Startup law: how to get started

www.buckworthsolicitors.co.uk

!STARTUP!LAW:!HOW!TO!GET!STARTED!!

!MICHAEL!BUCKWORTH!

!!!

www.buckworthsolicitors.co.uk

WHAT!ARE!WE!COVERING?!

•  Incorporation!

•  Risk!Assessment!

•  Insurance!

•  Compliance!

•  Intellectual!Property!

•  Selling!online!

•  Customer!terms!

•  Investment!

www.buckworthsolicitors.co.uk

ABOUT!BUCKWORTH!

•  Founded!by!Michael!Buckworth!in!2011!

•  Only!law!Qirm!in!the!London!Market!focusing!solely!on!startups!!

•  Acted!on!45%!of!startup!investment!rounds!in!the!London!market!in!2013!/!14.!!

www.buckworthsolicitors.co.uk

INCORPORATION!

•  What!structure!to!use?!•  Limited!company!•  LLP!•  Sole!trader!

•  Reasons!for!using!a!limited!company!•  Limited!liability!•  Separate!tax!treatment!•  Easy!to!bring!on!investment!/!sell!the!company!

•  Costs!of!setting!up!a!limited!company!•  £15!•  Standard!articles!are!Qine!until!investment!•  £0.01!shares!

www.buckworthsolicitors.co.uk

INCORPORATION:!TAX!REGISTRATIONS!

•  Corporation!tax!•  Mandatory!registration!on!commencement!of!trade!•  Annual!corporation!tax!return!•  Corporation!tax!at!20%!up!to!£300,000!

•  VAT!•  Mandatory!registration!at!£81,000!revenue!•  VAT!at!20%!

•  PAYE!•  For!all!employees!•  Deduction!of!income!tax!and!NI!from!employee!salaries!•  Employer’s!contribution!NI!

www.buckworthsolicitors.co.uk

RISK!ASSESSMENT!

•  Is!the!business!legal?!

•  Is!it!regulated?!

•  What!the!Qinancial!risks?!

•  What!are!the!risks!to!customers?!•  How!can!risks!be!reduced?!•  Limitation!of!liability!•  Insurance!

www.buckworthsolicitors.co.uk

INSURANCE!

•  Types!of!insurance!•  Public!liability!insurance!•  Employers’!liability!insurance!•  Professional!indemnity!insurance!•  SpeciQic!insurance!!

•  Things!to!consider!•  Matching!exclusion/limitation!of!liability!with!insurance!•  Excess!!•  Exclusions!

www.buckworthsolicitors.co.uk

COMPLIANCE!

•  Data!protection!•  Data!Protection!Act!1998!•  What!is!personal!information?!•  Obligation!to!register!with!the!ICO!•  Purpose!of!a!privacy!policy!

•  Tell!customers!what!information!you!collect!•  What!you!do!with!it!–!usage!/!storage!/!disclosure!•  What!it!will!be!disclosed!(and!secure!consent!for!disclosure)!•  Explain!use!of!cookies!•  Set!out!customer!rights!

!•  Regulated!activities!

•  Financial!services!•  Gambling!•  Solicitors/accountants!•  Employment!business!

www.buckworthsolicitors.co.uk

INTELLECTUAL!PROPERTY!

•  What!is!IP?!!•  IP!often!belongs!to!the!creator!i.e.!the!founders!individually!or!a!developer!contractor.!

!•  To!transfer!IP!to!your!company!the!creator!must!sign!a!written!agreement.!

•  Transfer!of!all!IP!created!prior!to!date!of!agreement!•  Automatic!transfer!of!all!future!IP!on!creation!•  Undertaking!to!execute!any!agreement!required!to!transfer!IP!•  Grant!power!of!attorney!to!company!to!execute!any!document!in!his!name!

on!his!behalf!

www.buckworthsolicitors.co.uk

INTELLECTUAL!PROPERTY!

If)creators)of)IP)don’t)transfer)the)IP)to)the)company,)the)company)does)NOT)own)the)IP.)

RESULT:!

•  The!creator!may!prevent!the!company!from!using!or!amending!the!IP!

•  Investors!may!not!invest!in!the!company!•  The!company!may!have!to!pay!signiQicant!sums!to!the!creators!to!purchase!the!IP!

www.buckworthsolicitors.co.uk

SELLING!ONLINE!

•  Documentation!•  Terms!and!conditions!with!customers!•  Privacy!Policy!•  Policies!

•  Relevant!legislation!•  Sale!of!Goods!Act!•  Distance!Selling!Regulations!•  VAT!analysis!

•  Refund!policies!•  Cancellation!policies!!

www.buckworthsolicitors.co.uk

CUSTOMER!TERMS!

•  Limitation!of!liability!•  Exclusion!of!some!risks!•  Limitation!of!other!risks!•  Insurance!for!risks!that!cannot!be!limited!or!excluded!(death,!personal!

injury,!fraud,!gross!negligence)!

•  Termination!•  For!nonfpayment!•  At!will!(if!no!longer!economical)!•  On!insolvency!of!customer!

•  Provisions!•  Due!date!for!payment!•  Formal!demand!for!payment!•  Interest!on!late!payments!

!

www.buckworthsolicitors.co.uk

FUNDING!

•  Friends!and!family!•  Seed!funding!•  Generally!smaller!amounts,!smaller!equity!stake!•  Relatively!few!restrictions!•  Loan!or!equity!

•  Angels!•  High!net!worth!individuals!who!invest!their!own!funds!directly!usually!in!

return!for!equity!and!maybe!a!position!on!the!board!

•  VCs!•  Private!equity!funding!looking!to!invest!in!companies!with!high!growth!

potential!

•  Debt!Qinance!!

www.buckworthsolicitors.co.uk

HOW!CAN!WE!HELP?!

•  We!can!assist!with:!•  Incorporation!and!set!up!•  Website!terms!and!conditions!•  Customer!contracts!•  Privacy!policies!•  Commercial!agreements!•  Employment!/!contractor!agreements!•  IP!agreements!and!protection!•  Shareholders’!/!founders’!agreements!•  Investment!rounds!(SEIS!/!EIS!/!VC)!•  Sale!of!business!

!

www.buckworthsolicitors.co.uk

FURTHER!INFORMATION!

•  Take!our!free!“introduction!to!startup!law”!brochure!

•  Check!out!our!website!at!www.buckworthsolicitors.co.uk!

•  Attend!one!of!our!seminars!

•  Contact!us!by!email!or!telephone!!