Top legal tips for startups in the digital space

It is not easy to navigate the legal technicalities of the digital space, writes Arro Lawyers CEO Simon Reid

I have seen a surge in businesses and startups wanting advice to effectively grow and become successful within the digital space.

Starting a new business is an exciting and overwhelming experience. However, navigating the legal technicalities and requirements of the digital space can prove difficult and at times be overlooked.

Based on my experience running a firm that specialises in legal advice for startups and other digital businesses, I would recommend you consider the following checklist as your first step towards legal protection within the digital arena:

Structuring

  • Who is the money and who is the brains?
  • Ensure you have a written shareholders agreement or other form of agreement which documents who does what, who has control of the day to day operations and what does a share transfer/sale look like.
  • Who owns the intellectual property?
  • Branding
  • Logo
  • Images
  • Doman names
  • Business names
  • Websites
  • Design registration
  • Patents and trademarks
These all form part of startup’s IP and it is important to identify who owns it and to consider whether this valuable asset should reside in a separate structure from the entity which is going to be doing the trading.

Trading

  • Do you trade online, if so do you have relevant and up to date: -
  • Privacy policy;
  • Website terms and conditions of use;
  • Terms and conditions of the sale of your goods or services; and
  • If you are engaging a third-party providers of goods and services including any third parties producing and developing your website/app/branding logo and imagery, at what point does ownership of this work become yours and is copyright being assigned?
Accounting

Have you established proper robust accounting systems, in particular cloud software accounting solutions that can integrate with your own accountant’s software programs for ease of bookkeeping and accounting to ensure your regulatory obligations can be identified and satisfied in relation to the ATO for GST, BAS and any PAYG?

Premises

Do you need to obtain your own premises?You will need to be aware of the considerations such as the costs of any fitout with the addition to an upfront payment of rent.You will need to consider a requirement to provide a bank guarantee and/or a personal guarantee.

Have you identified whether your organisation might fit within an innovation cluster or hub? If so, make sure you review the relevant terms of any licence agreement which will enable you and your business to effectively hot desk from one of these premises. It would be useful to check the rights granted by the licence provider.

Engaging staff/sub-contractors

It is very tempting at the commencement of the startup phase to engage with sub-contractors to provide services.You will need to be careful however to ensure there is the distinction between whether the sub-contractors are actually considered sub-contractors for the purposes of tax law or deemed employees.Care will need to be given to their agreements to ensure that such a risk is identified and minimised.

I hope the above questions will help to initiate a dialogue within your business, and ensure you’re on track to effectively grow within the digital space.

The proper legal foundations, preferably backed up by expert legal advice, can go a long way to ensuring long term success.

Simon Reid is the CEO and principal lawyer of online law firm Arro Lawyers, which specialises in advising businesses that operate in the digital space.

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