After determining what goods are services are going to be supplied as the business activity it is important to determine the structure of the entity that will be used to carry on the business, how the business will be funded and how the business will engage with third parties.
Business structure
A business structure is important for two main reasons:- 1. A business structure such as a trust or company can be used to limit the liability of the individual(s) carrying on the business. In this way it can protect certain valuable assets such as a family home from creditors of the business and the individuals can limit the amount of risk they wish to assume in operating the business. 2. A business structure also plays an important role in tax minimization. It is important to keep in mind that the objective of the business is to make money and as a result it is important to maximize profit and minimizes all costs, including taxes. DC Adolphe Legal works closely with accountants specialising in small business tax issues to determine the best structure for your business. If there is more than one person involved in the business it is important to consider how the rights of the participants will be protected between each other. This will often involve advice concerning business arrangements such as:-
Partnership agreements;
Shareholder agreements;
Joint venture agreements.
Each arrangement between individual participants is different and a specifically tailored legal advice is required in each case. Business structures >>
Finance
An important factor in considering the business structure is how the business will be funded. This can be important in terms of nature of the security that may have to be given to secure borrowed funds. This can also be important if there is more than one business operator and the contributions to the business, in terms of cash and effort, may be different. Advice to Borrowers >>
Buying a small business
It may the case that you are starting a business from scratch or you are buying an existing business or franchise business. Buying a business can be very complicated and you should seek legal advice to ensure that you understand the rights and obligations of the parties in the transaction. It is also very important that each party understands exactly what they are buying and selling. A small business is usually a collection of assets and rights which are then sold together. An example of a right is the right of the business to occupy the business premises under a lease. It is very important particularly in retail businesses that the rights of the business in the lease are assigned to the buyer. There may be of course many other assets and rights that a buyer will want to take assignment to in the purchase. Some examples of such assets and rights are:-
Business name;
Intellectual property rights such as trademarks, designs, patents, trade secrets etc.;
Plant and equipment;
Work in progress;
Goodwill of the business;
Employee and key employee agreements;
Supplier agreements;
Exclusivity licenses or agreements;
Licenses or permits from local authorities (i.e. liquor license or gaming license).
Most businesses require a business premises in which to operate. Therefore, unless there is sufficient start-up capital to purchase premises, premises will have to be leased. If the business is a retail shop or is to be located in a retail shopping centre, there are certain legislative protections available for the business operator. Leasing >>