(Published in The Star, Thursday 7th August 2008)  

 Get the paperwork right on every part of your enterprise  

 By Nikki Viljoen of N Viljoen Consulting CC

Being in the new world of an Entrepreneur or Business Owner can be daunting. Not knowing where to go, what to ask, when to ask and even if you do ask, having the remote possibility of someone actually knowing what you are talking about can and will make it of the most stressful times of your life. If you are not extremely careful, you could be paying ‘school fees’ for the rest of your business life, if you don’t get it right up front. So make sure that you have contracts and agreements in place. When looking for legal generic documents or help in terms of legal documents that have to be written up specifically, I always use www.agreementsonline.co.za. Simplify your life – get your contracts in place and get yourself legally safe – it will go a long way to alleviating stress.

Let’s face it marriages are not made in heaven – why on earth would you think that partnerships are? The quickest and easiest way for a relationship to sour is when money and/or power and/or emotion come into the equation. So why not deal with these issues up front and get them out of the way. Some of the issues that a contract between yourself and a partner that should be covered are things like, but not limited to:

  • how is the business to be set up
  • finance – who pays for what when setting up the business
  • finance – who earns what
  • finance – what expenses are covered by the business and what expenses are personal
  • Separation of duties – who is responsible for what
  • Divorce – if things go pear shaped, how do you undo the relationship without destroying the business.

Always have a beginning (how it is set up) a middle (how is it to run) and an end (how to undo it.)

Your association agreement should be in addition to the CC documents or Company documents that you sign. The CC and the Company documents that you sign upon registration just evidence that you both ‘own’ the business – nothing else.

Tip # 1 : Remember even if you are married to your partner – your marriage and your partnership are two separate issues and you should have two separate contracts in place. Just because your marriage goes sour doesn’t mean that the Business has to fall apart too. Then you need to set up contracts with your clients – they also need guidelines on how you want your relationship with them to run. Again it has to be about but not limited to:

  • What you are going to give them (either in services or product).
  • How and when they are going to pay you.

Remember the National Credit Act – unless you are a registered provider you cannot give credit or lend money. Therefore your payment terms need to be quite clear.

Tip # 2 : Ensure that your wording on your invoices matches (in spirit) what your Terms & Conditions say – your invoice cannot say ‘Pay on presentation’ if your Terms & Conditions say “Payment 30 days”.

Tip # 3: Make sure you have indemnity clauses in place to protect yourself from issues beyond your control. You need to have contracts in place with your Service Providers too – they also need to have consequences if they don’t deliver and please believe me – many won’t.

Tip # 4: Beware of signing sureties! Banks and landlords love to tie you up with sureties – don’t be drawn into signing! They could end up costing you your Business, your home and even the shirt off your back.

Contractors and Agents – especially if you are out-sourcing work – make sure that your expectations and those of your contractors and/or agents are clearly reflected in your contract, and that you both have your responsibilities and the consequences thereto clearly documented.

Tip # 5: Make sure you meet the requirements of the Basic Conditions of Employment Act and that your Agent/Contractor falls outside of the requirements of ‘What is an Employee’ as legislated and promulgated into law.

Employees need contracts too – in fact your employees are required by law to have Letters/Contracts of Employment in place, within 48 hours of the staff member starting work. Your employee also needs to know what their duties and job descriptions are.

Make sure that issues like leave, sick leave, family responsibility leave, termination, hours of work and the like are covered in your contract.

Tip # 6: Make sure that you have all the Labour Requirements in place. Having your contracts in place will give you absolute peace of mind.

 

 Please note that this information is supplied for general information and does not constitute legal advice. It is advisable for you to contact a legal practitioner for guidance in respect of your unique requirements.

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