NTEEP 4.0: Business Formations for African Startups

[Music] good morning good afternoon good evening everyone and welcome to inp 4.0 empowering African startups for Global impact my name is Jessica Kings and I'll be um your moderator for today I know based on the profile we were supposed to have Ruth but she'll be joining us a bit later hopefully um as we all know inp was launched in 2020 and ever since we've been able to empower African startups we've been able to train and support over 600 um businesses providing essential tools skills and a supportive Community to help entrepreneurs scale their businesses in a digital world we've been able to start off this program from day one with um Mr Mustafa and then we're able to hear from um Miss Osa who yesterday had spoke on customer validation and market research and it is a great pleasure that she's also here with us again today um miss a brief profile on her she has been in the IT industry since 1987 and has worked for companies such as NCR soft lab and Oracle she studied management and Entrepreneurship in Vienna Austria Europe where she also lives and then she has also been a self-employed for over 20 years and founded obuntu soft um Mrs Osa has a vast of experiences and hearing from her is honestly a privilege good to have you miss miss Ola with us and is yours thank you so much and good morning uh to everyone good afternoon maybe already so uh great that I'm back with another topic um a very important topic um one that you might already have considered because I know there are many companies here already so you probably already uh thought about this topic you maybe make made a decision already but we will summarize all the options today again so we are talking about business formations first which is the legal business structure and we can see the types of business formations that there are um generally there's the sole proprietorship there's Partnerships uh limit Li mited liability company an LLC a corporation or a Cooperative uh depending on the country you are watching from there might even be one or the other additional uh form of legal business structure um that could well be so even here in Austria things are changing we now even have a bit more um yeah a bit more options alternative to the former types of of of um of formations let's start with the sole proprietorship um this is the easiest and simplest way of building a business it's in most of the time you are just using your own name um you don't have um a lot of um restrictions or rules that you have to obey uh regarding how you set your business up so you have the full control of your business um you are fully responsible for your business so it's it's both ways um and normally um you can decide to have this kind of business formation of of legal business structure and then you only would have to check whether you need any kind of business life license in your area uh or a local permit for the kind of work that you are doing this is completely different in in various areas various Industries so you definitely have to check that with your government governmental authorities governmental websites sorry so um as this is so simple to um use for for any kind of startup this is uh actually also the most popular type of business that we can find actually in in any country More than 70% of all businesses worldwide do use this kind of uh business uh structure and we can also see it's uh it's especially good for lowrisk businesses and we will see immediately why this is uh so and also for first testing out your business idea so if for for any reason you really have to come up with your business legal structure before you can do your market research and and anything else then this might be a way to go but there are also disadvantages of this simple first form of a business structure and we can see there is no differentiation between you your person as the owner of this Soul proprietorship and the business so it's actually seen as as one and that means you cannot in any way separate your personal liabilities and assets from whatever happens in your business um what that mean means is that you are respons responsible for everything um that for instance for every damage that your business might cause so if there's a damage you with your personal assets will have to come up uh for it you will have to pay this kind of debt for instance which might be yeah which might be awful in in one way because um if you have some personal assets I'm thinking of um money in the bank I'm thinking of a car um house maybe sorry that's uh on your name in your name then these things could be uh taken away from you if you don't have enough money to actually uh pay this depth that your business maybe cost so you really have to consider is your business something that might be a bit more risky than this might not be the perfect business structure for you to use um on the other hand right from the beginning you might not even know how risky it might get or you as I said you might just want to start then start with this but but keep this uh in in your mind that um you are responsible for everything and are going to be held liable with all your personal assets which will even include your sole proprietorship having employees and these employees would cause any kind of damage then it's exactly the same thing you will be held responsible it's your business there's no separation between you as a person and you as a business owner and therefore um be very careful also so as you are only like one entity and also also the government will see you as one entity um the revenue authorities especially there will be no kind no kinds of benefits that that uh other business structures might come with those benefits they are not available for sole proprietorship you as an owner will have to pay a self-employment tax so it's not even any kind of corporational tax tax so it's definitely you as the business owner yeah and one topic that is always um something that comes up with businesses is um how would I be able to raise money how can I fund my business if necessary and then in the case of a so proprietorship this is something that might be very difficult um because even banks are not really happy with so proprietorships uh with the exception of you being a business owner with enough personal assets that the bank knows about then they might uh consider differently but normally they are hesitant to land to so proprietorships another form um that you could consider especially if you're not going to start alone if you're actually considering starting with a partner are Partnerships um these Partnerships they are also quite simple to to establish so there are not normally not no specific partner ship documents required you definitely should set up um an agreement of course we will talk about agreements a bit later um but normally government is not telling you which kind of form this should have or what what what it should contain so um yeah if you have more than one partner or all the partners will have to review and also sign the partnership agreement so why is this um an easy way as I said uh there is actually not a lot of paperwork to do for this kind of um business structure um you also have to but that's actually the case for for every business structure you have to check which kind of licenses um and permits do you need to even be allowed to operate um and then everyone signs the agreement and each of you will definitely have the same kind of unlimited liability meaning all of you all Partners equally will be personally liable for anything that has to be um paid regarding the business that's the reason why there's even another kind of partnership it's the so-called limited partnership um and this kind of partnership has the advantage of you being able to have Partners um but at the same time these partners are protected they are not the ones with the unlimited liability that's only you as the business owner the others will have limited liability and therefore you might find these kind of Partners uh more easily they on the other hand are not going to work and and decide within your your business so they are partners that you might have considered because um maybe of um finances maybe they they um bring in some funds for your business maybe they bring in some some knowledge some experience but generally they are not working and not deciding within the business so uh the profits they are again pass through to the personal tax returns that is true for uh every limited liable liable partner and uh the general partner so the one that is really doing business so to say um again pays the self-employment taxes um then we have the next step so first we had all partners are liable equally liable then we had only one is liable the rest is protected kind of and then the third U version is the limited liability partnership LLP which um actually gives the limited liability to all of the partners so that is already a more secure kind of business structure um which might be yeah a good idea um because that's that tries to separate the the business from the personal assets and the personal um yeah the P the persons themselves already and also nice thing um here is that one partner is not responsible for anything that other partners are doing so there's this kind of protection here as well um a quite wellknown uh kind of partnership uh joint ventures so they can be formed by two or more people um sometimes they are limited to a very specific project sometimes they are just unlimited continue forever until something happens um and here we also have the protection for the partners so there is no personal liability for for the partners um we have it here on our slide that you definitely need an agreement for for this kind of partnership but as I said before you definitely want to have an agreement for whatever business structure you actually choosing and we will come to that in in some uh minutes and talk about that more in detail so uh when would you now want to Jo want to start a joint venture that is typically something when you are working towards a common goal you're working on a project that that um you want to work with a partner um on this projects here you would have to share the profits as well as the losses and um yeah all the partners are equally um capable of of uh of having a voice in this kind of partnership the taxation here we can uh see the the government sees a joint venture already as a separate entity so a joint venture will pay taxes uh just like any other business or Corporation does so we have this kind of split between the the owner and the business entity already um if you choose to operate as an LLC so this is um not the joint venture this is just the LLC then profits and losses will would