As Head of Practice Area at REVERA law group, I regularly work with founders and see firsthand how early legal decisions can determine the future of the company. Based on our practical experience, here are the key legal aspects every founder should pay attention to:

1. Should I register a company?

The answer depends on several factors, including your scaling plans, expected revenue, team size, and others. The laws of the country where you plan to register your business may offer various legal structures, each with its nuances and requirements.

Some key considerations:

1. Many jurisdictions require registration (e.g., as an individual entrepreneurship or company) once you start generating income. As a rule, startups begin to consider registration at this stage. We recommend considering this in advance to assess the financial criteria for choosing the appropriate legal structure
2. If your project is being started by several people, registering a company is generally more efficient in addressing the interests of the co-founders
3. The jurisdiction of registration matters. Jurisdictions may offer certain preferential regimes that would allow business to be conducted in quite comfortable conditions. The selection can also be based on this criterion

2. We're all friends – do we really need to formalise our business arrangements?

One of the most common mistakes is the lack of clear written agreements between co-founders. At the start, enthusiasm is high, and verbal agreements seem sufficient. But once money, clients, and investors enter the picture, informal arrangements might fall apart.

Your solution is a written agreement between co-founders. The format of the document and its content depends on the legal requirements and your arrangements (this could be, for example, a Shareholder's Agreement).

Even if you haven't registered a company yet, formalise your business arrangements in writing – this could be an informal Term Sheet signed by all founders.

3. Intellectual property: who owns your product?

In tech startups, intellectual property (IP) – like software, technology, or designs – is often the most valuable asset. Code may be written on personal devices, designs created by freelancers, and rights left unassigned. If IP rights aren't formally transferred, the creator remains the IP owner. IP rights ownership can be a ‘stumbling block’ not only between the founders/team but also a dealbreaker in getting investment.

What can you do to secure full rights to your product?

1. IP rights can be transferred by law (e.g., via employment contracts) or by agreement (e.g. when you engage freelancers). Regardless of how significant a team member's contribution is, we recommend signing an appropriate agreement with each individual (e.g., employment contracts or contractor agreements). In addition, such agreements should include the necessary IP clauses to ensure the full transfer of intellectual property rights
2. If IP was created before company registration, transfer those rights to the company. You can do this by signing an IP rights sale agreement between the rights holder and the company. If your relationship with the team members has not been formalised previously, this can be a collective IP rights sale agreement signed by all authors
3. You can use third-party IP. In this case, we recommend having clear and understandable license agreements with such third parties for the legitimate use of such IP. Often, various IP stocks may be used in the development. In this case, we recommend paying attention to the terms of use posted on the sites of such resources. Some of them have restrictions, including prohibition of commercial use

4. Should you register a trademark?

In the early stages, trademark registration may seem secondary or too expensive. However, it's a strategic move that can protect your brand and prevent future issues. Failure to register may result in: claims from owners of similar or identical brands; rebranding costs; loss of reputation and recognition if the name has to be changed; and limited defences if competitors copy the brand.

Before registering, conduct a trademark search to ensure that the same or similar designations are not already registered or in use in your field.

5. What if my project is confidential?

Relying solely on verbal promises of confidentiality is risky. Such arrangements are generally difficult to prove in the event of a dispute and do not provide sufficient legal protection.

The solution is to sign a Non-Disclosure Agreement (NDA) with every project participant. An NDA is a legally binding document that clearly defines what information is considered confidential, how it should be used, and what the consequences are in case of its disclosure.

To simplify document flow and increase transparency, NDA terms can be included in the main contracts with team members (labour contracts, independent contractor agreements). This can help to avoid duplication of documents and provide a single legal context for all project participants.

This list of recommendations is not exhaustive and may include other factors as well. We recommend consulting legal advisors to ensure that all the nuances of your business are properly taken into account.