Before you start your business, there are many things to consider: the name of your business and marketing, how to raise funds, finding the right environment to thrive in and the right partners, or dealing with administrative requirements. However, one of the most daunting parts of the process seems to be, for many people, the legal part.
Indeed, when embarking on an entrepreneurial journey, there are many legal risks to be taken into account. During one of our events, Claude Englebert and Yasmina Maadi, two lawyers at Reef Legal, pointed out that any legal risk becomes de facto a financial risk. It is therefore essential to identify these risks in order to prevent them.
As part of our Womenpreneur Initiative’s mission to support women entering the entrepreneurial world, we want you to be prepared for any obstacles you may encounter along the way. In this article, you will thus find 4 legal issues that you should pay special attention to when launching your business.
1. The law can be on your side
To become self-employed, you can set yourself up as a natural person, i.e. in your own name, or as a legal person, i.e. as a company. In the first case, there is no distinction between you and your business, whereas in the second case, the company has its own capital and is a legal entity with rights and obligations.
With the modernisation of Belgian corporate law, it is wiser to incorporate in the form of a company rather than in your own name: among other things, it allows you to cap liability, safeguard private assets, benefit from flexibility in terms of political and economic rights and enjoy the freedom to attract new investors.
Before incorporating the company, it is also important (if not mandatory) to draw up a business and financial plan. To avoid any risk and protect yourself completely, your company must meet the liquidity test, which measures a company’s ability to repay its debts and its margin of safety.
2. Sharing is (not) caring
If you have a very good idea, keep it to yourself! Trade secrets are intellectual property rights on confidential information that can be sold or licensed. By keeping all business information confidential, you add value to your enterprise and give it a competitive advantage. Trade secrets include both technical information (e.g. research data, manufacturing processes) and commercial information, such as advertising strategies or list of suppliers and partners, and all the information that needs to be guarded well. Hence, you should not hesitate to sign non-disclosure agreements with the people you work with. Protect what you create.
In addition, be careful about how you collect data and how you use the data you collect. Indeed, the European Parliament has adopted the new General Data Protection Regulation (GDPR), the conditions of which must be carefully observed. Make sure everyone in the organisation is aware of the GDPR, make an inventory of the data you hold and manage the consent given by data subjects.
3. Business partners
The relationships you have with customers, and especially partners, must be framed by contracts. Indeed, many commercial documents are needed from the very beginning of the business, and the clauses in the general conditions of sale are very important.
Indeed, it is in the general terms and conditions that you decide how unpaid bills will be handled, where any disputes will be settled or how much liability will be capped. If you are considering setting up your business in Belgium, bear in mind that legal proceedings can be very slow in Brussels’ courts, so it may be worthwhile to locate elsewhere in the country.
4. Standing out from the crowd
Finally, we have talked about the importance of intellectual property and obtaining the rights to all of your company’s branding, texts, logos, etc. However, to ensure its viability, it is also very important to do some research beforehand: prior to choosing your brand, do some artistic search in the field of your brand to make sure it stands out from the crowd and thus ensure its viability.
In conclusion, there are legal risks, but by taking these risks into account, you can add value to your business. When in doubt, don’t hesitate to ask the right people for help.
Despite the many challenges of entrepreneurship, taking the leap and launching a business can be a life-changing adventure. By being prepared for all legal aspects of the project, you will feel confident and have the capacity to successfully carry out your business!
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