get passed through to the owner's personal tax returns just as we said when we were discussing the LLC so thinking of Partnerships when is is this a good choice as I said when you want to work with one or more people in your business um we can find this in various um Industries um especially like like lawyers for instance they often um have this kind of Partnerships working together in in one office and um yeah having this kind of business structure or you could also uh use this form for your very first test if it's um not you alone if you have a partner then this would be the the easiest way to set up a business structure together with your partner then we can also found the limited liability company so now we are coming to this kind of um separated business entities separated from the business owner so we have here more advantages but of course also disadvantages so that's that's the same for all the structures so the business owner again is protected he has a limited liability um even in a case of bankruptcy which is something that every business owner should somehow consider because it can happen to each of us um so even in that case your personal assets like your your vehicles like your houses and so on saving accounts would not be at risk [Music] um what still might happen um I know this uh for Austria for instance and it might be there might be something similar in in one of the African countries as well um if a company files for bankruptcy has to file for bankruptcy um then there is also a kind of Investigation why it happened and if the business owner would somehow be responsible for this kind of bankruptcy because um he did not warn everyone on time for instance there's a law in Austria you have to already mention that your business is in trouble even before you might have to to take this final step so if you as a business owner would not do that or would have done something that was actually illegal um then you could still be held responsible so in general you are protected as long as you obey the laws and rules and everything but if you did not you might still be um hold responsible even with your personal assets uh and even uh here in austrialia you could even go to prison for that so that is uh really something that they consider being a crime so normally then it's not the personal the business owner responsible normally it's the entity the LLC that is responsible for any kind of Dept um and has to deal with that so the advantage one of the advantages is that the LLC members um can actually decide how they want to be texted so there's the option of being texted as a corporation which might be the best um option or also as a partnership you so you can decide on that um if there are more than if there's more than one member in the LLC so if there's only one we again have um a mandatory self-employment tax so that's that's one of the uh restrictions how many um members Can an LLC have so normally there is no limit to that um one thing to mention is that an LLC cannot issue stocks um you might say okay that is not a big deal you didn't really plan on doing that anyway but it might uh affect you in um in another way we will see that shortly yeah and then we say we see there's of course this kind of flexibility when it comes to deciding how to uh actually what to do with the profits and losses generally so we see um profits and losses get passed through to your income without facing corporate taxes if that is your decisions decision and in many countries um you would have to really take care of your agreements that you set up for your LLC because your LLC might be an a business entity on one side but also not be built for eternity uh what I mean is um if you don't have agreements that state exactly what to do what should uh happen then it could even uh be the case that your LLC would have to be um dissolved um or at least reformed when for instance one of the members dies so if there is no agreement if there is no statement um before the situation happens it might lead to an LSC having a limited life so all in all um llc's are a good choice for businesses with a medium or even a higher risk doing business so you might know the kind of business you are doing and whether it's it's low risk um nothing much can happen or if you say okay there is a specific medium maybe even a higher risk that that can happen uh and you might have some insurances um if available to uh deal with these kind of risks but yeah it all depends on on the stability of the company sometimes you don't even get this kind of insurances sometimes they don't even exist maybe in your country so you have to consider the risks and then according to the risk you choose your business structure um yeah so that is for the limited uh liability we also have corporations so the that's an even bigger business entity it's um meant for really um companies with with um a lot of growth um that they are going for and then they have they have sorry and then you can choose between two types of cooperations there's the C and the S cooperation sorry so the C corporation um is again a legal entity completely of its own completely separated from the business owner and also U meant for being held legally liable apart from the from the business owner it's uh the kind of business structure that offers the strongest protection um so your personal assets are safe in that case and this is different to what we just heard um a kind of business entity when one of the members are leaving or dying or whatever um or selling their their shares um then this business entity is definitely going to survive they are going to uh just go on with the other daily operations an ESC Corp is of course similar it's also a ceration um but especially designed to avoid double taxation draw bags so most of those uh business entities that are really really corporations they do have the double Taxation and we are going to hear more about um accounting and Taxation in another um in another training so here you can allow profits and some losses to be passed through directly to the owner's personal income without ever being subject uh to the corporate tax rates that might be uh a better way to deal with the the profit um that's dependent on the laws in your country they also completely separate so they are also not uh going to be res dissolved when when something happens that's also fine um yeah you can just go on with the business as usual even in that kind of case yeah no Advantage without disadvantage of course so the disadvantage might be seen in the definitely higher costs of these kind of um business structures so as I said they have a more extensive record keeping they have this kind of uh double Taxation and so on um double bookkeeping and so this is really meant for businesses that are not just trying out a business idea or something like that but are really um already into business and know that they would have the the profits and they will grow and so on yeah um sometimes um also a disadvantage potential disadvantage uh the corporate profits are texed texed twice um when the company makes profits and then maybe also pays dividends to the shareholders then these would also be texted again um the last Point um now explains what I what I meant when I said the um LSC cannot issue stocks and that could be a disadvantage we can see here that corporations when they are need of money when they have to go to a bank or any other kind of investor um they have the advantage of being able to to do this because they they can issu stocks they can um yeah raise funds through this kind of means um as we can see so this might also be something where you finally actually decide to found found an in corporation because it will be the easiest way to actually get funds um yeah here we do have the information about the elected direct directors that are NE necessary so not only the the documents and and U everything that has to be um kept uh in documents it's also about um a very strict structure so the law already tells us who has to be responsible for the corporation as we can see elected directors uh their names might even have to be included in in the documents so it has to be visible to to any kind of um yeah uh stakeholders in in a in a wider sense who are the people involved in this cooperation that's also something that's important um yeah corporate owners again have this limited personal liability protection as in all the other cases that we had already and um again you also with this kind of business entity of course you have to make sure that you have the permits and licenses necessary to do these businesses accordingly and and from experience these Corporation business entities they might even have a kind of bigger business licenses so what do I mean in Austria we do have a lot of business really a lot of business licenses that are kind kind of very easy to get you don't need any kind of U exam um you don't have to prove that you know um anything in the area of uh your that your business is operating in so in many many cases you just go to the authority and get the business license you just tell them I would need it but then there are also other ones where it's not even enough to uh prove your knowledge uh with a with via an exam you also would have to prove your experience so uh for instance uh that you already worked um in a as an employee maybe in a company that had this kind of business license and you got your experience by working with these companies so that's the case um for instance uh a bit uh in with insurance uh with the financial advisor that's the case uh in even in cleaning industry in in some areas um and and several other um Industries like like uh Bakery if you you you can already be a master Baker but if you would not be able to prove your experience in it you will not even get this kind of bigger business license so corporations uh they are the ones um when you are really dealing with higher risks medium and higher risks um and the idea and already the plan to actually fund your business try to raise money for your business then this is the most stable form of business another interesting form might be a Cooperative um that is again a business or organization owned by and operated um by several people and it's meant for for someone to benefit from from these services so we see profits and earnings um are distributed among the members they will also have an elected board of directors and so on um and members can become become part of the Cooperative by purchasing shares so when would you even use this kind of um business structure here in Austria we also have this kind of business structure and um we do have one or the other insurance company that is actually using this kind of business structure why is this they see