by not getting a patent, copyright, or trademark or design right.
  7. Not paying your employees the minimum wage or following other employee protection acts.
  8. Not reporting your tax/VAT correctly.

Thinking out of the box is hard work

What have other entrepreneurs done to promote their business and create attention among their target audience? Learn, what might work for you and why thinking out of the box is absolutely crucial.

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