10 things to know before starting a company

Starting a company is an exciting step, but reversing it costs time, money and sometimes relationships. Making the right decisions before incorporation prevents most later problems. In this guide we cover the 10 topics to clarify before starting a company, with check questions for each and common mistakes. Regulation varies by country; get accountant and lawyer support for exact terms.

1. Must you incorporate? When?

Not every idea needs a company right away. At idea-validation stage, with no or very little revenue, it can make sense to start as an individual or postpone incorporation. When to incorporate: when you need regular income, invoicing, a partner or investor, to hire employees or for liability protection. Validate demand first; see idea validation.

2. Company type

Sole proprietorship, limited and joint-stock companies differ in liability, cost, fundraising and share transfer. See limited or joint-stock and limited company set-up steps.

3. Partners and equity split

Clarify in writing whom you partner with and in what ratios, roles and exit scenarios. Friendship does not replace a contract. See the founders' agreement and cap table.

4. Costs and cash plan

Make a cash plan of at least 6 months for registration fees, accounting, bank charges, office, tools and early operating costs. See the financial model and cash flow management.

5. Tax and accounting

Clarify tax liability, VAT and other duties, the filing calendar and bookkeeping with an accountant. See accounting and tax basics.

6. Sector-specific permits and licences

Sectors such as food, health, finance, education and trade may need permits, licences or authorisations. Research these before incorporation; some activities are subject to strict regulation. See the legal checklist.

7. Brand and domain

Check brand name, domain and registration status before incorporation; see choosing a brand name and trademark registration.

8. Intellectual property

Make sure that whoever produces code, design and content, the rights are assigned to the company. See the IP guide.

9. Personal data and legal documents

If you will process customer data, you need notices, privacy and terms of use. See the data protection checklist and terms of use and privacy policy.

10. Financing and support

Plan how to finance incorporation cost and the early period: own resources, grants, support or investment. See grants and support programmes, bootstrapping and funding rounds.

Pre-incorporation checklist

• I have validated demand; there are a few paying customers or strong signals.
• I have chosen the company type.
• Partnership and equity structure are in writing.
• I have a 6-month cash plan.
• I work with an accountant and, if needed, a lawyer.
• I have researched sector permits.
• Brand and domain are available.
• IP structure is clear.

Common mistakes

• Incorporating without validating demand
• Not making a partnership agreement
• Looking only at set-up cost and forgetting the long-term plan
• Neglecting accounting: Risk of penalties and delays.
• Mixing personal and company finances
• Thinking about permits and licences afterwards

FAQ

How long to set up a company? If documents are complete, usually a few business days; preparation can take longer.

Do I pay tax right after incorporating? Duties depend on activity and earnings, but some administrative duties may start even without activity. Confirm with an accountant.

Should I incorporate abroad? Only if investors or customers require it; see setting up a company abroad.

Conclusion

Validating demand, choosing the structure, putting partnerships in writing and making a cash plan before incorporating prevents most later problems. Start small and realistic and get advisor support. For the whole startup journey, see the tech startup roadmap.