themselves and their services uh the insurance contracts in whatever area car insurance household insurance and so on as a service to their members so if me as a private consumer um gets a contract um from them for my household Insurance then I'm actually becoming a member kind of of their cooperative and that normally means um there is more money in the company because they don't have shareholders that are waiting for getting their dividends um and therefore the money even bigger parts from The Profit are actually um be actually being put into the business again so what we can see here is that these kind of uh business of insurance uh companies they tend to have the lower premium rates for the insurances so it's really um working together you could say um when there are less damages and there is therefore more profit um then this is actually good for everyone who is anyhow dealing with this insurance agent so that is one idea other areas where we are talking about cooperatives are definitely also in the agricultural um area industry that's also uh something where this is a business structure that is chosen quite often um like we have it here in Austria for um shopping cooperatives so people are working together coming together building this kind of structure to then be able to get whatever it is whether it's fertilizers or any kind of tractors or whatever cheaper than if they would have to go there as the one single farmer trying to get a good price so that's also something that uh where people would use a Cooperative so which business structure to use again a short summary of what we said already so um if you are already thinking of um how would I even pay anything in case of a bankruptcy or in case anything happens and then you would have Dept then um you better go for a bigger business entity LLC or Corporation if you know already that your business is going to need financing down the road then again um a limited partnership a bigger kind of company LLC and and uh or Corporation is again what you want to go for um we did not even mention the IPOs that would also be possible in that case uh which is also interesting for investors of course and don't forget the employees that you might want to hire um here as a sole proprietor you would be the one held responsible for everything that they are doing which you also could um you could protect yourself from that by founding at least an LLC for all these kind of business structures and for everything else that's going to happen in your business the most important thing are business agreements um even if you're founding your company your partnership your LLC whatever with your very best friend or with someone that you know for long and you know their reputation and everything you need to have an a written agreement a signed agreement to protect yourself from unnecessary trouble down the road so that's that's super super important as an example so that you can imagine why this might be so important yeah let's say uh these two people are trying to work together and then it's about um what are we going to do with the profit and actually there should be even a third person here saying uh we do not even take out the profit out of the company we actually reinvest it immediately to for other things but these two people at least they are like yeah we agreed we are going to gonna spend um the profits but one of them is actually thinking of a nice car and the other one is thinking of holidays so they might even think that they have kind of the same goal they are going in One Direction but then finally um when it comes to the profits and it would maybe not be enough for uh having both dreams and both wishes uh fulfilled then it's the typical case where trouble uh arises so that is the kind of um idea behind agreements so it's uh something that definitely needs to be offered so one person um among several people uh can start writing down an agreement where they actually write down what the partners should agree on so it's a record of commitments it should prevent conflicts um and also of course mitigate risks business main maintain compliance anyway um um yeah Foster communication and collaboration also because we know if there is an agreement written reviewed and signed by everyone if there is a if if there's trouble coming up people are more willing to sit down and talk to each other when there's actually an agreement that's stated exactly what they wanted to do in the beginning yeah so if there's no agreement one might say no no no we said this the other might say no no we we we said this and they would not try to find a solution they would probably immediately go to court and that's something that normally should be the last option um and you should actually first try to do other things to have an agreement it's not just uh reading what has been written in the agreement and then then you just sign it you definitely should do your due diligence in any case even as I said even as you um already know the person it might be your best friend you you think it's it's totally clear what what his um goal what his strategies is you you you think you know him very well or her um but you might be super wrong and I even could tell you uh how I found out via my own experience um and if I would tell you you would immediately sit down and write agreements so I'm I'm pretty sure that would be the consequence so so what kind of agreements um do you have um or do you should you consider so there are the business stakeholder agreements um we can see here the list of uh there are the business owners of course that is probably the first agreement and the most important one uh then of course with the investors employees clients and service providers so what kind of agreements would you uh talk about business owners could be something like a Founders Agreement partners ship agreement shareholders agreement um there might be uh some some requirements for these kind of agreements but in some cases there might not even be any formal requirements so then you could actually come up with something um you or and or I would definitely say your lawyer so this is absolutely a case where you can start writing an agreement but if you want the agreement to really be useful in that case of trouble then you definitely should at least show it to a lawyer and the lawyer should say that is good and that's going to hold and that's going to protect you or the lawyer might rewrite parts of it yeah so that is definitely something that will might cost you in the beginning because a lawyer will not do it for free of course of course not but in the end it might help you save a lot of money later on when you have these kind of agreements employment contracts of course employe share option um that might be a way to try to find really the very best people in the market um they would be probably interested to not only work for you but they would also be interested in uh sharing profits in in this kind of way when they and their work actually contributed to that kind of profit then the clients are typically a sale and purchase agreement service agreements um and vendors we do have consultancy agreement Supply agreement so all kinds of things U um regarding vendors they might even have their own agreements then have a look at those and just check whether they are okay with with your intentions whether that's something that you can agree with and and sign so never sign anything that you did not really read properly that's also very important so just because you know that you have to sign a partnership uh agreement that does not mean that you should not really take care of of the content again so um agreement mistakes please be careful that you are really having signatures of people who are eligible to sign these kind of contracts so that is meant with wrong parties sometimes um if it's not the business owner himself if someone else signs it please uh try to verify that they are even eligible to do that else you will have a problem when the agree when you want to actually use the agreement and and point to the agreement that would not be valid then lack of uh consideration so maybe you um were just trying to come up with um something very quickly so that you finally have the agreement and then actually later you find out you forgot something very important to also include in the agreement um the improper execution of of the whole agreement that would be for instance um and that you also have to be very careful um if you do have an agreement and then someone else breaches this kind of agreement or yeah you think they they did it and then you are like okay now I'm no longer bound to this agreement and and you might do something like you quit but then later maybe you find out actually there would have been a paragraph in the agreement that you signed that would have said in case of you thinking the other one uh did a breach of the contract you would have to and then it might even state that the steps that you were actually agreeing on taking to even find out whether this was really true meaning it could be me I breached the contract you just think okay fine you are no longer um bound to this kind of agreement you just stop working and then actually it might turn out that I was not really um breaching the cont contct but you actually now did it because you just stopped yeah so these kind of cases um they are very difficult so be really sure not to haste about anything yeah really try to go through the agreement in a case like that and try to find out what exactly happened and the offer without acceptance of course if you give someone an agreement and you never get the signed agreement back then honestly you don't have an agreement so agreement documents are very very important um to have in any case what should you be doing if one of the parties really breaches the contract even if you might be super upset in the first moment already try to calm yourself down and first talk to the other party um many cases that actually went to court immediately could probably have solved if you just sat down talked about the things maybe there was a kind of misunderstanding or whatever so it's that is also just the cheapest way to solve things yeah maybe you can solve the issue by amending or altering the the agreement which is of course also possible if not you can terminate terminate the agreement but I said make sure that you also termin it according to the agreement and then yeah the actually last um way to solve an issue you can of course sue someone that you have an agreement with and try to get um yeah replacement money for damages or specific performance or or similar things when I said um that we can actually sit down and start writing an agreement especially for those that do not