The Lawyer and Startups: The indispensable legal considerations for startups
Be it in the USA, South Africa, Nigeria and especially Cameroon, most entrepreneurs neglect the services of a lawyer in their business project. A good business idea, capital, a strategic plan, equipment, etc. will not suffice in building a successful business if the services of an accountant and most especially a lawyer are not solicited.
The role of a lawyer in building a business is primordial, be it from: pre incorporation, post incorporation, and winding up of the business. Entrepreneurs should consider the following legal issues in order to avoid the mistakes that undermine many startups.
- Business Form and Licenses: In choosing a business structure the entrepreneur will need information as to licenses to be acquired, the required share capital, tax, as well as the required documents for incorporation. In Cameroon, the most common business structures include Sole proprietorship, partnership, Private Limited and Public Limited companies. The legal advice as to the business form to be considered shall be tailored base on the vision, nature of business and capital of the entrepreneur.
- Labour Law: Since no man is an island and the quest of employees is inevitable in every business, the entrepreneur should be duly informed as to the different laws regulating employment. Such discrimination as to sex, religion, tribe as well disabilities amongst employees are frowned at by both local and international conventions. Issues surrounding employment for example dismissal, paid leave, maternity leave, employment contracts and internal rules of the company should also be taken into consideration.
- Drafting of contracts or agreements: Entrepreneurs are advised to document all their contracts. It is important to put all agreement in writing to save you in future. A lawyer should accompany the entrepreneur in preparing documents such as articles and memorandum of association, employment contracts, partnership agreements and other contracts.
- Obtaining a loan: Pledging or mortgaging the firm’s property: Banks are generally stringent when lending money. A lawyer can better negotiate the terms for you in the course of obtaining a loan in order to mitigate some of the consequences which might ensue from the transaction. Before appending your signature on the loan agreement, get a lawyer to explain to you some of the clauses of the agreement such as; severability clause, entire, interest rate determination, contract length and amortization.
- Protecting intellectual property: African youths and Cameroonian youths in particular, are becoming more engaged into innovative products in recent times. Such innovators must consider protecting their intellectual property such as trademarks, copyrights and patents. This will eventually lead to profit maximization in that line of business.
- Insurance Policy: The relevance of an insurance policy can’t be overlooked when doing business in this contemporary business climate. Business risk must be insured against. A lawyer will help you obtain a good insurance policy by submitting a good legal analysis to the insurer and in case the insurer hesitates to indemnify you when it is due, the lawyer may develop strategies to pressure the insurer to pay.
- Tax Laws: Before engaging into a particular line of business, it is prudent to obtain proper information on the tax issues which are relevant in the line of business. The tax to be paid will vary on the different investment. If the business entails import or exportation of goods, custom duties must also be paid. There are several tax incentives available to business owners, you need a lawyer or tax expert to drill you towards the right direction.
The list of key legal issues to be taken into consideration by an entrepreneur as enumerated above is not exhaustive. A more exclusive list will be provided upon consultation on a particular business endeavour. A lawyer must be engaged from the very beginning and must not be solicited when the business is in difficulties as many entrepreneurs do. Because it might be too late.