in the balance

Protection, support and profitable trading

Jacky Fitt Principles of Profit

Protection, support and profitable trading

JACKY FITT   PRINCIPLES OF PROFIT

tel: +44 1904 270962‬

When you think about business law issues, what comes to mind? If we’re honest, whatever the topic, nine times out of ten it will be, “this is going to cost me an arm and a leg…”, yet a business founded on and guided by sound legal principles rarely goes awry, and if it does there is a framework through which to transparently work out the difficulties.

When you have your idea, invention or ‘fag packet’ million dollar sure thing, the best advice anyone can EVER give you is to find a good business law practitioner in your chosen area and pay them a visit. Many lawyers offer an initial chat at no cost and this invaluable half hour can have a profound effect on making the next few years fruitful or frustrating.

What are you going to create and why?

May seem a simple question, but depending on your idea, product, service or sector there are different ways to create a business entity that is flexible and robust enough to help and not hinder your progress. A basic list may include:

  • Sole trader
  • Partnership
  • Limited company
  • Community interest
  • Unincorporated association

If the title of Company Director appeals to you, do you know what it involves? How liable you are personally? You should. If you are uncomfortable with the world and his wife knowing how much profit you made, you should think twice before becoming a limited company and stay a sole trader.  Would you prefer to have a company limited by guarantee or shares? This depends on what not only what you do with your profit but also how you get funded.

Weighting up the positives and the negatives

Each different structure has positives and negatives around duties and disclosure, tax and employment. So, depending on what suits you, your lifestyle and the way you see the world, this will  impact on the way you want to do business. Engaging a good business lawyer also goes hand-in-hand with finding an accountant who is prepared to tell you the downside, as well as selling you all the benefits of a particular structure. This ethical approach will help you better quantify the risks and rewards.

Who’s the daddy?

Do you intend to be the only boss or are you happy to share that title and duties? And how is the pot to be split? When things are going well it’s never a problem; it’s when things go sour that the law can step in and support you, be it with fellow directors, shareholders or employees. Give some thought too, to who becomes a shareholder in your business for, say, tax reasons. If it is your husband or your wife, will your marriage outlast your business? I’m sure you hope so, but if not it can get beyond awkward…

Contracts and why you need them

When you decide to offer goods and services there are contracts. Business to business or business to consumer. There are duties, disclosures, indemnities, warranties and cooling off periods. Your terms and conditions need to be ‘fit for purpose’ – not only to protect you, but also the consumer. Getting a single big contract wrong can starve you of cash flow; lay you open to exploitation; give away your intellectual property or even bring down your whole business.

Think about the end game

Ultimately, what  is your ‘end game’ plan – your exit? Building a business should be a profitable activity and selling the product of your years of hard work can be just as profitable IF you plan early and keep an eye what will be expected of you. Again, a good business law specialist can and will help you avoid frustration, disappointment and heart ache. Saving you time and, in some instances, many thousands of pounds.

“It may be true that the law cannot make a man love me, but it can stop him from lynching me, and I think that’s pretty important.”
Martin Luther King Jr.

There is no doubt that a good business lawyer is worth their weight in gold. Brought in early, you WILL retain both your arms and legs and be confident in the structure of your business as it develops. If you do expect them to solve a fast developing contract crisis; salvage what they can from a chaotic boardroom or deal with a mutinous, tribunal heading employee, without the right legal framework in place you many indeed need the crutches – but whose fault will that be?