The comprehensive guide to Singapore budget 2017: SME edition

05/04/2017

The Singapore Budget 2017 that was announced earlier this year was received with much excitement by the rest of Singapore, and one group of stakeholders in particular – Singapore’s small and medium enterprises (SMEs). The nearly 190,000 SMEs in Singapore that make up 99% of businesses contribute to nearly half of the gross domestic product and employ more than 70% of Singapore’s workforce.

As more details about the various Budget 2017 initiatives become available in the weeks following the Committee of Supply debates, we give you a comprehensive overview of how your SME can harness the Budget initiatives to stay ahead of the curve:

1. Up your team’s skills and productivity with training support

First introduced in 2015, the Adapt and Grow initiative that aims to help Singaporeans adapt to changing job demands and grow their skills appears has proven effective, with 7 in 10 of the 10,000 rank-and-file workers placed through the Adapt and Grow career matching services in 2015 remaining in employment for at least 6 months after their placements.

The Adapt and Grow initiative underwent new enhancements that took effect on 1 April 2017:

Enhanced Career Support Programme (CSP)

What is it?

Businesses stand to receive up to SGD 42,000 in salary support when they hire Professionals, Managers, Executives or Technicians (PMETs) who are made redundant, or unemployed and actively looking for jobs for at least six months, in jobs that pay at least SGD 3,600 (for SMEs) or SGD 4,000 (for non-SMEs)

The eligibility criteria for employers are as follows:-
Any company registered in Singapore who;

  • Employs eligible PMET with minimum monthly gross salary of SGD 3,600;
  • Employs eligible* PMET job seeker on a permanent or contract basis for at least 12 months;
  • Provides eligible PMET with approved On-The-Job training (OJT) or WSG-approved courses.

Enhanced Professional Conversion Programmes (PCP)

What is it?

Businesses stand to receive 70% to 90% in course fee grant and salary support when they hire PMETs who are looking to switch careers, with enhanced support of up to 90% available for SMEs or PMETs aged 40 years and above. This includes both Place-and-Train and Attach-and-Train opportunities. The eligibility criteria for employers are as follows:

  • Registered or incorporated in Singapore;
  • Must offer employment directly relevant to the PCP, with remuneration commensurate with prevailing market rates;
  • Commit to PCP training arrangements;
  • Commit to work with WSG or its appointed partner on programme administrative requirements.

Enhanced Reskilling for Jobs – Work Trial

What is it?

Businesses have the opportunity to assess a jobseeker’s fit via a cost-free short-term work trial of 40-480 hours per job seeker before offering employment. The enhancements include:

  • An additional Retention Incentive of SGD 1,000 at the 6 month retention mark for Singapore citizens who had been unemployed for 12 months or more prior to taking up the Work Trial; and
  • Salary support at 30% of monthly salary for 6 months, capped at SGD 600 per month for employees who hire Singapore citizens who have been unemployed for 12 months or more.

2. Remunerate your workers better with employer support schemes

Beyond receiving more support to hire workers looking to switch careers, SMEs can also remunerate their workers better with schemes aiming to help firms cope with rising wages:

Extended Wage Credit Scheme (WCS)

What is it?

Budget 2017 continued to extend the scheme, which now co-funds 20% of wage increases given to Singaporean employees earning a gross monthly wage of SGD 4,000 and below.

The eligibility criteria for employers are as follows. All employers paying wage increases in 2013 – 2017 to Singaporean Singapore Citizen employees who:

  • Are earning a gross monthly wage of SGD 4,000 and below;
  • Received CPF contributions from a single employer for at least 3 calendar months in the preceding year;
  • Have been on the employer’s payroll for at least 3 calendar months in the qualifying year (i.e. employer must have paid employee CPF contributions for at least three calendar months* in qualifying year); and
  • Have at least SGD 50 gross monthly wage increase.
  • Must not also be the business owner of the same entity (i.e. sole proprietor of the sole proprietorship, or a partner of the partnership, or both a shareholder and director of a company)

Special Employment Credit (SEC)

What is it?

The SEC, which was extended for 3 years from 1 January 2017 to 31 January 2019, provides wage offsets to employers hiring Singaporean workers aged 55 and above and earning up to SGD 4,000 a month, and persons with disabilities.

The eligibility criteria for employers are as follows. Employers who:

  • hire Singapore Citizen employees aged above 50 years and earning up to SGD 4,000 per month; and
  • make regular Central Provident Fund (CPF) contributions for these eligible employees.

