Starting your own business is a big step that requires careful planning and forward-thinking. It’s important to take time before jumping in to think about the implications of starting up and what it will mean for you as an individual, as well as for your future business. Planning your business properly from the outset will not only help you avoid pitfalls and difficulties down the road, but it can also save you from costly mistakes further down the line. A great way to do this is by creating essential legal documents for your business. Before setting up any company or partnership you need to first understand what obligations come with that type of business entity, what formalities need to be completed, what taxes or registration fees there are, and so on. This article aims to give you a brief overview of some of the most essential legal documents for your business.
A company constitution is a document that sets out the rules and regulations governing how the company is run and how it is managed. Typically, it will outline the roles and responsibilities of the directors, any shareholders, and the employees. The constitution should also include information on how the company is funded, the amount of original capital, and the terms of how that capital can be withdrawn, if applicable. In many countries, the constitution is a legally binding document and must be reviewed and approved by the relevant government authority. It’s important to understand that while a constitution may seem like a fairly inconsequential document, it represents a huge proportion of your company’s obligations, rights, and liabilities .
Company memorandum and Articles of Association
The company memorandum and articles of association are the first set of documents you’ll have to produce when setting up your company. They are similar to one another in that they outline the start-up process for your company, the people involved, and the roles and responsibilities of each. However, there are some significant differences to be aware of between the two documents. The memorandum of association typically covers three key areas – the governing authority, the company’s name, and the company’s objects or purpose. The articles of association, on the other hand, are a lot more in-depth and tend to cover a wider range of topics, typically including the company’s shareholders, company director, company secretary, the company’s capital and how that capital is raised, and its financial year. Together, these documents will help you get your company officially up and running.
A business plan outlines the key information and figures related to the start-up of your business. It’s an effective tool for helping you to prepare for the future, particularly when it comes to securing finance from investors. A business plan is typically broken down into the following sections: –
- Executive Summary:- This section is designed to be read in a single sitting so it should be short and concise. It should outline the problem your product or service is aiming to solve, who your target market is, and how much money you will need to make the business venture a reality.
- Company Summary:- This is where you can go into greater detail about your business, including its history, its key personnel, its financial forecast, and its SWOT analysis. SWOT stands for strengths, weaknesses, opportunities, and threats. The strengths, weaknesses, and opportunities should be positive attributes of your company, while the threats should be potential problems or pitfalls.
- Marketing Plan:- This part of the business plan is essentially where you outline your marketing strategy and detail how you plan to market your product or service. This includes information on marketing budgets, where your marketing campaigns will take place, and who you will be targeting.
- Sales Forecast:- This part of the business plan outlines the projected sales figures for your company. This can be particularly helpful if you are aiming to secure finance from investors and need a significant loan.
- Financial Projections and Recommendations:- This section is where you outline the financial projections for your business. You can include information about projected sales, costs, and profits, among other things. This section of the plan can also be used to outline any recommendations you may have, such as hiring certain staff members and so forth.
Contract with your Employees
If you’re setting up a company that will employ people, you must have employment contracts in place. These contracts will outline the terms and conditions of their employment, including the duration, weekly hours, responsibilities, what they are paid, holidays, etc. It’s important to note that every country has their own set of employment laws and regulations, so you’ll need to check what applies to your employees. You don’t need to craft your employment contract from scratch. It’s highly advised that you don’t do this. Instead, you should turn to an employment contract template and modify it to fit your business needs.
Naming your Business
Your business name will play a key role when marketing your products and services, so you must choose wisely. For example, a name like “Smith & Sons” would suggest that you are a family-run business. In contrast, a representation like “Smith & Sons Corporation” would indicate that you’re a company with a board of directors. There are a few different things to consider when naming your business. You should ensure the name is available for use, that it doesn’t infringe on any copyrights, and that it accurately describes your business. You can use a business name generator to get ideas for names and see how they stack up.
Starting a new business is a big step that requires careful planning and forward-thinking. Planning your business correctly from the outset will not only help you avoid pitfalls and difficulties down the road, but it can also save you from costly mistakes further down the line. A great way to do this is by creating essential legal documents for your business.
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