Protect yourself before you hurt yourself

protect your intellectual property

Business start-ups often overlook the importance of a well thought out legal foundation and the impact it may have on their ability to succeed, attract capital and expand in the future. While it’s probably the last thing on your mind (or close to it) when developing your idea and building your networks, if something goes wrong having the right legal protection in place can be the difference between success and closing your doors for good.

Business Structure

No two start-ups are the same. Having the right business structure for your specific start-up is crucial if you want to maximise profits and minimise liability.

Four key points to consider when choosing the right business structure are:

1. Where you want liability to fall if something goes wrong
2. Whether you have (or plan to have) partners/co-founders or investors
3. The cost of setting up and maintaining your business structure
4. Tax implications

A structure popular with start-ups is a proprietary limited company (Pty Ltd), as it has strong liability protections, tax benefits and allows you to allocate shares. However there are high set-up fees and ongoing costs.

There’s also the option of partnerships if you have multiple founders and want to pool income, expertise and resources. On the other hand, if you’re looking for the lowest-cost option and you are on your own, becoming a sole trader might be the option for you. However these structures don’t offer as many tax benefits and less protection from liability.

It’s also important to put any agreements you make with your co-founders in writing, (i.e. Shareholder’s Agreement or Partnership Agreement). This makes sure everyone is clear on how the start-up will be run, who owns what, and will minimise misunderstandings.

Intellectual Property

IP is an important part of what distinguishes your products or services in the marketplace and the branding you portray to your customers. Having sufficient IP protections in place prevents people from copying your branding, website content or original product and from essentially piggy-backing off your reputation and goodwill.

A couple of things to look out for when it comes to IP:


Register your Trade Marks

Trade marks can be a word, logo, picture, product shape, colour or any other aspect of branding. It’s not compulsory to register your mark, as over time you develop some ownership rights through public awareness. However it’s always a good idea to register because enforcing your rights will be much easier in the event of infringement.

What about Copyright?

Copyright protects any expression of ideas and applies to literary, dramatic, musical and artistic works. It’s an automatic right, so you don’t need to worry about registering or issuing copyright notices. As long as your idea is “original”, utilises a degree of skill, and created by a human, it will generally be protected for 70 years following your death.

Non-Disclosure Agreements (NDA’s)

Always use NDA’s! These are essential if you want to talk about your idea with potential co-founders or capital providers. These agreements ensure that no-one can discuss or use your idea without your express permission. If you don’t have an NDA, it’s harder to stop people from stealing your ideas

For now as a start-up this may all seem like pointless extra work, but if you take some time at the beginning of your journey to make sure you tick the right legal boxes and protect yourself, you won’t have to worry about hurting yourself when something goes wrong.

While you’re at it, also check out our blog post on our quick guide to start ups here!

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  1. […] small for the bigger FMCG brands to care …. or they just slip under the radar. If you’re just starting up, we definitely recommend that you don’t do […]

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