Additional Special  Employment Credit (ASEC)

What is it?

The ASEC will be extended for 2.5 years, from 1 July 2017 to 31 December 2019, and continue to support workers older than the re-employment age, as well as those above 65 years old as of 1 July 2017 and hence not covered by the increase in re-employment to 67.

Related reading: 5 top tips for onboarding new hires

3. Innovate and gain a competitive advantage with greater access to tech

Singapore Budget 2017 has been hailed as one that is “about changing the way things are done here so as to help Singapore stay ahead of the curve in the disruptive economy”. In his Budget 2017 speech, Singapore’s Finance Minister Heng Swee Keat identified capabilities businesses will need as Singapore matures as an economy and competes on the quality and novelty of ideas and ability to create value: the ability to use digital technology and embrace innovation.

In terms of the big picture, 23 Industry Transformation Maps (ITMs) were rolled out under the SGD 4.5 billion Industry Transformation Programme in Budget 2016 to help companies drive innovation and productivity. Six of these ITMs have been implemented. Under Budget 2017, the National Research Fund will be topped up by SGD 500 million and National Productivity Fund will be increased by SGD 1 billion.

 

Source: Ministry of Trade and Industry Singapore

Beyond enhancing their own digital capabilities, SMEs have also been encouraged to take a more proactive approach towards becoming more innovative. Several programmes by the Agency for Science, Technology and Research (A*STAR) aim to strengthen SMEs’ capacity for innovation by upgrading their technical capabilities, improving access to intellectual property (IP) and enabling faster time to market:

SMEs Go Digital (CSP)

What is it?

Administered by the Info-communications Media Development Authority (IMDA) in collaboration with other sector lead agencies, the programme aims to provide a more focused and structured support for SMEs seeking to go digital, whether this is for basic needs such as accounting software or advanced needs such as data analytics and cybersecurity. Businesses can take advantage of this initiative by:

  • Contacting a SME Centre
  • Securing a referral to the new SME Digital Tech Hub to be launched by the end third quarter of 2017; and
  • Working with IMDA to apply new & emerging tech solutions.

A*STAR Operation and Technology Roadmapping (OTR)

What is it?

A*STAR works with firms to conduct operation and technology roadmapping to identify how tech can help them innovate, by 5 half-day sessions covering topics such as Market/Technology Drivers and Game-Changing Products/Service. This initiative will expand its efforts to support 400 companies over the next 4 years. All Singapore-registered businesses with at least 30% of the shares owned by Singapore Citizens or Singapore Permanent Residents are eligible.

A*STAR Headstart Programme

What is it?

SMEs that enter into a Research Collaboration Agreement (RCA) with A*STAR can now enjoy royalty-free and exclusive licenses of IP developed, for the first 36 months. For companies seeking access to IP, the IP intermediary will work with the Intellectual Property Office of Singapore to analyse and bundle complementary IP from Singapore and overseas. Employees who are eligible are as follows:
Applicable to all SMEs that enter into a RCA with A*STAR.

4. Free up funds to strengthen business operations with loans & tax rebates

As a small business, many of the pain points that you face can be attributed to the limited time, energy and resources you have to run business operations and implement long-term strategy. These options to access financing and save up with tax rebates are thus welcome:

Corporate Income Tax (CIT) Rebate

What is it?

For Year of Assessment (YA) 2017, companies will be granted a 50% CIT Rebate capped at SGD 25,000 (up from SGD 20,000 in 2016). The Rebate will continue into YA 2018, with a 20% CIT Rebate capped at $10,000.

Who is eligible?

Given to all companies to help them with rising business costs.

SME Working Capital Loan

What is it?

Launched on 1 June 2016, the SME Working Capital Loan will continue to be available until 31 May 2019 to help local enterprises access unsecured working capital financing in a period of slow economic growth. Local SMEs can apply for loans of up to SGD 300,000 to fund daily operations, with a repayment period of up to 5 years. The government co-shares 50% of the default risk of such loans with participating financial institutions in order to encourage lending to SMEs.

 

Who is eligible?

The eligibility criteria for companies are as follows:

  • Company registered and operating in Singapore;
  • At least 30% local shareholding; and
  • Group annual sales of ≤ SGD 100m or group employment size ≤ 200

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5. Expand into the region with internationalisation opportunities

According to an Internationalisation Survey of 700 companies in major sectors conducted by International Enterprise Singapore, internationalisation has become the key engine of growth for Singapore companies. In 2016, the overseas revenue or SMEs formed 53% of total revenue, a 3% increase from the previous year. As Singapore’s SMEs look to international markets for opportunities to grow their business, Budget 2017 promises to provide support in this direction.

