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Legal checklist for starting a business

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If you are in the startup phase of your business, there are a few things you need to consider from the legal perspective to get your entrepreneurship journey going. Whether you are in the idea phase, already have a team and an MVP of your product or service or you are already talking and pitching to the investors, here is a little guide to help you get the ball rolling from the legal side. Starting off with good legal structure and documentation can be a great advantage during your investment rounds. 

1. Speak to an expert

When you are serious about taking your business idea to the next level and turn your idea to an actual business, it is always a clever idea to first share your plans with an expert. It might seem redundant to bring in a lawyer at this stage, but having the right type of company set up from the beginning will save you from later hassle.  

There are certain limitations and regulations depending on the area of activity of the business. For instance: 

  • financial services need a licence; 

  • there are certain areas of activities that require authorisation or making a notice to the economic activity register and;  

  • in certain cases you need to have a public limited company (AS) instead of a limited liability company (OÜ) to start your business activities.   

Knowing these limitations and taking them into account at the right time will save you time and money. 

2. Register your business

Although in Estonia it is amazingly simple to register a business online, it is advisable, if you are serious about growing your company and raising investments to think through some of these especially important aspects that will save you costs and misunderstandings later: 

  • depending on your business needs the automatically generated articles of association might not be in line with your plans, so you need to consider the suitability before registration

  • in case there are multiple founders, it is advisable to have a shareholder’s agreement in addition to the articles of association to cover the rights and obligations and prevent future misunderstandings and disputes.  

3. Protect your Intellectual Property (IP)

Protecting your IP is essential in obtaining a competitive edge and avoiding unnecessary legal issues.  Make sure to register the trademarks, designs, and inventions as soon as possible. It is also crucial to think through what kind of IP is created when doing business and having right agreements and IP clauses in contracts can guarantee you become the owner or exclusive licensee of everything crucial to your business.   

4. Compliance with GDPR  

Data protection has been a hot topic for businesses since the GDPR came into force in 2018. As the awareness of the users grows, it is more important than ever to be transparent about how you use your customers’ data and to ensure it is protected. If you process customer data or use cookies, you will need to make sure you have the relevant policies in place and that they are easily accessible. GDPR implements risk-based approach and requires a company to follow privacy by design and default approach, so it is important to evaluate the risks and build your product or service with data protection already integrated in the technology when created. 

5. Employment matters

Establishing employment agreements is crucial for safeguarding your business against typical employment challenges. Initially, when starting your business, a single employment contract for all employees might be enough. As your business grows or when distinct employment terms are required for junior and senior positions, you might find it necessary to implement more extensive contracts or a variety of them. This could also involve implementing internal rules and procedures for employees but also having good contracts for self-employed individuals as well.  

6. ️ Granting options to top talent

Setting up an option plan and granting stock options is an effective way to attract and retain talent. Cash may be tight in a startup and offering potential equity in the form of stock options can be an attractive form of compensation. To make the most out of the option offering, a well thought through plan and agreements are especially important.  

7. ️ Business terms and conditions

Finally, any business should think about the terms and conditions under which they want to sell a product or provide a service. Disputes are easy to arise when the terms are not correctly understood by both parties. Special attention should be taken by businesses in the B2C market as consumer protection laws lay additional obligations to businesses and certain information needs to be disclosed in the consumer terms. 

Let us guide you through the steps! 

Whether you are in the idea phase or have already taken some steps to set up your business, we would love to hear more about your business and ideas and talk about how we can support you in your journey. Book a free meeting or call or email us. 

 

Startup phase
Entrepreneurship

Contact Senior Legal Counsel Marit Saul!

"I have years of experience working in Head of Legal roles in startups and tech companies. My heart lies with the technology sector as it is built on change and growth."