In the startup business world, many founders choose to focus on their product and business solely. That’s perfectly fine because after all, your goal is to grow quickly and disrupt the industry.
However, what most entrepreneurs fail to note is that 1 out of 10 startups fail because of legal-related issues. This makes engaging a startup lawyer especially important to protect the interests of your startup.
As a startup ourselves, we understand the importance of bootstrapping your funds. However, we also understand the need for legal services. Therefore, we decided to compile a list of the essential lawyer fees that your startup business will have to consider.
Fees involved in engaging a lawyer for your business
For traditional businesses and startups, there are fees that both business types will mutually encounter. However, due to the nature of startups, there are other types of legal costs that should be taken note of.
General fees that all businesses will incur
These fees are essential to operate a business entity in Singapore. All businesses, at some point, will encounter the need for the below legal services.
1. Incorporation
In general, all businesses must register themselves with the relevant authorities. Startups especially are recommended to incorporate a private limited company. Although this can be done easily, it is highly encouraged to engage a lawyer to do this for you to prevent any mistakes.
There are four documents required by the Accounting and Corporate Regulatory Authority (ACRA) to register a company.
- Company Constitution
- Signed Consent To Act as a Director
- Signed Consent To Act as a Company Secretary
- Identification and residential address for all shareholders and officers of the company
Most business lawyers will include the above fees in their incorporation packages. Below are other fees that are usually included as well:
- $15 name approval fee
- $300 company registration fee
- Document preparation fees
- Company registration fees
- Secretarial fees
2. Secretarial Services
ACRA dictates that every company must appoint a company secretary within six months of incorporation. Although you can appoint anyone with a valid SingPass to be your company secretary, there are many disadvantages to doing it yourself.
In the scenario where your incorporation package does not include secretarial fees, this would be the next lawyer fee you will incur.
3. Document Drafting
As your business grows, there are more documents that you will need. These documents should be drafted by business lawyers to protect your business from any potential loopholes.
Examples of such documents are:
- Advisor agreements
- Distribution agreements
- Employment contracts
- Independent contractor contracts
- Non-disclosure agreements
- Shareholder agreements
- Other ad hoc supporting documents and business contracts
4. Dispute resolution
With contracts and agreements present, there is a likely chance where you will encounter disputes. You should get legal representation should you be involved in any commercial disputes, especially when you need conflict resolution such as arbitration, mediation, and litigation.
Fees that startup businesses should consider
As most startups have proprietary assets, leverage on data, and aims to disrupt industries, these fees, although applicable to all businesses, are exceptionally important for startup businesses to take note of.
1. Intellectual Property
Intellectual property (IP) lawyers can help you with the drafting and filing of your trademarks, patents, and even protect your copyrighted assets. As a startup, it is essential to do this to prevent theft from your competition.
A startup business that protects their assets well are also more attractive to investors and will likely to find less difficulty in raising funds.
2. Financing
At different stages of funding, the legal needs of startups vary, making a lawyer’s advice highly valuable. It is critical to consult with business lawyers at each stage to understand what you need to do and what you need to take note of.
This protects your startup from any possible liabilities while ensuring that each transaction is compliant and structured to suit your business needs.
3. Statutory Compliance
There are three main legislations that you will have to take note of when running a business.
I. Consumer Protection (Fair Trading) Act (CPFTA)
This legislation contains provisions that seek to protect consumers’ interests. This act does not protect business-to-business dealings.
II. Unfair Contract Terms Act (UCTA)
This legislation contains provisions that limit the use of unfair contractual terms. Here are some of the things that are covered in the UCTA.
III. Personal Data Protection Act (PDPA)
This legislation ensures that organisations in Singapore handles and protects personal data. Failure to do so will result in severe sanctions against your startup.
With the above legislations, startups must obtain legal advice to ensure that they are compliant with these statutes. As startups are looking to grow exponentially, any setback with statutory compliance will dramatically slow your startup down.
Conclusion
There are a lot of legal obligations you will have to face when running a startup in Singapore, and this article merely covers the important aspects that startup founders should take note of.
It might even be daunting to know that these legal fees might accumulate and hinder growth for your bootstrapped startup.
However, if you are a serious founder, you will understand the need for these lawyer fees for your startup business. Consistently engaging a lawyer is crucial for your startup’s long-term growth, protecting you from IP theft and legal complications that may arise.
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