The details on the new initiatives are limited at present, but SMEs can look forward to more information about the following in time to come:

  • International Partnership Fund: Budget 2017 commits up to SGD 600 million to set up this new fund managed by a unit of Temasek Holdings that will help Singapore-based companies increase their presence on the global market, by co-investing with these firms.
  • Global Innovation Alliance: With programmes such as the Innovators Academy for tertiary students, Innovation Launchpads for entrepreneurs and Welcome Centres for innovative foreign firms, this initiative aims to help Singaporeans gain experience abroad, make connections and collaborate with their counterparts in other innovative cities such as Beijing and San Francisco.

Claim your free trial. Start drafting legal documents with Zegal today.

How does your SME plan to take advantage of Budget 2017?

Share with us in the comments below!

Essential Features Of A Payroll Software

09/03/2017

Choosing a payroll software is never easy. With the plethora of fancy features offered by the numerous payroll software vendors, it might seem as if all of it could very well solve your payroll woes – or not. To help you narrow down your selection, here are 6 essential features that any payroll software should have:

Payroll Processing

A payroll processing function is a given in any payroll software. Most payroll software in the market offer integration capabilities, such as linking the system to leave applications, timekeeping, overtime pay rates etc. This saves a lot of payroll processing time from having to manually input the necessary payroll information.

Direct Bank Disbursement

A direct bank disbursement is likely to resonate well with both your HR department and employees. By disbursing monthly salary payments directly into employees’ bank account, it saves your company time and money from having to issue paper cheques. Additionally, it mitigates the risk of a lost cheque or fraud cases. The best part – the funds are available immediately after disbursement.

Tax Calculations and Filing

Payroll software takes the tedious paperwork out of taxes computation and filing. With automated calculations, it reduces the risk of human calculation error. Additionally, the system can pre-fill in the tax forms based on employees’ payroll information that is already available within the system. This alleviates the unwanted situation of submitting tax forms with missing employee information.

Furthermore, automated filing ensures that your company and employees’ taxes are filed on time. This can prevent the company from incurring penalties due to late submission.

Payroll Compliance

The payroll software contains all the confidential employees’ personal details and important payroll information. Additionally, technology is constantly evolving and hackers are becoming more sophisticated in their ways to hacking into payroll databases. Thus, a robust payroll compliance system has to be in place to prevent data leak or loss of critical payroll records and employees’ personal information.

Employee Self-Service

By incorporating an employee self-service, you are essentially passing some of the payroll work to the employees themselves. Employees can log in to view their own payroll history or fill in their time attendance – all of which would then be recorded in the system for seamless salary calculations at the end of the month. Furthermore, an employee portal can address certain queries that employees may have without them having to constantly call you just to answer a simple payroll question.

Accounting Integration

Similarly, with the enhanced integration capabilities of payroll software, accounting functions can be integrated into the payroll system as well. This can save both the accounting and HR team hours of time from having to manually key in monthly payroll details. Likewise, it minimises the chances of miscalculation, incorrect data entries or other “uh-oh” moments.

Payroll is simply one part of your business. Having that said, more time should be spent on other critical aspects of your business rather than spending your resources on solving your payroll woes.

As you look around for payroll software providers, keep Gpayroll in mind. In addition to payroll processing, auto tax filing as well as regulatory compliance, Gpayroll also offers eClaims and eLeave to further enhance your payroll processes. For more information on our products, do reach out to us via any of our communication channels.

This is a guest post from RenQun Huang at Gpayroll Want to read more articles related to payroll, HR & technology? Visit us at Gpayroll

Start managing your legal needs with Zegal today.

The Comprehensive Guide to Building a Legally-Healthy Business (SME Edition)

05/12/2016

We know that running a small business is a challenging task for any entrepreneur. Small businesses are perpetually stretched, with limited time, manpower and resources. We recently published a post on the top pain points that small businesses face and how to deal with them.

In this Comprehensive Guide to Building a Legally-Healthy Business (SME Edition), we give you the lowdown on the key legal documents and resources that your small business should have in place to deal with these 8 pain points!

1. MANAGING CASH FLOW

Customers who make late payments can hinder efficient cash flow and pose a headache, especially for small businesses with low cash reserves. The good news is that small business owners can alleviate the problem by putting in place legal documents that optimise their cash flow. Top tips include negotiating payment dates to align inflows with outflows, reducing your payment term to encourage customers to make payment earlier, and putting in place recurring payment methods to encourage your customers to pay on time.

