Essential Commercial Law Tips for Start-up Businesses

Linkilaw Startup Advice & Tips

Being a start-up business owner doesn’t always equal mounds of business acumen and commercial aptness. As with every other new role and line of business, it’s a learning curve for everyone involved – and that’s OK. However, some mistakes can be very expensive, potentially even fatal to your booming young business. Talent, skills and hard work is extremely important, but it is the commercial savvy that will help you emerge as a winner in the modern entrepreneurial environment. So, let’s start right from the basics, shall we?


Business Dictionary defines commercial law as a branch of law that (1) determines the rights and duties of parties engaged in trade and commerce, (2) governs disputes arising out of ordinary transactions of buyers and sellers, and (3) settles issues concerned with affreightment, banking, insurance etc. In this blog post, we’ll run you through some of the most important commercial law tips you ought to apply in the running of your start-up.

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  • Reach a precise agreement with your partners/co-founders

It’s a mistake many fall prey to in the early days of their joint business venture: being friends, relatives, or simply several enthusiasts bound by the same vision or mission, people enter into a partnership or co-found a business without setting some hard and fast rules about the nature of the relationship and the company itself first.

What is the percentage of shares each of you is going to get? What are your salaries going to be? What tasks and responsibilities are you each going to take?  How are decisions going to be made? Do you all agree on the strategy and tactics? Make certain you have the answers to these questions before you jump into the new business with both feet – vague, unclear, or worse yet, nonexistent agreements are a ticket to the dark abyss of failed businesses..


  • Choose the right type of legal business structure

Are you going to register your business as a sole proprietorship, a business partnership, a limited company, or a limited partnership? This is a critical decision because it directly affects the level and nature of your financial liability – in other words, certain scenarios can even put your personal finances at stake. The choice will depend on your priorities and the level of responsibility you’re willing to take upon. For a more in-depth view into choosing the right type of legal structure for your start-up, head to our recent and straightforward blog post on the matter.


  • Pay heed to tax issues

Very much related to the legal structure of your start-up, there are going to be some very specific tax guidelines you’ll need to follow in order to stay in the legal line. Tax laws and stipulations differ from country to country, but generally speaking, you will have to collect taxes on the products and services you’re selling, as well as pay them on the salaries of your employees. Spare no expense on hiring an excellent accountant or tax lawyer, as he or she will pay themselves off tenfold. What’s more, depending on the national regulations and your line of business, you may be eligible for certain tax incentives that can give your business the always welcome financial boost.


  • Protect your intellectual property

When you’re just starting out, you may feel like intellectual property (IP) is something that can wait, and that there are more pressing things you should pay attention to. It’s an understandable conclusion, yet a very dangerous one: if you leave your intellectual property unprotected, someone could spot what is potentially your gold mine and impose hefty financial harm on your business. This gloomy scenario can be easily avoided at your government’s office or agency for the protection of intellectual property. Depending on the type of product or service, see that it’s legally registered and thus secured from infringement of others, either via a patent, copyright or trademark. Confidentiality agreements (or NDAs) are also vital to protecting your interests, as they minimise the risk of a third party spilling your business secret(s).

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Lastly, make sure you are not infringing someone else’s trademark, name or other element of visual identity. Even if done unintentionally or unconsciously, taking someone else’s piece of IP and using it as your own can end up in a costly lawsuit. The old-fashioned approach works best in this case: Google the name to see if there are other companies using the name; you can also ask your lawyer to conduct a professional trademark search. Speaking of protecting IP, did you see our latest post on how to do so without a patent?