have any kind of governmental uh rules or regulations or or or structures that they have to how they have to look like then of course you can again use our our virtual assistant so we would want to change to our other the screen now um and um I was of course talking about chat GPT um the 40 version as we said is free for everyone now so you even have it with a free account you don't need to have the paid account for that and then you could do something like and I did it already because we never know um how fast jet GPT would actually be when we do it live if I would say uh please write a Founders agreement for Nigeria as an example yeah then Chad GPT starts writing a first structure a first draft um and might even think of things that we might not have thought of yeah so if you start writing your agreements you might want to use something like C GPT artificial intelligence that would just come up with ideas you see there is a lot of paragraphs that you can then go through and then try to uh find out is this exactly how you want to have it in your in your agreement uh you can definitely use this as a as a template and that will also maybe even reduce the costs because if you already have an agreement that you afterwards just go and let a lawyer check that is definitely cheaper than as if you would go there and ask the lawyer to set up the whole agreement and and even then the lawyer will also ask you actually the same question so what do you want to have here what what kind of agreement do you want to have here so honestly um Chet GPT is very very useful in this case as well and as I said agreement s are the most important basis of your company of your business please please take this very seriously thanks okay thank you so much uh Miss Osa for that wonderful presentation on business formation um finally with us is um Ruth so Ruth over to you thank you so much Jessica for standing in um right now we'll be going to the q& a session for if you have questions this is the right time to ask them we have a few already and um I'll be taking them one after the other someone asked how can you calculate Assessments in your community for your business to survive uh could could you repeat the question please I didn't get the the beginning how could you calculate how can you calculate risk assessment in your community for your business to survive um that is a very good question um what you could do is you just think about um the kind of business that you're are doing and you just try to imagine something like worst cases yeah um what do I mean let's say you do have you have a plan to open a restaurant so one worst case that immediately would come to my mind is like um what if one of the the ingredients was not good any longer and um one of of your customers is getting sick or even worse um or what other things what what could happen to your customers you think of all that might happen even if it's not really likely but but what could happen when doing this kind of business yeah um and and then you know somehow how risky your business might be um also in that case you I'm pretty sure that even in this case um jgpt might come up with some ideas if you would type in um what might be um a typical what might be a risk um in the business area of and then whatever it is uh it might come up with ideas so if if if you yourself um cannot come up with enough potential risks try using the artificial intelligence and and see what what it comes up with okay okay thank you the next question is what happen if the partner decides to leave the complain would there be immediate dividend um that would actually be one of those things that as you are already now thinking about it and and I would hope that this is now means before you even go into the into the partnership that this is something that um that is typically something that you would just put into the agreement what should happen what would you and your partner agree on going to happen What would be going to happen if that's the case yeah it could be this it could be that and and then you you just discuss this thing and then you agree on one or the other afterwards if you already are in a part partnership you did not consider this kind of um regulation that you that you would have put into your agreement then it's going to be difficult because then you you would actually afterwards start discussing it and then if you cannot agree on on what to do now this is one of the one of the cases where you will start quarreling and that would not be necessary if if you would have thought of these kind of things in the beginning from the beginning and just put it into the agreement yeah this a good typical case okay another question is as a startup operating in the realm of agch and renewable energy what types of business Foundation is best um that is a a good question that I in that case cannot really answer because um yeah you you would have to consider what it is that that you want to the advantages and disadvantages that you want to have do you need legal protection um do you have personal assets that need to be protected how risky is it going to be depending on exactly what you're are going to do um if it is risky could you at least have insurance that that covers your risks so that even if you would have your your personal liability nevertheless the insurance would take uh care of of the the liability cost yeah and um I'm not even talking about taxes or anything like that it's just these these kind of really uh element three fundamental questions that you would have to ask yourself yeah um and that actually will then lead you to one of the options of the business structure and as I said uh depending on your country uh the rules also might be a bit different for different areas of Industries so in the end you might just uh contact a lawyer when you have thought about about all these things yeah so how much protection do I need what would be a potential risk and everything uh when you know all these things and and and then you are like maybe this could be the best business structure then go and talk to a lawyer nevertheless this is important um yeah many companies definitely would still be around if they would just have considered these things in the beginning thanks okay thank you I think um Ruth just went off there sorry another question is what happens if the partner decides to leave the company will there be immediate dividends okay that was a question we already had we just had no no problem probably Network um I'm trying to check for more questions someone was asking about business formation that is good for humanitarian Services um you might consider but again I'm not a lawyer I cannot even give any legal advice um I will I will of course um provide the the slides um um after the training so you can read everything again and and then check also the country specific rules that would apply for you um you might consider a Cooperative but your lawyer might tell you whatever reason that why it might be better to have a different um business structure for for your case yeah um and again it is a bit similar to the question before try to come up with who should be the beneficiaries who is going to be uh involved um who should be reli should be hold liable um who should be protected these kind of things yeah um as I said in in many cases in in the agricultural area and Industry um I see cooperatives but that does not mean that it would definitely be the best option for you so again think about what what would be the the major um facts the the the pillars so so to say of your business that you would like to actually see in your business structure then go through the slides check out your country um specific additional laws maybe and never nevertheless talk to a lawyer at least in the very end when you are actually quite sure already but just to to be on the safe side okay thank you missa due to time we might just be taking um our last two questions but please those who are we are unable to answer your question you can um connect with um Miss usla from our community that is connect in.org um to ask your questions and then she'll be able to reach out to you from there so one question is what about proprietary limited what are the advantages of establishing one um yeah as we actually said um there is the kind of protection that is already included um if that is something that you're looking for and you are not for whatever reason not really keen on on on founding one of the bigger and um separated entities but still you want to have a kind of uh protection reduction of of liability then this would be something to consider okay thank you U miss usla someone says apart from bridge of agreement what else can partnership do to that leads to termination of agreement well um the agreement itself of course could have um a statement um like something like um if one of the partners chooses to quit the company or the kind of business structure if one of the partners maybe passes away there could be already um a statement saying that's the case where um this is the business entity is going to be uh dissolved um yeah that that is actually the main reason for it yeah the main reason for for ending agreements or it could of course also be kind of a limited agreement you could have for whatever reason uh an agreement where you are saying okay this is now the agreement uh until December 20 December 31st 2025 okay I'm I'm I I can't think of a of a example where that could be now necessary but nevertheless there could be a case where you are like okay this agreement is definitely not forever this is until and then we either come up with a new agreement or we don't and that could also end the the whole thing thank you so so much missla once again for your time and um the wonderful presentation on business formation we look forward to hearing from you again the following weeks to come and so sorry to all those who were we were unable to answer your questions like I said you can still connect with us and ask those questions and then we'll be able to our mentors will reach out and answer them just like you can connect with Miss Osa on at connect in.org she will be over there to answer your questions um please note that the attendance form will be available at the description box after this session so you can go back to the video check the description box and then you will see the attendance link so click on that and then fill out your attendance form a big thank you to all our sponsors we have Africa's business Ubuntu soft Nono Technologies and spirit TV thank you so much for this opportunity to be able to hear from wonderful speakers such as U Miss Osa and our other speakers it is really a wonderful time and very insightful also please don't forget to join us also please um subscribe to our YouTube channel and click on the notific notification Bell so that you can be notified and every time the session begins you don't have to miss the session and then you can be also be able to ask your questions live so we look forward to seeing you again tomorrow from me myself have a wonderful day thank you Miss Ola bye you're welcome bye