Document Used for
Purchase Order This is a standard document or template that your customers or clients can use to order goods or services from your business. When you accept the Purchase Order, a binding contract is formed.
Invoice An Invoice is a document you can send to a customer requiring payment for goods or services that you have provided or will provide. It acts as a bill and a proof of a transaction.
Late Payment Letters These are a useful and affordable way of chasing up overdue invoices by prompting a customer to pay the overdue amount.  Depending on the original agreement, you might be able to set a certain number of days before you start charging interest.
Letter Accepting Payments in Installments If your customer does not dispute that money is owed and is willing to make arrangements for the debt to be repaid, you can consider a Letter Accepting Payments in Instalments. Such a letter allows the debtor to pay off the debt with regular fixed instalments.

Resources for optimising cash flow

Download the FREE ebook

 Learn more about how you can use key legal documents to ensure you receive payment on time and optimise your cash flow.

2. HIRING & RETAINING STAFF

SMEs face challenges hiring and retaining staff, with high manpower costs and competition from more established companies that can offer more attractive remuneration packages. First up, make your company a more attractive proposition to both existing employees and potential recruits by putting in place compensation options that encourage long service. And when you are thinking about whether and who to hire, another tip is to consider hiring freelance consultants (otherwise known as independent contractors) instead of taking on a full-time employee for fixed term projects!

Document Used for
Employment Contract Once your candidate has accepted the offer of employment, put together the Employment Contract to regulate the relationship between the employer and employee in order to minimise potential disputes. The document is useful if you want to dissuade certain new hires from leaving your company too soon, disclosing confidential information about your business, or going to work for a competitor.
Consultancy Agreement A Consultancy Agreement is a document designed to regulate the relationship between a company and an independent consultant who is not an employee of the company. A well-drafted Consultancy Agreement will set out the scope of the work that the consultant will provide, and protects the business by letting the consultant know the extent of his or her powers and responsibilities.
Share Vesting Agreement A Share Vesting Agreement is a contract granting an individual or company the right to purchase shares. By allowing employees or other consultants to earn equity in a company over time, you can reward your employees for their performance while incentivising them to remain with the business. Vesting is a great way to encourage long service to the company as you can specify when each of the shares is released to the employee.
Option to Purchase Shares An Option to Purchase Shares is an offer from a company to a certain individual with an option to purchase from the company a pre-determined number of shares in that company at a pre-determined price. As there is no upfront cost to the option-holder upon receiving the Option to Purchase Shares, your company can attract employees and incentivise existing employees or shareholders.

Resources for growing your team
Unsure what employment laws you have to comply with when taking on board that new hire?

Download a free eBook to learn how you can avoid pitfalls by navigating through areas of employment law.
Singapore Version      Hong Kong Version

Want to keep your employees happy and motivated? Check out this post on our blog for tips on incentivising employees without burning a hole in your pocket.

3. DEALING WITH CUSTOMER COMPLAINTS

People often say that the customer is king, and for good reason. Mismatched expectations or a lapse in service quality may alienate your customers and hurt your ability to maintain and grow your customer base. Put in place documentation that helps you align expectations with your clients on all fronts, including pre-, during and post-delivery of the goods and services!

Document Used for
Letter of Intent (Memorandum of Understanding) A Letter of Intent (Memorandum of Understanding) is a non-binding document to summarise the result of negotiations between two parties in order to facilitate the future formation of a contract. By setting down a record of the progress of initial negotiations, parties can focus on issues that need resolution.
Sale of Goods Agreement This is a contract for the sale and purchase of goods that sets out the exact nature of the goods, as well as price and payment terms. As the product may pass through the hands of international manufacturers and distributors before it reaches its final destination, the agreement must be clearly written to ensure careful consideration of the sale and delivery risks.
Supply of Services Agreement This is a contract between a supplier and a customer for the provision of a specified service that documents the key terms of how that service will be carried out. As you may be dependent on the customer to perform certain tasks in order for you to perform your obligations, set out your terms and conditions in this agreement to make sure that both parties are in complete agreement so that you can build a mutually beneficial relationship.

Resources for building a relationship with your customers

Growing your small business is very much about growing your customer base, by keeping your existing customers happy while acquiring new customers. Check out this post for tips on how to maintain your customer relationships and build loyalty by making your customers feel understood and valued!

