ENTREPRENEURSHIP

These are the legal issues to keep in mind when undertaking

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By: Carlo Pérez-Arizti, partner of the transactional and venture capital area of Baker McKenzie

Something that characterizes entrepreneurs is that they usually have a great idea, little money, many barriers to entry and time against them. It is understandable that most of them leave in the background the task of creating a legal structure appropriate to their objectives, which provides them with legal certainty.

However, this structure is as important as your business proposal, hence, on numerous occasions, successful entrepreneurs and those who were not so lucky are heard saying that one of their main mistakes was not being adequately advised at the time of starting. your business.

Over the years advising entrepreneurs and start-ups, we have detected a series of initial legal aspects that are often overlooked and that are fundamental to cement the success of a company.

For this reason, below are some critical points that it is recommended that the entrepreneur keep in mind when undertaking:

Constitute a company

  • You will run less risk because you limit the risk of your personal assets.
  • The cost of forming a company is low compared to the amount of profit it produces.
  • It allows to obtain investments over time.
  • Your business will be formal and legal.

Choose the type of company that best suits your needs

Choosing a type of company depends on the needs of each business, but the most popular in Mexico are the following:

Limited Liability Company (S. de RL). The main advantage of this company is that you have more control over your participation structure and it can help you in tax matters with other countries with which there is a double taxation treaty.

Sociedad Anónima (SA). There are fewer restrictions for shareholders in terms of number and transmissions.

  • Investment Promotion Company (SAPI). Undoubtedly, this is the type of company that is recommended for entrepreneurs because it is the most flexible company to operate in Mexico, since shareholders can reach agreements in the bylaws, which could not be reached in a S. de RL or SA
  • Simplified Stock Company (SAS). It is allowed to be made up of a single shareholder, so that that natural person will make all the decisions of the company and will manage the same. If it is expected that the business will not generate annual income greater than 5 million pesos, this type of company is ideal for the entrepreneur.

All companies start with a capital that cannot be modified, this is their fixed capital stock. However, to any of these companies, you can add the variable capital modality, known by its abbreviation CV This means that the capital stock can increase or decrease when new partners enter or when a certain amount or the total of the contributions is withdrawn. .

Register your brands, patent your products and protect your industrial secrets

To register your trademark and be able to use it for commercial advertisements and in your products or services, you should approach a lawyer or the Mexican Institute of Industrial Property ; there they will give you all the information and guidance you need to protect it. It is very convenient that you register your brand, in this way you will have exclusivity on your “distinctive sign”, and other companies that offer a service or product similar to yours will not be able to use your brand name, your logo or any other sign make it part of your brand.

Patent your products and protect your industrial secrets with confidentiality contracts. For an institutional investor, it is very valuable that you have your intellectual property in order. It is what distinguishes you from your competitors and gives value to the company.

Create a good team, encourage it and protect yourself

A good team is key when you are starting out. There are times when you need employees, partners, advisors, service providers, or even a good incubator or accelerator to grow your team. Understand the importance of each of them and correctly document their relationship with you and the company. Aligning economic incentives or ” stock options ” is a great way to have a diverse and top-notch team, but you have to be very careful with legal documentation, to limit equity risk and to remain in control of the company.

Study your business area and that you do not lack the necessary permits or authorizations

It is key to understand what your company is going to do and know what government permits or authorizations are needed to be able to sell your products or provide your services. On many occasions it is seen that entrepreneurs go out to the market without considering this point, and the financial penalties, loss of time and costs of lawyers end up being much more onerous than if they had done a good study of principle. The most advisable thing for this case is to approach a lawyer who knows the business field, or to approach the chambers or business organizations; These normally have already studied the regulatory framework.

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