For our Life's a Pitch presentations I was in charge of the legalities behind building our business and providing a service. I did loads of research into this and spoke to some corporate solicitors which were a great help in making this overwhelming amount of information clear and categorised. This was all so helpful in general and I will definitely be referring back to this as I focus on showcasing and providing my work on a much more professional and profitable level.
Legalities
Company
Limited Liability Company – like Al Ltd
(because then the company will get sued –
not you, if something goes wrong!)
You and future investors can be given shares and a seat on the
board. You can take money out of the company as a wage or as a dividend or
leave it in to grow the business.
The company will pay corporation
tax on its profits.
It will pay PAYE
and National Insurance for employees and will pay and charge VAT once it’s turnover reaches a
certain level.
Costs
There are costs with a company…
To set one up
costs a couple of hundred quid and you need to file annual accounts and tax
returns.
Local accountants,
if needed, are fairly cheap- a few hundred a year.
Insurance
The company would want insurance to cover…
Public liability
(incase a ribbon explodes and injures someone),
Employee liability
in case you injure an employee,
Car insurance
Building Insurance
Borrowing Money
If the company wants to borrow money from a bank, the bank may ask for personal guarantees from the directors or shareholders.
Copyright
To protect the product, we could name our company with our brand name.
We could also register it and a logo as a registered trademark against the categories of products you make.
If we invent
something, we could register it as a
patent or a registered design.
Otherwise, our artwork will automatically be covered by copyright.
Contracts
In our contracts with employees,
subcontractors, partners and customers,
we would need to ensure we keep these intellectual
property rights.
For some things, those parties should also sign confidentiality agreements.
Franchise
To exploit our
business idea, you could franchise
it …
I.e. let people in other countries or regions run
the same business under tight conditions and paying us a fee for the privilege.
For related business,
but not the same e.g. a curtain maker who wants to use our design, we can give
them a licence and they would pay us
royalties.
Production
For production, rather than incur the cost of making things ourself, we could subcontract this to someone else.
However, we would need to be careful about quality control.
Would we be happy for them to make stuff for competitors or would we want them to be exclusive? – We could get them to manufacture our exclusive designs.
Exclusive – confidentiality and commitment.
Would we need remedies
in the contract in case they deliver
late e.g. penalty payments – as we will have delivery commitments to our
customers?
Business Partner Agreement
We will need a business
partner agreement with the outlets
we work with, setting out how we will work together.
Exclusivity on
either side?
How long will
both parties commit to and in what situations
could they terminate early? – We
would want to if they don’t pay,
they would want to if we don’t deliver.
They may also commit to specified
store or web space or location and help with our marketing spend.