4. MARKETING YOUR BUSINESS ONLINE

In a time where competition is no longer local but now global, businesses have to go online in order to reach a broader customer base. Websites are a key touchpoint of any business, even if you do not use your website as a platform for the sale of goods or services. Make sure you have these key legal documents in place to manage the relationship between your business and your web developer as well as website users.

Document Used for
Website Design and Development Agreement Business owners often hire freelancers or other third parties to build or redesign their websites. Make sure you have in place this contract to set out the nature and ownership of the website as well as service expectations so that your company can focus on its business and the contractor can focus on the website.
Website Privacy Policy This is a statement you place on your website laying out how your business will collect, use, and manage a user’s personal data. By clarifying the scope of use of such personal data, you can avoid future disputes concerning data privacy infringement.
Website Terms of Use A Website Terms of Use structures the relationship between you as a website operator and your website users by setting out each party’s rights and obligations. They are made available on your website for users to read and, by continuing to use the site, users accept these terms.


Resources for online marketing & running an online business

Want to know how to make the most of your marketing dollar? Check out this post for tips that include identifying your target market and increasing website traffic through search engine optimisation (SEO).

Looking to take your business online? Download our free eBook Online Business: How To Set Up & Protect Your Online Business (Hong Kong) and Online Business: How To Set Up & Protect Your Online Business (Singapore) and read more about the key documents you will need to protect your online business and build a successful online enterprise.

Operating an online marketplace? Check out this post on our blog for essential legal considerations for online marketplaces.

5. RISING COSTS & COMPETITION

It can be a challenge to run a business in hubs such as Hong Kong and Singapore, given the high overheads and strong competition. Sometimes, businesses may need to take loans to tide over a financially challenging period. Depending on who you take the loan from – another business, a shareholder, a director or a sister company – you will need different kinds of Loan Agreements to set out the terms of conditions for the loan and repayment.

Another tip – one way to beat the rising cost of office rental is to work from co-working spaces or share your office space with a fellow small business!

Document Used for
Commercial Loan Agreement If other businesses are interested in helping you tide over a financially challenging period, use this document to set out the terms and conditions for the loan. This agreement can help both parties more closely monitor the condition of the loan, thereby enhancing the borrower/lender relationship because it promotes more frequent communications between the parties.
Loan from Director or Shareholder It is crucial to distinguish between money paid into a company as capital (e.g. to subscribe for shares), and money lent to a company as debt (i.e. a loan). A Loan from Director or Shareholder is an agreement for use when a director or shareholder lends money to their company. By drawing up a Loan from Director or Shareholder, the director or shareholder becomes a creditor of the company. Upon liquidation this debt will be repaid before the shareholders of the company get back the capital they invested into the company.
Intragroup Loan Agreement An Intragroup Loan Agreement records the terms on which one party (the lender) lends money to another party (the borrower) which is within the same group of companies, e.g. from a parent company to a subsidiary or between two subsidiaries of the same parent company. It is suitable for any group company member that wants to draft the basic terms of the arrangement in order to avoid any potential misunderstanding regarding the loan that may otherwise occur if there is no formal record beyond accounting entries.
Term Sheet If your source of funding is private investors such as venture capital firms or angel investors, they will typically ask for a Term Sheet. This is a preliminary document that will include the key terms of an investment in a company, including the agreed-upon valuation of the business, the proposed capitalisation table, the key financial and legal terms, and the rights of the company and the investors.
Co-working Space Application Form and Terms of Use For smaller businesses, sharing an office space is a practical way to minimise costs while maximising access to office facilities. If you want to let another business use your spare office space, then a Co-working Space Application Form and Terms of Use sets out the terms under which you will work together.

Resources for raising funds

  Simply need more funds to grow your business? Check out this post to learn about the Singapore government grants that cater to small businesses.

Want to know what’s on the mind of investors when they’re deciding whether to invest? Check out insights from investors, entrepreneurs and lawyers from our Legal Startup Academy session on Early Stage Funding.

Intending to raise funds via a Convertible Note? Check out this post on our blog to learn how the Convertible Note mechanism works as well as the relevant documents that you need.

6. PROTECTING IDEAS & COMMERCIAL ASSETS

Beyond the goods and services that you provide to your customers, one of the most valuable assets that you have as a business are your ideas and intellectual property (IP). Whenever your business develops intangible human creations, ensure that you secure your IP rights in order to protect your creations. This way, you can even monetise your IP in the future, by licensing your trade mark to another company to expand into new markets or transferring the trade mark of a business or product line when you sell it to another company.

