maintenance of a paper trail and facilitate proper
and complete documentation of the business' history, inspiring confidence in the investor and facilitating their due diligence when that becomes necessary.
Incorporating is also an important tool to limit
your personal liability. At law, a corporation is
considered a separate legal entity and thus your
personal assets and liability will be separate from
those of the assets and liability of your business.
Should something occur in your new business that
attracts legal liability, incorporation can effectively shield your personal assets from any losses.
However, it's important to note that incorporation
doesn't provide you with a complete shield and liability can still extend to the individual depending
on the circumstances.
Intellectual Property
Most startup businesses are centered around a new
idea. With some development, it is hoped that the
new idea can be capitalized on and taken to market. It's important to protect this idea and any other intellectual property that the business might develop as it progresses. Not only will investors want
to see that your business' intellectual property is
well protected and ownership rights are clearly established, the future success of your business can
rely on the protection of those ideas and intellectual property.
This can mean the use of agreements with employees, consultants and any other partners to delineate
clearly who will have what rights in the intellectual
property that is developed. As well, non-disclosure
agreements will be essential with anyone to whom it
may be necessary to share such information. It will
always be important to ensure who has what rights
in what intellectual property and to ensure that no
outside party can claim your intellectual property or
make use of it without your explicit permission on
terms that are agreeable to you.
Employment Agreements
The common law can impose harsh realities on
employers. As a startup business, you will want to
ensure that you can remain nimble and flexible as
the economy and your development will dictate.
Effective use of employment agreements will allow this to be the case by clearly setting out notice periods and what severance might be payable
should an employee need to be dismissed. As well,
the employment agreement should address noncompetition by an existing employee should that
employee pose a threat to the viability or success
of your business.
While all of the foregoing can sound overwhelming, with the help of professional advisors,
your startup business can easily be positioned to
thrive when your idea is ready to go to market.
Clarence Bennett, partner
Fredericton, N.B.
506.444.8978
cbennett@stewartmckelvey.com
Twila Reid, partner
St. John's, N.L.
709.570.8828
treid@stewartmckelvey.com
Nicholas Russon, associate
Fredericton, N.B.
506.443.0128
nrusson@stewartmckelvey.com
Doing Business in Atlantic Canada SUMMER 2013
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