Date post: | 11-Apr-2017 |
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10 Legal Mistakes Small Businesses Make and How to Avoid Them
PRESENTER: DOMINIC WOOLRYCH
10 LEGAL MISTAKES SMALL BUSINESSES MAKEAND HOW TO AVOID THEM
DOMINIC WOOLRYCH
Australia’s Leading Online Legal Service ProviderLAWYERS
650USERS
23,000SAVINGS
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10 LEGAL MISTAKES SMALL BUSINESSES MAKEAND HOW TO AVOID THEM
“Starting companies is a lot like launching rockets: if you’re a tenth of a degree off at the launch, you may be a thousand
miles off downrange”
- Craig Johnson, The Silicon Valley Edge
20 - 50 New Businesses and Startups each day
What are the 10 most common legal mistakes?
AGENDA
1. Not Performing Initial Searches
Initial Searches for any New Business:
Check identical names with ASIC
Check name with IP Australia
Check domain with Go Daddy
Google it
1. SEARCHES
Business Name – ASIC
https://connectonline.asic.gov.au/RegistrySearch
1. SEARCHES
Trademark Check – IP Australia
http://www.ipaustralia.gov.au/get-the-right-ip/trade-marks/search-for-a-trade-mark/
1. SEARCHES
2. Neglecting the Non-Disclosure Agreement
What is a Non-Disclosure Agreement?
A non disclosure agreement (NDA) is used to safeguard a business’s confidential information. It is used when a business or individual wants to disclose confidential information and make sure that the confidential information does not fall into the wrong hands.
2. NDAs
When to use a Non - Disclosure Agreement?
Talking to investors
Talking to potential Co-founders
Speaking to developers / designers
Talking to potential employees
2. NDAs
NDA Basics
One way v mutual
Only effective is signed
Complete before you share information
Take additional steps to protect your ideas
2. NDAs
2. NDAs
3. Not Being on the Same Page as Your Co-Founder
3. CO-FOUNDERS
“Your business is twice as likely to succeed if you have a Co-founder”
Study done by founders.com
3. CO-FOUNDERS
Issues that need to be addressed
Here are the key deal terms you need to address in some kind of written founder agreement:
Who is officially involved
$ Capital
Roles and responsibilities
Equity
3. CO-FOUNDERS
4. Copying & Pasting Online Terms From Another Website
Privacy Policy
What is a Privacy Policy?
Do I need a PP?
What is ‘confidential information’?
New 2014 Privacy Principles (APPs)
4. ONLINE TERMS
Terms and Conditions
What are Terms and Conditions?
Do I need T+C’s?
What must T+C’s include?
4. ONLINE TERMS
Terms of Use
What are Terms of Use?
Do I need Terms of Use?
What must Terms of Use include?
4. ONLINE TERMS
Do I need a Lawyer?
Meet Lexi!
4. ONLINE TERMS
5. Failing to Manage Intellectual Property
What is Intellectual Property?
Intellectual Property (IP) is a term that describes the application of the mind to develop something new or original. IP can exist in various forms; a new invention, brand, design or artistic creation.
5. INTELLECTUAL PROPERTY
Intellectual Property
Who built your website?
Designs / Content
Assigning IP
Investors
5. INTELLECTUAL PROPERTY
Problem 1: Moonlighting problem
If you work on your startup while currently employed by another company, your employer may have rights to your intellectual property/invention
5. INTELLECTUAL PROPERTY
Problem 2: Zuckerberg problem?
IP is not assigned to the company by the founders and/or third-party developers (including foreigners)
5. INTELLECTUAL PROPERTY
6. Incorporating a Company at the Wrong Time
TYPES OF STRUCTURE1. Sole trader2. Partnership3. Company4. Trusts
WHY A COMPANY IS THE BEST STRUCTURE
5. Risk (Corporate Veil)6. Tax7. Entering into contracts8. Investors9. Disputes10. Equity
HOW TO INCORPORATE1. Online – providers use ASIC software2. Directors / Secretary3. Shareholders4. Share allotments5. ABN / TFN / GST
”Don’t incorporate a hobby. Incorporate when you are serious about making your startup a business”
6. INCORPORATION
7. Issuing Equity Without Vesting
Problem:
2 founders start a business, each gets 50% of the business. After 6 months one of the founders leaves and wants nothing to do with the business
What happens?...
7. VESTING
Solution = Vesting Schedules
Vesting
Cliffs
Acceleration
7. VESTING
7. VESTING
8. Thinking Boards are Only For Large Companies
Advisory Board
Never to small for an Advisory Board
Surround yourself with experienced people
Offer small amount of equity
Great for networking
Easy to appoint
8. ADVISORS
9. Hiring Staff Without the Correct Contracts
You must have written agreements for all of your employee or contractor.
Factors to consider:
1.Control
2.Independence
3.Risk
4.Separate business entity
5.Delegation
6.Tools and equipment
7.Terms of contract
9. STAFF
Need some help?
9. STAFF
10. Using the Wrong Lawyer
Things to consider:
Find the right Start-up / small business Lawyer
Fixed Fee – Pricing (get quotes up front)
Don’t give them equity
Talk to other Start-ups – see who they have used
10. LAWYERS