Lawyers with clientGetting to the point where you’re ready to start a business is a major first step.

Starting a business – whether it’s as a sole trader, partnership, company or a joint venture – there is a lot of ground to cover, many discussions to be had and even a fair amount of stress involved. During this time, entrepreneurs often wonder whether or not their start-up needs a solicitor, and under what circumstances they need to ask for legal help.

For entrepreneurs with limited resources, the decision not to engage a company solicitor is often a financial one. But a company lawyer can be a vital asset in the unsteady weeks and months during the infancy stage because business mistakes can be costly, so getting solid and no-nonsense legal advice may be something which is worth factoring into your expenditure.

In this article, the team of company solicitors at Foys aims to discuss the reasons and circumstances you need to engage a solicitor when you’re first starting your business, and what the legal implications are for your new business.

Situations where a company lawyer is vital

Choosing a business structure is your first step and there are four types of legal structure: sole trader, partnership, limited company and limited liability partnership. Your choice affects your liability and the taxes you pay.

Having a company solicitor to look out for your interests is key and broadly speaking, a company lawyer can help in many ways:

  • Assisting in forming your business.
  • Safeguarding your intellectual property.
  • Preparing a wide range of contracts – client contracts, supplier contracts, employment contracts, distribution contracts, licensing contracts and franchising contracts to name a few.
  • Providing specialist advice – this can range from a brew pub needing a license to discharge of trade effluent in England and Wales to a chemist needing a license to possess and sell scheduled substances.
  • Purchasing premises – acquisition and disposal of freehold or leasehold property, planning permission, property refinancing, asset management and general business sales and purchases.
  • Leasing premises – landlord and tenant matters from contracts to managing disputes.
  • Preparing partnership agreements – protecting your business investments.

Partnership

When a business consists of more than one person – such as partnerships – it is critical to have a company lawyer on-board. Partnerships, as legally defined by Section 45 of the 1890 Partnership Act, can come in three guises: conventional or ordinary partnership, limited partnership (LP) and limited liability partnership (LLP). Make use of an expert company lawyer like Foys for partnership agreements to protect the interests of all partners by setting out details such as:

  • Capital contributions of each partner
  • Roles and responsibilities of each partner
  • Debt liabilities of each partner (applicable to limited partnership and limited liability partnership)
  • Profit sharing structure
  • Exit strategies, i.e. what happens when a partner leaves

It must be said that unlike conventional partnership, a limited liability partnership needs a partnership agreement before it can even qualify and be registered as an LLP.

Limited companies

For limited companies, it is also absolutely essential that there is a company solicitor involved in the formation. Every limited company has two important documents: Memorandum and Articles of Association. A memorandum states the names of the founding shareholders (or guarantors) and their formal agreement to become members of the company. Articles of Association spell out the rules relating to how the company is owned, operated and governed.

In addition to that, many limited companies choose to have shareholders’ agreements which establish additional obligations relating to how the company is managed, the powers of members and officers, transfer of shares and other issues. If you’re a shareholder of a limited company but you don’t have significant control of the business, we recommend you entering into a shareholders’ agreement to protect your business interests.

How Foys can help your new business

If you choose to utilise a company lawyer during the process of forming your new business, it’s important that you work with a law firm that has the experience and knowledge to maximise a return on this investment.

At Foys Solicitors, our exceptional company and commercial legal team will do everything that they can to help your business start off on the right foot, giving it a better chance to grow. Our first consultation is free, giving us a chance to get to know your business better and create a plan that is best for your business.

We can work with you to adapt or change your business structure to suit the competitive landscape, and support you through the many legal hurdles for businesses in today’s world.

For more information on how our company and commercial legal experts can help your new business, fill out our Online Form, or call your local Foys Solicitors office:

  • Doncaster – 01302 327 136
  • Retford – 01777 703 100
  • Worksop – 01909 500 511
  • Clowne – 01246 810 050
  • Rotherham – 01709 375 561
  • Sheffield (Waterthorpe) – 0114 251 1702
  • Sheffield (Chapeltown) – 0114 246 7609

This post is not legal advice and should not replace professional advice tailored to your specific circumstances. It is intended to provide information of general interest about current legal issues.

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