[Music] good morning good afternoon good evening everyone and welcome to inp 4.0 empowering African startups for Global impact my name is Jessica Kings and I&#39;ll be um your moderator for today I know based on the profile we were supposed to have Ruth but she&#39;ll be joining us a bit later hopefully um as we all know inp was launched in 2020 and ever since we&#39;ve been able to empower African startups we&#39;ve been able to train and support over 600 um businesses providing essential tools skills and a supportive Community to help entrepreneurs scale their businesses in a digital world we&#39;ve been able to start off this program from day one with um Mr Mustafa and then we&#39;re able to hear from um Miss Osa who yesterday had spoke on customer validation and market research and it is a great pleasure that she&#39;s also here with us again today um miss a brief profile on her she has been in the IT industry since 1987 and has worked for companies such as NCR soft lab and Oracle she studied management and Entrepreneurship in Vienna Austria Europe where she also lives and then she has also been a self-employed for over 20 years and founded obuntu soft um Mrs Osa has a vast of experiences and hearing from her is honestly a privilege good to have you miss miss Ola with us and is yours thank you so much and good morning uh to everyone good afternoon maybe already so uh great that I&#39;m back with another topic um a very important topic um one that you might already have considered because I know there are many companies here already so you probably already uh thought about this topic you maybe make made a decision already but we will summarize all the options today again so we are talking about business formations first which is the legal business structure and we can see the types of business formations that there are um generally there&#39;s the sole proprietorship there&#39;s Partnerships uh limit Li mited liability company an LLC a corporation or a Cooperative uh depending on the country you are watching from there might even be one or the other additional uh form of legal business structure um that could well be so even here in Austria things are changing we now even have a bit more um yeah a bit more options alternative to the former types of of of um of formations let&#39;s start with the sole proprietorship um this is the easiest and simplest way of building a business it&#39;s in most of the time you are just using your own name um you don&#39;t have um a lot of um restrictions or rules that you have to obey uh regarding how you set your business up so you have the full control of your business um you are fully responsible for your business so it&#39;s it&#39;s both ways um and normally um you can decide to have this kind of business formation of of legal business structure and then you only would have to check whether you need any kind of business life license in your area uh or a local permit for the kind of work that you are doing this is completely different in in various areas various Industries so you definitely have to check that with your government governmental authorities governmental websites sorry so um as this is so simple to um use for for any kind of startup this is uh actually also the most popular type of business that we can find actually in in any country More than 70% of all businesses worldwide do use this kind of uh business uh structure and we can also see it&#39;s uh it&#39;s especially good for lowrisk businesses and we will see immediately why this is uh so and also for first testing out your business idea so if for for any reason you really have to come up with your business legal structure before you can do your market research and and anything else then this might be a way to go but there are also disadvantages of this simple first form of a business structure and we can see there is no differentiation between you your person as the owner of this Soul proprietorship and the business so it&#39;s actually seen as as one and that means you cannot in any way separate your personal liabilities and assets from whatever happens in your business um what that mean means is that you are respons responsible for everything um that for instance for every damage that your business might cause so if there&#39;s a damage you with your personal assets will have to come up uh for it you will have to pay this kind of debt for instance which might be yeah which might be awful in in one way because um if you have some personal assets I&#39;m thinking of um money in the bank I&#39;m thinking of a car um house maybe sorry that&#39;s uh on your name in your name then these things could be uh taken away from you if you don&#39;t have enough money to actually uh pay this depth that your business maybe cost so you really have to consider is your business something that might be a bit more risky than this might not be the perfect business structure for you to use um on the other hand right from the beginning you might not even know how risky it might get or you as I said you might just want to start then start with this but but keep this uh in in your mind that um you are responsible for everything and are going to be held liable with all your personal assets which will even include your sole proprietorship having employees and these employees would cause any kind of damage then it&#39;s exactly the same thing you will be held responsible it&#39;s your business there&#39;s no separation between you as a person and you as a business owner and therefore um be very careful also so as you are only like one entity and also also the government will see you as one entity um the revenue authorities especially there will be no kind no kinds of benefits that that uh other business structures might come with those benefits they are not available for sole proprietorship you as an owner will have to pay a self-employment tax so it&#39;s not even any kind of corporational tax tax so it&#39;s definitely you as the business owner yeah and one topic that is always um something that comes up with businesses is um how would I be able to raise money how can I fund my business if necessary and then in the case of a so proprietorship this is something that might be very difficult um because even banks are not really happy with so proprietorships uh with the exception of you being a business owner with enough personal assets that the bank knows about then they might uh consider differently but normally they are hesitant to land to so proprietorships another form um that you could consider especially if you&#39;re not going to start alone if you&#39;re actually considering starting with a partner are Partnerships um these Partnerships they are also quite simple to to establish so there are not normally not no specific partner ship documents required you definitely should set up um an agreement of course we will talk about agreements a bit later um but normally government is not telling you which kind of form this should have or what what what it should contain so um yeah if you have more than one partner or all the partners will have to review and also sign the partnership agreement so why is this um an easy way as I said uh there is actually not a lot of paperwork to do for this kind of um business structure um you also have to but that&#39;s actually the case for for every business structure you have to check which kind of licenses um and permits do you need to even be allowed to operate um and then everyone signs the agreement and each of you will definitely have the same kind of unlimited liability meaning all of you all Partners equally will be personally liable for anything that has to be um paid regarding the business that&#39;s the reason why there&#39;s even another kind of partnership it&#39;s the so-called limited partnership um and this kind of partnership has the advantage of you being able to have Partners um but at the same time these partners are protected they are not the ones with the unlimited liability that&#39;s only you as the business owner the others will have limited liability and therefore you might find these kind of Partners uh more easily they on the other hand are not going to work and and decide within your your business so they are partners that you might have considered because um maybe of um finances maybe they they um bring in some funds for your business maybe they bring in some some knowledge some experience but generally they are not working and not deciding within the business so uh the profits they are again pass through to the personal tax returns that is true for uh every limited liable liable partner and uh the general partner so the one that is really doing business so to say um again pays the self-employment taxes um then we have the next step so first we had all partners are liable equally liable then we had only one is liable the rest is protected kind of and then the third U version is the limited liability partnership LLP which um actually gives the limited liability to all of the partners so that is already a more secure kind of business structure um which might be yeah a good idea um because that&#39;s that tries to separate the the business from the personal assets and the personal um yeah the P the persons themselves already and also nice thing um here is that one partner is not responsible for anything that other partners are doing so there&#39;s this kind of protection here as well um a quite wellknown uh kind of partnership uh joint ventures so they can be formed by two or more people um sometimes they are limited to a very specific project sometimes they are just unlimited continue forever until something happens um and here we also have the protection for the partners so there is no personal liability for for the partners um we have it here on our slide that you definitely need an agreement for for this kind of partnership but as I said before you definitely want to have an agreement for whatever business structure you actually choosing and we will come to that in in some uh minutes and talk about that more in detail so uh when would you now want to Jo want to start a joint venture that is typically something when you are working towards a common goal you&#39;re working on a project that that um you want to work with a partner um on this projects here you would have to share the profits as well as the losses and um yeah all the partners are equally