Ten simple things

1. Choose a name for the business that’s easy to remember, which you won’t mind being abbreviated and which has a chance of still being appropriate in five years time.  And if it's no longer appropriate don’t be afraid to change it. Make sure nobody else is using it too!
2. Think about your appetite for risk – are you happy to take it all personally, or would a company with limited liability be a better option?
3. When using a company issue plenty of shares on incorporation – it's much easier to subdivide or consolidate 1000 shares a year or two after incorporation than it is to do the same with five.
4. Understand your obligations and liabilities as a director. Being a director is more than just a badge of honour – what you say and do while wearing that hat really matters.
5. Think hard before using shares in your new company to pay people for helping or doing favours. While that might seem like an easy option at the time, dealing with 10 or 20 minority shareholders takes a lot of time and effort – keep your shareholding as tight as possible, until you can really start to leverage your shareholding (in for example an employee share scheme).
6. In a company make sure you have a constitution. A constitution allows you to do some things that you can’t do unless you have one, for example the company can own shares in itself, and the company can take out directors and officers insurance. A constitution is also easier to read than the Companies Act!
7. Have a plan. That can be a business plan, or a shareholders agreement, or both, or more. But you need to have an idea of where you want to go, and you should have a good commercial arrangement between your shareholders so that you have some rules in place to regulate how you all work together.
8. Keep records. Make sure that you keep your company records properly. Companies must keep statutory records such as a share register, copies of directors certificates, copies of resolutions, minutes etc. There’s nothing worse than having to try to recreate these years down the track when you suddenly have a buyer looking at your shares.
9. Be flexible. It's an old saying but it's still true – it's often better to have a small slice of a larger pie, than it is to own a big slice of a much smaller pie.
10. Take advice. Use your lawyers and accountants well. Make the most of lower cost business advisers such as industry bodies or through the banks. Especially early on paying for advice is often seen as a non-income earning investment – but it could well be the best investment you make. A stitch in time does still save nine.

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