Document Used for
Trade Mark License Agreement This agreement allows the owner of the trade mark (the licensor) to give approval to another person (the licensee) to use the trade mark. Licensing can help a company expand into new markets effectively while lending the licensee an established name and reputation as well as provide lucrative income for trade mark owners.
Trade Mark Assignment If you are selling a business or a product line, you may need to transfer the trade mark that is associated with it. A Trade Mark Assignment provides a record of ownership and allows the trade mark owner to transfer the owner’s rights, title, and interest in a trade mark or service mark in a way that protects the rights of all parties.
Confidentiality Agreement (or Non-disclosure Agreement) Your business has information that should remain private, such as customer database, financial information, or new business ideas. An NDA is your first line of defence to protecting this information. This legal document creates a confidential relationship between your business and any contractors, employees, and other business partners who might get a behind-the-scenes look at your operations.

Resources for protecting your brand

Download the FREE eBook

Just designed a logo that you want to protect?

Download our free eBook to learn about what you need for a successful application, how to maintain your trade mark and maximise its value globally.

Confused about the differences between the various types of IP? Check out this post on our blog to find out what the various types are and what you need to qualify for IP protection.

Want to whether your latest invention qualifies for IP protection? Learn about the key considerations in this interview with an IP lawyer.

7. TIME MANAGEMENT

As a business owner, you wear multiple hats and it often seem like the things you should do to improve operations and grow your business is never ending. Given that businesses these days are all about automation, efficiency and productivity, there’s no prizes for guessing what the solution is for your challenge of time management. Technology can help you eliminate repetitive tasks and streamline operations so that you can devote your time to what really grows your business. Think social media management tools such as Hootsuite to manage your online marketing efforts and online payroll software such as Gpayroll, Talenox and HReasily to manage your HR needs more affordably and efficiently.

And when it comes to legal, the Zegal web app enables fast production of custom documentation which will help your business improve efficiency, accuracy and compliance.

As a Zegal subscriber, you can:

  • Access any of our 500 existing business documents and customise them to your specific needs, and
  • Draft legal documents without any legal knowledge using our simple Q&A interface
  • Use our cloud software to store all your legal documentation in a simple and easy-to-navigate space
  • Choose to automate any of your frequently used documents and save a few hours each week
  • Save time on sourcing and evaluating law firms – we recommend you to a trusted one in our network

8. DEALING WITH REGULATION & STAYING UP-TO-DATE

It is important that you stay up-to-date with the latest updates to laws, acts, and regulation that may impact the way you run your business. This isn’t something that can be solved with a single legal document, but rather requires you to ensure that your legal documents are constantly updated to reflect the latest regulatory changes. This is what we provide on our Zegal web app – a comprehensive suite of legal documents that are constantly kept up-to-date amidst an evolving regulatory climate.

Beyond legal documents, businesses sometimes simply need trusted legal advice when deciding whether to make the next strategic step to launch a new product or enter a new market. This is why we recently launched Zegal Managed Accounts, where we partner with established law firms with expertise in a range of industries to provide Zegal-enabled legal services for your organisation.

What goes into a Zegal-enabled plan?

  • Business compliance: Manage risk by having your business model or operation documents reviewed on regulatory compliance
  • Zegal subscription: Create unlimited legal and business documents on Zegal for the running of your day-to-day business
  • Review documents: Have your documents reviewed by experienced lawyers and amended to fit your specific business purpose

View our list of Certified Advisors – Zegal Managed Account

Resources for staying up-to-date with regulatory requirements

→ Trawling the Internet for the latest regulatory requirements that your business needs to stay compliant with can be tedious, and you can’t always be sure that what you find is the most updated regulation or piece of legislation. Check out our eBook library for our Does The Law Matter? series for the lowdown on what you need to know to navigate key legal requirements!

Start up in 6 Easy Steps – Zegal for Startups

16/11/2016

Did you know that 90% of startups fail? 

As an entrepreneur, there is always something more you can do to make your business succeed. Whether it is perfecting that pitch for a potential investor or tweaking that one button in your app to make it more aesthetically appealing. With so much on a founder’s mind, it is no wonder that the legal needs of a budding business often takes a backseat.

However, not having proper legal documents in place can potentially lead to drastic consequences down the road. Disagreements among shareholders on rights and obligations, and when your company logo is misused without your permission are just two examples. Legal is important, and while it might not be make or break, staying on top of your legal documentation and regulatory requirements can make running your business more fuss-free. 
That’s why we launched  Zegal for Startups. 