um capable of of uh of having a voice in this kind of partnership the taxation here we can uh see the the government sees a joint venture already as a separate entity so a joint venture will pay taxes uh just like any other business or Corporation does so we have this kind of split between the the owner and the business entity already um if you choose to operate as an LLC so this is um not the joint venture this is just the LLC then profits and losses will would get passed through to the owner&#39;s personal tax returns just as we said when we were discussing the LLC so thinking of Partnerships when is is this a good choice as I said when you want to work with one or more people in your business um we can find this in various um Industries um especially like like lawyers for instance they often um have this kind of Partnerships working together in in one office and um yeah having this kind of business structure or you could also uh use this form for your very first test if it&#39;s um not you alone if you have a partner then this would be the the easiest way to set up a business structure together with your partner then we can also found the limited liability company so now we are coming to this kind of um separated business entities separated from the business owner so we have here more advantages but of course also disadvantages so that&#39;s that&#39;s the same for all the structures so the business owner again is protected he has a limited liability um even in a case of bankruptcy which is something that every business owner should somehow consider because it can happen to each of us um so even in that case your personal assets like your your vehicles like your houses and so on saving accounts would not be at risk [Music] um what still might happen um I know this uh for Austria for instance and it might be there might be something similar in in one of the African countries as well um if a company files for bankruptcy has to file for bankruptcy um then there is also a kind of Investigation why it happened and if the business owner would somehow be responsible for this kind of bankruptcy because um he did not warn everyone on time for instance there&#39;s a law in Austria you have to already mention that your business is in trouble even before you might have to to take this final step so if you as a business owner would not do that or would have done something that was actually illegal um then you could still be held responsible so in general you are protected as long as you obey the laws and rules and everything but if you did not you might still be um hold responsible even with your personal assets uh and even uh here in austrialia you could even go to prison for that so that is uh really something that they consider being a crime so normally then it&#39;s not the personal the business owner responsible normally it&#39;s the entity the LLC that is responsible for any kind of Dept um and has to deal with that so the advantage one of the advantages is that the LLC members um can actually decide how they want to be texted so there&#39;s the option of being texted as a corporation which might be the best um option or also as a partnership you so you can decide on that um if there are more than if there&#39;s more than one member in the LLC so if there&#39;s only one we again have um a mandatory self-employment tax so that&#39;s that&#39;s one of the uh restrictions how many um members Can an LLC have so normally there is no limit to that um one thing to mention is that an LLC cannot issue stocks um you might say okay that is not a big deal you didn&#39;t really plan on doing that anyway but it might uh affect you in um in another way we will see that shortly yeah and then we say we see there&#39;s of course this kind of flexibility when it comes to deciding how to uh actually what to do with the profits and losses generally so we see um profits and losses get passed through to your income without facing corporate taxes if that is your decisions decision and in many countries um you would have to really take care of your agreements that you set up for your LLC because your LLC might be an a business entity on one side but also not be built for eternity uh what I mean is um if you don&#39;t have agreements that state exactly what to do what should uh happen then it could even uh be the case that your LLC would have to be um dissolved um or at least reformed when for instance one of the members dies so if there is no agreement if there is no statement um before the situation happens it might lead to an LSC having a limited life so all in all um llc&#39;s are a good choice for businesses with a medium or even a higher risk doing business so you might know the kind of business you are doing and whether it&#39;s it&#39;s low risk um nothing much can happen or if you say okay there is a specific medium maybe even a higher risk that that can happen uh and you might have some insurances um if available to uh deal with these kind of risks but yeah it all depends on on the stability of the company sometimes you don&#39;t even get this kind of insurances sometimes they don&#39;t even exist maybe in your country so you have to consider the risks and then according to the risk you choose your business structure um yeah so that is for the limited uh liability we also have corporations so the that&#39;s an even bigger business entity it&#39;s um meant for really um companies with with um a lot of growth um that they are going for and then they have they have sorry and then you can choose between two types of cooperations there&#39;s the C and the S cooperation sorry so the C corporation um is again a legal entity completely of its own completely separated from the business owner and also U meant for being held legally liable apart from the from the business owner it&#39;s uh the kind of business structure that offers the strongest protection um so your personal assets are safe in that case and this is different to what we just heard um a kind of business entity when one of the members are leaving or dying or whatever um or selling their their shares um then this business entity is definitely going to survive they are going to uh just go on with the other daily operations an ESC Corp is of course similar it&#39;s also a ceration um but especially designed to avoid double taxation draw bags so most of those uh business entities that are really really corporations they do have the double Taxation and we are going to hear more about um accounting and Taxation in another um in another training so here you can allow profits and some losses to be passed through directly to the owner&#39;s personal income without ever being subject uh to the corporate tax rates that might be uh a better way to deal with the the profit um that&#39;s dependent on the laws in your country they also completely separate so they are also not uh going to be res dissolved when when something happens that&#39;s also fine um yeah you can just go on with the business as usual even in that kind of case yeah no Advantage without disadvantage of course so the disadvantage might be seen in the definitely higher costs of these kind of um business structures so as I said they have a more extensive record keeping they have this kind of uh double Taxation and so on um double bookkeeping and so this is really meant for businesses that are not just trying out a business idea or something like that but are really um already into business and know that they would have the the profits and they will grow and so on yeah um sometimes um also a disadvantage potential disadvantage uh the corporate profits are texed texed twice um when the company makes profits and then maybe also pays dividends to the shareholders then these would also be texted again um the last Point um now explains what I what I meant when I said the um LSC cannot issue stocks and that could be a disadvantage we can see here that corporations when they are need of money when they have to go to a bank or any other kind of investor um they have the advantage of being able to to do this because they they can issu stocks they can um yeah raise funds through this kind of means um as we can see so this might also be something where you finally actually decide to found found an in corporation because it will be the easiest way to actually get funds um yeah here we do have the information about the elected direct directors that are NE necessary so not only the the documents and and U everything that has to be um kept uh in documents it&#39;s also about um a very strict structure so the law already tells us who has to be responsible for the corporation as we can see elected directors uh their names might even have to be included in in the documents so it has to be visible to to any kind of um yeah uh stakeholders in in a in a wider sense who are the people involved in this cooperation that&#39;s also something that&#39;s important um yeah corporate owners again have this limited personal liability protection as in all the other cases that we had already and um again you also with this kind of business entity of course you have to make sure that you have the permits and licenses necessary to do these businesses accordingly and and from experience these Corporation business entities they might even have a kind of bigger business licenses so what do I mean in Austria we do have a lot of business really a lot of business licenses that are kind kind of very easy to get you don&#39;t need any kind of U exam um you don&#39;t have to prove that you know um anything in the area of uh your that your business is operating in so in many many cases you just go to the authority and get the business license you just tell them I would need it but then there are also other ones where it&#39;s not even enough to uh prove your knowledge uh with a with via an exam you also would have to prove your experience so uh for instance uh that you already worked um in a as an employee maybe in a company that had this kind of business license and you got your experience by working with these companies so that&#39;s the case um for instance uh a bit uh in with insurance uh with the financial advisor that&#39;s the case uh in even in cleaning industry in in some areas um and and several other um Industries like like uh Bakery if you you you can already be a master Baker but if you would not be able to prove your experience in it you will not even get this kind of bigger business license so corporations uh they are the ones um when you are really dealing with higher risks medium and higher risks um and the idea and already the plan to actually fund your business try to raise money for your business then this is the most stable form of business another interesting form might be a Cooperative