OUIL502: Life's a Pitch: Legalities

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.