The Toronto-Waterloo Tech Corridor: Protect Your Start-Up!
Read time: 3-5 minutes
There is an incredible number of technology start-ups setting down their roots in the tech corridor from Waterloo Region to Toronto. The corridor is home to approximately 15,000 tech companies, 200,000 tech workers and 5,200 tech start-ups.
There is also a shocking number of larger technology companies that have raised significant capital from all sources and have grown billion-dollar businesses (D2L and Christie Digital, to name a few).
Tech start-ups continue to bring innovation, creativity and advancement to the community. While these businesses are fast-paced and thrive on the passion, imagination and innovation of the individuals who start them, it is important to take some time to think about the legal position of your business. Better yet, pay a law firm to do this so that you can wholly focus on your business growth.
Your business can be structured as a sole proprietorship, partnership or corporation. See our article, “Ontario Business Structures: Selecting the Right Structure for your Business” for more information about the pros and cons of each structure.
Your start-up company can be organized using a minute book, by-laws, resolutions, shareholder agreements, or partnership agreements, amongst other documents. These documents should detail how the company will govern itself, how disputes are resolved and how responsibilities are going to be divided amongst directors and officers, amongst other things.
You can also reorganize your company later, if you change your mind about what the right organization is for your start-up, or if the company’s needs change over time. However, it is easier to establish this at the outset of a new business venture.
The Shareholder Agreement or Partnership Agreement
One of the most important documents for your start-up company is a shareholder agreement (if it is a corporation) or a partnership agreement (if it is a partnership). Relationships between shareholders or partners are often great at the beginning of a new business venture, but they can quickly sour as the business grows and becomes more complex. This is true even if, and maybe especially if, the shareholders or partners are family members or close friends. See our article, “The Shareholder Agreement: A Tool for Avoiding Disputes”, for more information about how these agreements can help your company succeed.
Set Your Company Up for Success
Legal documents are often overlooked in the day-to-day operations of running a company. Individuals often make the mistake of thinking that legal documents are not necessary. However, having the right legal documents in place can set your business up for success in the event that a dispute arises with shareholders, clients, suppliers or other parties.
Well written legal documents, such as a service contract, can avoid disputes or can make disputes easier to resolve without the use of litigation. While it may cost you initially in legal fees to put these documents in place, it can actually save you a lot of money, stress and time in the long-run so that you can better focus your energy on your passion project.
Common Legal Documents to Safeguard your Company’s Interests:
- Shareholder Agreements
- Partnership Agreements
- Minute Books
- Service Contracts
- Supplier Contracts
- Confidentiality Agreements
- Share Purchase Agreements
- Commercial Leases
Leave it to Your Lawyer
It may seem like lawyers encourage the use of legal documents, such as shareholder agreements, in order to gain business and overly complicate matters, however the truth of the matter is simple: legal documents don’t seem important until a dispute arises and it’s too late to put the agreement in place.
If you fail to properly safeguard your business interests or contracts with written agreements, you may find yourself in the middle of a messy dispute or legal action with shareholders, business partners, customers or suppliers. Let your lawyer worry about your legal position, so that you can focus all of your energy on your business, products, services and sales.
Unified LLP has the pleasure of practicing in the tech corridor with offices in both Kitchener and Toronto. Please contact Michael Paiva at 519.729.5038 or at 416.800.1733 for more information, or if you require assistance with a business law matter.