um that is again a business or organization owned by and operated um by several people and it&#39;s meant for for someone to benefit from from these services so we see profits and earnings um are distributed among the members they will also have an elected board of directors and so on um and members can become become part of the Cooperative by purchasing shares so when would you even use this kind of um business structure here in Austria we also have this kind of business structure and um we do have one or the other insurance company that is actually using this kind of business structure why is this they see themselves and their services uh the insurance contracts in whatever area car insurance household insurance and so on as a service to their members so if me as a private consumer um gets a contract um from them for my household Insurance then I&#39;m actually becoming a member kind of of their cooperative and that normally means um there is more money in the company because they don&#39;t have shareholders that are waiting for getting their dividends um and therefore the money even bigger parts from The Profit are actually um be actually being put into the business again so what we can see here is that these kind of uh business of insurance uh companies they tend to have the lower premium rates for the insurances so it&#39;s really um working together you could say um when there are less damages and there is therefore more profit um then this is actually good for everyone who is anyhow dealing with this insurance agent so that is one idea other areas where we are talking about cooperatives are definitely also in the agricultural um area industry that&#39;s also uh something where this is a business structure that is chosen quite often um like we have it here in Austria for um shopping cooperatives so people are working together coming together building this kind of structure to then be able to get whatever it is whether it&#39;s fertilizers or any kind of tractors or whatever cheaper than if they would have to go there as the one single farmer trying to get a good price so that&#39;s also something that uh where people would use a Cooperative so which business structure to use again a short summary of what we said already so um if you are already thinking of um how would I even pay anything in case of a bankruptcy or in case anything happens and then you would have Dept then um you better go for a bigger business entity LLC or Corporation if you know already that your business is going to need financing down the road then again um a limited partnership a bigger kind of company LLC and and uh or Corporation is again what you want to go for um we did not even mention the IPOs that would also be possible in that case uh which is also interesting for investors of course and don&#39;t forget the employees that you might want to hire um here as a sole proprietor you would be the one held responsible for everything that they are doing which you also could um you could protect yourself from that by founding at least an LLC for all these kind of business structures and for everything else that&#39;s going to happen in your business the most important thing are business agreements um even if you&#39;re founding your company your partnership your LLC whatever with your very best friend or with someone that you know for long and you know their reputation and everything you need to have an a written agreement a signed agreement to protect yourself from unnecessary trouble down the road so that&#39;s that&#39;s super super important as an example so that you can imagine why this might be so important yeah let&#39;s say uh these two people are trying to work together and then it&#39;s about um what are we going to do with the profit and actually there should be even a third person here saying uh we do not even take out the profit out of the company we actually reinvest it immediately to for other things but these two people at least they are like yeah we agreed we are going to gonna spend um the profits but one of them is actually thinking of a nice car and the other one is thinking of holidays so they might even think that they have kind of the same goal they are going in One Direction but then finally um when it comes to the profits and it would maybe not be enough for uh having both dreams and both wishes uh fulfilled then it&#39;s the typical case where trouble uh arises so that is the kind of um idea behind agreements so it&#39;s uh something that definitely needs to be offered so one person um among several people uh can start writing down an agreement where they actually write down what the partners should agree on so it&#39;s a record of commitments it should prevent conflicts um and also of course mitigate risks business main maintain compliance anyway um um yeah Foster communication and collaboration also because we know if there is an agreement written reviewed and signed by everyone if there is a if if there&#39;s trouble coming up people are more willing to sit down and talk to each other when there&#39;s actually an agreement that&#39;s stated exactly what they wanted to do in the beginning yeah so if there&#39;s no agreement one might say no no no we said this the other might say no no we we we said this and they would not try to find a solution they would probably immediately go to court and that&#39;s something that normally should be the last option um and you should actually first try to do other things to have an agreement it&#39;s not just uh reading what has been written in the agreement and then then you just sign it you definitely should do your due diligence in any case even as I said even as you um already know the person it might be your best friend you you think it&#39;s it&#39;s totally clear what what his um goal what his strategies is you you you think you know him very well or her um but you might be super wrong and I even could tell you uh how I found out via my own experience um and if I would tell you you would immediately sit down and write agreements so I&#39;m I&#39;m pretty sure that would be the consequence so so what kind of agreements um do you have um or do you should you consider so there are the business stakeholder agreements um we can see here the list of uh there are the business owners of course that is probably the first agreement and the most important one uh then of course with the investors employees clients and service providers so what kind of agreements would you uh talk about business owners could be something like a Founders Agreement partners ship agreement shareholders agreement um there might be uh some some requirements for these kind of agreements but in some cases there might not even be any formal requirements so then you could actually come up with something um you or and or I would definitely say your lawyer so this is absolutely a case where you can start writing an agreement but if you want the agreement to really be useful in that case of trouble then you definitely should at least show it to a lawyer and the lawyer should say that is good and that&#39;s going to hold and that&#39;s going to protect you or the lawyer might rewrite parts of it yeah so that is definitely something that will might cost you in the beginning because a lawyer will not do it for free of course of course not but in the end it might help you save a lot of money later on when you have these kind of agreements employment contracts of course employe share option um that might be a way to try to find really the very best people in the market um they would be probably interested to not only work for you but they would also be interested in uh sharing profits in in this kind of way when they and their work actually contributed to that kind of profit then the clients are typically a sale and purchase agreement service agreements um and vendors we do have consultancy agreement Supply agreement so all kinds of things U um regarding vendors they might even have their own agreements then have a look at those and just check whether they are okay with with your intentions whether that&#39;s something that you can agree with and and sign so never sign anything that you did not really read properly that&#39;s also very important so just because you know that you have to sign a partnership uh agreement that does not mean that you should not really take care of of the content again so um agreement mistakes please be careful that you are really having signatures of people who are eligible to sign these kind of contracts so that is meant with wrong parties sometimes um if it&#39;s not the business owner himself if someone else signs it please uh try to verify that they are even eligible to do that else you will have a problem when the agree when you want to actually use the agreement and and point to the agreement that would not be valid then lack of uh consideration so maybe you um were just trying to come up with um something very quickly so that you finally have the agreement and then actually later you find out you forgot something very important to also include in the agreement um the improper execution of of the whole agreement that would be for instance um and that you also have to be very careful um if you do have an agreement and then someone else breaches this kind of agreement or yeah you think they they did it and then you are like okay now I&#39;m no longer bound to this agreement and and you might do something like you quit but then later maybe you find out actually there would have been a paragraph in the agreement that you signed that would have said in case of you thinking the other one uh did a breach of the contract you would have to and then it might even state that the steps that you were actually agreeing on taking to even find out whether this was really true meaning it could be me I breached the contract you just think okay fine you are no longer um bound to this kind of agreement you just stop working and then actually it might turn out that I was not really um breaching the cont contct but you actually now did it because you just stopped yeah so these kind of cases um they are very difficult so be really sure not to haste about anything yeah really try to go through the agreement in a case like that and try to find out what exactly happened and the offer without acceptance of course if you give someone an agreement and you never get the signed agreement back then honestly you don&#39;t have an agreement so agreement documents are very very important um to have in any case what should you be doing if one of the parties really breaches the contract even if you might be super upset in the first moment already try to calm yourself down and first talk to the other party um many cases that actually went to court immediately