We’ll explain in 6 easy steps how to startup your business. We’ll also round up the key legal documents you need as you go through the different stages:

Download our Legal Checklist for Startups

1. FORM A BUSINESS

As a founder, you should consider the needs of your business carefully. Choose the structure that will work for you now, but more importantly, make sure it will work in the years to come. Depending on the type of business structure, you may require a Partnership Agreement or Shareholders’ Agreement.

Document Used for
Partnership Agreement Forms the foundation of your business partnership by protecting and aligning the interests of you and your partners. Ensures your business is run in a professional and cooperative way.
Shareholders’ Agreement    Legal contract between all the shareholders that sets out all their rights and obligations. Sets out the rules while providing more flexibility than relying solely on the company’s Articles of Association.
Share Certificate Issue this to each shareholder as evidence of their shareholding in your company.

Resources for setting up your business

→ Confused about how the different business structures impact the transferability of ownership and degree of liability? This post summarises the key differences between setting up as a sole proprietor, business partnership or a company.

→ Incorporating a company for the first time? Download our free eBook to gain a practical understanding of key issues involved in incorporating and maintaining your company in Hong Kong and Singapore.

2. FUND YOUR BUSINESS

While businesses typically start out bootstrapping, at some point many business owners need to look to other sources of funding to secure the capital necessary to maintain operations and grow the business. Depending on what your source of funding is, you will need different legal documents to manage the new infusion of capital. 

Document Used for
Promissory Note Where you have asked family and friends for support via a loan, a simple agreement that records the terms of the loan and repayment can prevent future disputes.
Commercial Loan Agreement If other businesses are interested in helping you out, use this document to set out the terms and conditions for the loan. This agreement can help both parties more closely monitor the condition of the loan, thereby enhancing the borrower/lender relationship because it promotes more frequent communications between the parties.
Term Sheet If your source of funding is private investors such as venture capital firms or angel investors, they will typically ask for a Term Sheet. This is a preliminary document that will include the key terms of an investment in a company, including the agreed-upon valuation of the business, the proposed capitalisation table, the key financial and legal terms, and the rights of the company and the investors.

 Download checklist in pdf

Resources for raising funds

→ Curious about what your options are when it comes to sources of funding? Download our free eBook on Early Stage Funding to learn about the pros and cons of each method and decide which is the best fit.

→ Want to know what’s on the mind of investors when they’re deciding whether to invest? Check out insights from investors, entrepreneurs and lawyers from our Legal Startup Academy session on Early Stage Funding.

→ Want to raise funds via a Convertible Note? Check out this post on our blog to learn how the Convertible Note mechanism works as well as the relevant documents that you need.

3. GO ONLINE

Your business website is your new front door; even if you do not use your website as a platform for the sale of goods or services. Are you turning customers away even before they walk in?

On your website, make sure you have these key documents in place to manage the relationship between your business, web developer as well as website users.

They are made available on your website for users to read and, by continuing to use the site, users accept these terms.

Document Used for
Website Design and Development Agreement Business owners often hire freelancers or other third parties to build or redesign their websites. Make sure you have in place this contract to set out the nature and ownership of the website as well as service expectations so that your company can focus on its business and the contractor can focus on the website.
Website Privacy Policy This is a statement you place on your website laying out how your business will collect, use, and manage a user’s personal data. By clarifying the scope of use of such personal data, you can avoid future disputes concerning data privacy infringement.
Website Terms of Use A Website Terms of Use structures the relationship between you as a website operator and your website users by setting out each party’s rights and obligations.

Resources for online businesses

If you are running an online business, there are other legal documents that will help you establish prudent legal protections and grow a successful enterprise. Check out the following resources:

→ Running an online business? Download our free eBook: How to Set up & Protect Your Online Business and read more about the key documents you will need to protect your online business and build a successful online enterprise.

→ Operating an online marketplace? Check out this post for essential legal considerations for online marketplaces.

4. HIRE A TEAM

Once you have your business concept and legal entity in place, a crucial step is to hire the right talent to form your team and grow your business. Manage the recruiting process right by having these key documents in place.

The document is useful if you want to dissuade certain new hires from leaving your company too soon, disclosing confidential information about your business, or going to work for a competitor.

