10 Startup Tips
Chapter 11: Grasping the Law
Most startup guidebooks have tons of information on legal matters.
Just because you’re a connoisseur
of the law doesn’t mean you’ll be successful.
But if you ignore the basic legal issues,
you will quickly get in trouble.
The disappearance of bureaucracy
Sadly, today’s small businesses are faced with a host of scary regulations.
This seems to be in line with our acceptance of the American culture
of “charge, claim, and make money”.
There’s a scene in Oklahoma
where a passenger crossing the street sees a bus
that’s just been in an accident,
gets in the bus,
and a moment later starts rubbing his neck
and says he’s injured his whip in the middle of the road neck
due to the accident.
We also seem to have spent too much time worrying about the law.
Leave it alone.
You don’t have to worry about those risks.
There’s not much you can do with them,
and small businesses tend to be exempt.
The biggest risk you can take is doing nothing.
Going to labor court
– the biggest obsession of any small business owner
if you have seen the movie “Crown Court”1 as a child.
Statistics from the UK Labor Court show
that out of 115,042 lawsuits filed in 2005,
only 14% were successful.
However, about 44% of small businesses solve their problems
on their own without going to court,
not to mention thousands of businesses
that have handled their own problems
before going to the courts.
In Vietnam,
you can consult tax
and legal information for businesses at the website
of the General Department of Taxation:
www.gdt.gov.vn.
Find a legal consultant
Sometimes you will need a lawyer.
The principle is:
Using a lawyer is like a hospital room.
Lawyers are people who help prevent legal problems from happening.
You should seek an attorney now
to avoid trouble later.
Taking a little extra time
when starting out can save you a lot of money later on.
Just like prevention,
don’t just use the cheapest
– it’s hard to claim
when something bad happens…
For compensation,
please let the child in.
(Signs on condom vending machines at London Underground)
Ask an attorney to write you a legal risk analysis.
I’ve been given a copy by lawyers and it’s worth it.
Attorneys only need up to two hours to review every risk
and legal issue that needs your attention,
from what form of business is right for your business to contracts,
insurance, copyrights,
and more. …
And finally,
you should make a checklist of items to check.
Do not panic!
You don’t have to deal with this right away.
Business is about taking into account all the risks,
you need to know which priority to deal with first
and whether you can afford to do it.
If a lawyer isn’t willing to do the work for you,
you may have paid them a little too low.
Avoid disputes
Most legal disputes stem from two main causes
that you need to avoid:
Poor communication:
For example, approving a contract
with a client is just a negotiation process
that considers all possible scenarios to avoid future misunderstandings.
Ego is too big:
Many people go to court
because they feel their self-esteem is hurt.
Of course, you must have felt unfairly treated
and the incident felt like a slap in the face.
But is it really worth the business
to spend thousands of pounds
and months on litigation?
You win the lawsuit but lose the business.
A small computer software company discovered
that Microsoft had accidentally copied one of its designs.
Outraged, they took the giant Microsoft to court
and after a long time of litigation,
they won.
However, not long after the company went bankrupt
because the lawsuit took them too much time and money.
When you want revenge,
dig two graves
Should I go as a limited liability company?
When starting a business,
you have two legal options:
Sole Proprietorship (or Partnership):
This is the simplest type of business.
It requires little paperwork
and from a tax filing point of view
it is the simplest form.
However, the disadvantage of this form of business
is that the business owner is responsible
with all his assets for all activities of the business.
If the business goes bankrupt,
you will be the one to directly pay all the debts.
It sounds reasonable to start with a sole proprietorship
or partnership (with two or more people),
but there’s no reason why you can’t run your own business
if you want to.
Brand John Lewis, the name of a chain of retail stores today
still in the form of a partnership.
Limited Liability Company:
A limited liability company is a legal form
that is separate from you,
as an individual (even if you own all of the shares).
You become an employee for the business;
you are only responsible
is a limit on the amount of capital you invest
if trouble occurs, and keep the following in mind:
Once you have a certain level of protection,
the same level of liability.
You have submitted your financial statements to the Registrar
and Business Administration
(which means your competitors can see them);
In addition to specific revenue levels,
these statements have also been audited.
And as a director,
you must follow some regulations
such as not continuing to do business when bankrupt
if you do not want to break the law.
There are different types of taxes
such as personal income tax, corporate income tax.
A limited liability company can issue shares to its employees.
Ultimately, the funder is obviously wise enough
to see the benefits of a partnership.
As a result, they usually expect you to have personal guarantees on any loan.
If your company’s loan is secured against your house
– what limit of liability do you really have?
The answer is not simple.
You need an accountant to specifically guide you
on what’s good for you and your company.