The startup business is closely linked to the concept of a scalable business model due to its long-term growth potential. Generally, these companies are characterized by their commitment to technology and their rapid expansion. Practice that requires hiring personnel and consolidating companies.
In this sense, the hiring of personnel can generate some problems: problems when calculating the taxes that have to be paid, issues related to image, some contingencies… What can be done to avoid this type of obstacle and not have no stone in the way.
One of the most important things for a business of this type is technology, but there is an aspect that is often not taken into account: legal advice. There is an incorrect thought that has arisen due to the nature of startups, and that is that they do not need to focus so much on legal advice.
This helps to have a defined legal framework and this has an impact on the proper functioning of the business and on potential investors seeing that startup as a serious and responsible company, in which it is worth investing.
It is essential to have, on the one hand, labor advice for hiring employees, downsizing, dismissals, SMAC, procedures before the social jurisdiction. And, on the other hand, tax advice on all kinds of tax returns, both local, regional and national.
Having good legal and accounting advisors on hand can prevent future risks. Especially in hiring. Although in the first instance many entrepreneurs may see it as a cost, in fact it is a true investment that will save future problems.
There is an important point for which it is extremely important to have legal advice in a startup: dilution.
In investments, dilution occurs when the percentage owned by a partner decreases, due to the increase in new capital. For this we must understand that startups make investment rounds, where, if the company needs to grow, it must request more investment.
If new investors enter, it is best to have legal advice to establish how the investor properties will be distributed. In addition, it is necessary to start a new round of investments so that the raising of capital is the most indicated.
This is done so that investors are less affected and that the company can grow. After all, if the capital raising is done correctly in investment rounds, a shareholder’s portion of ownership may decrease by percentage, but it will increase in value significantly.
Another essential pillar to take into account refers to correct tax planning: In any venture, but particularly in startups, every penny counts. Therefore, tax optimization is a basic need from the beginning.
Today, entrepreneurs have big problems when it comes to hiring their own staff. The labor cost of hiring an employee in a dependency relationship is around 50%. This means that on a salary of 20,000 euros, approximately half of the social charges are paid.
After three months elapse, the employee remains within the company. And it is decided to unlink him after that period, the compensation from the fourth month is equivalent to four times the salary.
Given such a scenario, a recommendation could be to keep as few fixed costs as possible and this includes employees. Therefore, in the early stages of the project where one is validating an idea or product, it is important to look as much as possible at all the services that are possible.