Document Used for
Offer of Employment Letter Before you take your new hire on board, extend an Offer of Employment Letter to indicate a conditional offer to your selected candidate. This lays out the conditions that the candidate has to fulfil in order for the offer to be valid and summarises the terms of employment, including remuneration, benefits, working hours, and probation.
Employment Contract Once your candidate has accepted the offer of employment, put together the Employment Contract to regulate the relationship between the employer and employee in order to minimise potential disputes.

Resources for growing your team

→ Unsure what employment laws you have to comply with when taking on board that new hire? Download our free eBook The New Hire (Hong Kong) and The New Hire (Singapore) to learn how you can avoid pitfalls by navigating through areas of employment law.

→ Want to keep your employees happy and motivated? Check out this post on our blog for tips on incentivising employees without burning a hole in your pocket.

5. OWN YOUR INTELLECTUAL PROPERTY

Whenever your business develops intangible human creations, it is key that you secure your Intellectual Property (IP) rights in order to protect your creations. Intellectual property is a core asset of a business. The main types are trade marks, patents, copyrights, and trade secrets. Protect your IP rights and prevent others from infringing your brand:

Document Used for
Trade Mark License Agreement This agreement allows the owner of the trade mark (the licensor) to give approval to another person (the licensee) to use the trade mark. Licensing can help a company expand into new markets effectively while lending the licensee an established name and reputation as well as provide lucrative income for trade mark owners.
Confidentiality Agreement (or Non-disclosure Agreement) Your business has information that should remain private, such as customer database, financial information, or new business ideas. An NDA is your first line of defence to protecting this information. This legal document creates a confidential relationship between your business and any contractors, employees, and other business partners who might get a behind-the-scenes look at your operations.

Other resources for protecting your brand

→ Confused about the differences between the various types of IP? Check out this post to find out what the various types are and what you need to qualify for IP protection.

→ Just designed a logo that you want to protect? Download our free eBook Own Your Trade Mark: Your Most Valuable Commercial Asset to learn about what you need for a successful application, how to maintain your trade mark and maximise its value globally.

→ Want to whether your latest invention qualifies for IP protection? Learn about the key considerations in this interview with an IP lawyer.

6. SELL GOODS & SERVICES

In every business that involves selling goods or services, it is crucial to have key documents in place to ensure manage the relationships with your stakeholders, whether these are customers, sellers or business partners. There are a number of documents that your startup may need depending on the type of business and the products or services you offer. These span the entire timeline of the business relationship and sets out the terms and expectations of the relationship.

Document Used for
Letter of Intent (Memorandum of Understanding) In the early stages of negotiations before a formal agreement has been entered into, it would be good to summarise the result of negotiations in a non-binding document known as a Letter of Intent.
Sale of Goods Agreement This is a legal contract for the sale and purchase of goods that sets out the exact nature of the goods, as well as price and payment terms.
Supply of Services Agreement This is a contract between a supplier and a customer for the provision of a specified service that documents the key terms of how that service will be carried out.
Purchase Order This is a standard document or template that your customers or clients can use to order goods or services from your business. When you accept the Purchase Order, a binding contract is formed.
Invoices An Invoice is a document you can send to a customer requiring payment for goods or services that you have provided or will provide. It acts as a bill and a proof of a transaction.

Resources for optimising cash flow

→ Download our free eBook Manage Cash Flow: How to use legal documents to optimise your cash flow to learn more about how you can use key legal documents to ensure you receive payment on time and optimise your cash flow.

INTRODUCING: “DRAGON LAW FOR STARTUPS”

Overwhelmed by the legal needs you need to navigate as you try to get your startup off the ground? In the years that we have worked with startups and small businesses, and being a startup ourselves, we have seen how challenging building a business from scratch can be. We have worked with over 5,000 startups in 25 countries, and we see that legal frequently isn’t at the top of an entrepreneur’s mind. It is costly and there are often other more pressing needs that demand your attention. But legal is important nonetheless.

This is why we launched  Zegal for Startups. Our online legal software allows you to manage your legal documentation reliably and affordably. It means less time spent on routine legal work and crucial cost savings for a startup raising early funds. Signing and storing all your legal documentation on the cloud allows you to access your documents on the go.

As a Zegal for Startups subscriber, you get:

  • Access to all the documents your startup needs, fully customisable,
  • Unlimited document creation, yes, you heard it right, create as many legal documents as you need, and
  • Free client service support (for the first 3 months) via live chat, email or phone.

As we on-board your team, we will create a personal roadmap for the legal documentation that you need. We’ll help you gain confidence in managing your legal documentation online.

Learn more:

Download checklist in pdf here

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