could probably have solved if you just sat down talked about the things maybe there was a kind of misunderstanding or whatever so it&#39;s that is also just the cheapest way to solve things yeah maybe you can solve the issue by amending or altering the the agreement which is of course also possible if not you can terminate terminate the agreement but I said make sure that you also termin it according to the agreement and then yeah the actually last um way to solve an issue you can of course sue someone that you have an agreement with and try to get um yeah replacement money for damages or specific performance or or similar things when I said um that we can actually sit down and start writing an agreement especially for those that do not have any kind of governmental uh rules or regulations or or or structures that they have to how they have to look like then of course you can again use our our virtual assistant so we would want to change to our other the screen now um and um I was of course talking about chat GPT um the 40 version as we said is free for everyone now so you even have it with a free account you don&#39;t need to have the paid account for that and then you could do something like and I did it already because we never know um how fast jet GPT would actually be when we do it live if I would say uh please write a Founders agreement for Nigeria as an example yeah then Chad GPT starts writing a first structure a first draft um and might even think of things that we might not have thought of yeah so if you start writing your agreements you might want to use something like C GPT artificial intelligence that would just come up with ideas you see there is a lot of paragraphs that you can then go through and then try to uh find out is this exactly how you want to have it in your in your agreement uh you can definitely use this as a as a template and that will also maybe even reduce the costs because if you already have an agreement that you afterwards just go and let a lawyer check that is definitely cheaper than as if you would go there and ask the lawyer to set up the whole agreement and and even then the lawyer will also ask you actually the same question so what do you want to have here what what kind of agreement do you want to have here so honestly um Chet GPT is very very useful in this case as well and as I said agreement s are the most important basis of your company of your business please please take this very seriously thanks okay thank you so much uh Miss Osa for that wonderful presentation on business formation um finally with us is um Ruth so Ruth over to you thank you so much Jessica for standing in um right now we&#39;ll be going to the q&amp; a session for if you have questions this is the right time to ask them we have a few already and um I&#39;ll be taking them one after the other someone asked how can you calculate Assessments in your community for your business to survive uh could could you repeat the question please I didn&#39;t get the the beginning how could you calculate how can you calculate risk assessment in your community for your business to survive um that is a very good question um what you could do is you just think about um the kind of business that you&#39;re are doing and you just try to imagine something like worst cases yeah um what do I mean let&#39;s say you do have you have a plan to open a restaurant so one worst case that immediately would come to my mind is like um what if one of the the ingredients was not good any longer and um one of of your customers is getting sick or even worse um or what other things what what could happen to your customers you think of all that might happen even if it&#39;s not really likely but but what could happen when doing this kind of business yeah um and and then you know somehow how risky your business might be um also in that case you I&#39;m pretty sure that even in this case um jgpt might come up with some ideas if you would type in um what might be um a typical what might be a risk um in the business area of and then whatever it is uh it might come up with ideas so if if if you yourself um cannot come up with enough potential risks try using the artificial intelligence and and see what what it comes up with okay okay thank you the next question is what happen if the partner decides to leave the complain would there be immediate dividend um that would actually be one of those things that as you are already now thinking about it and and I would hope that this is now means before you even go into the into the partnership that this is something that um that is typically something that you would just put into the agreement what should happen what would you and your partner agree on going to happen What would be going to happen if that&#39;s the case yeah it could be this it could be that and and then you you just discuss this thing and then you agree on one or the other afterwards if you already are in a part partnership you did not consider this kind of um regulation that you that you would have put into your agreement then it&#39;s going to be difficult because then you you would actually afterwards start discussing it and then if you cannot agree on on what to do now this is one of the one of the cases where you will start quarreling and that would not be necessary if if you would have thought of these kind of things in the beginning from the beginning and just put it into the agreement yeah this a good typical case okay another question is as a startup operating in the realm of agch and renewable energy what types of business Foundation is best um that is a a good question that I in that case cannot really answer because um yeah you you would have to consider what it is that that you want to the advantages and disadvantages that you want to have do you need legal protection um do you have personal assets that need to be protected how risky is it going to be depending on exactly what you&#39;re are going to do um if it is risky could you at least have insurance that that covers your risks so that even if you would have your your personal liability nevertheless the insurance would take uh care of of the the liability cost yeah and um I&#39;m not even talking about taxes or anything like that it&#39;s just these these kind of really uh element three fundamental questions that you would have to ask yourself yeah um and that actually will then lead you to one of the options of the business structure and as I said uh depending on your country uh the rules also might be a bit different for different areas of Industries so in the end you might just uh contact a lawyer when you have thought about about all these things yeah so how much protection do I need what would be a potential risk and everything uh when you know all these things and and and then you are like maybe this could be the best business structure then go and talk to a lawyer nevertheless this is important um yeah many companies definitely would still be around if they would just have considered these things in the beginning thanks okay thank you I think um Ruth just went off there sorry another question is what happens if the partner decides to leave the company will there be immediate dividends okay that was a question we already had we just had no no problem probably Network um I&#39;m trying to check for more questions someone was asking about business formation that is good for humanitarian Services um you might consider but again I&#39;m not a lawyer I cannot even give any legal advice um I will I will of course um provide the the slides um um after the training so you can read everything again and and then check also the country specific rules that would apply for you um you might consider a Cooperative but your lawyer might tell you whatever reason that why it might be better to have a different um business structure for for your case yeah um and again it is a bit similar to the question before try to come up with who should be the beneficiaries who is going to be uh involved um who should be reli should be hold liable um who should be protected these kind of things yeah um as I said in in many cases in in the agricultural area and Industry um I see cooperatives but that does not mean that it would definitely be the best option for you so again think about what what would be the the major um facts the the the pillars so so to say of your business that you would like to actually see in your business structure then go through the slides check out your country um specific additional laws maybe and never nevertheless talk to a lawyer at least in the very end when you are actually quite sure already but just to to be on the safe side okay thank you missa due to time we might just be taking um our last two questions but please those who are we are unable to answer your question you can um connect with um Miss usla from our community that is connect in.org um to ask your questions and then she&#39;ll be able to reach out to you from there so one question is what about proprietary limited what are the advantages of establishing one um yeah as we actually said um there is the kind of protection that is already included um if that is something that you&#39;re looking for and you are not for whatever reason not really keen on on on founding one of the bigger and um separated entities but still you want to have a kind of uh protection reduction of of liability then this would be something to consider okay thank you U miss usla someone says apart from bridge of agreement what else can partnership do to that leads to termination of agreement well um the agreement itself of course could have um a statement um like something like um if one of the partners chooses to quit the company or the kind of business structure if one of the partners maybe passes away there could be already um a statement saying that&#39;s the case where um this is the business entity is going to be uh dissolved um yeah that that is actually the main reason for it yeah the main reason for for ending agreements or it could of course also be kind of a limited agreement you could have for whatever reason uh an agreement where you are saying okay this is now the agreement uh until December 20 December 31st 2025 okay I&#39;m I&#39;m I I can&#39;t think of a of a example where that could be now necessary but nevertheless there could be a case where you are like okay this agreement is definitely not forever this is until and then we either come up with a new agreement or we don&#39;t and that could also end the the whole thing thank you so so much missla once again for your time and um the wonderful presentation on business formation we look forward to hearing from you again the following weeks to come and so sorry to all those who were we were unable to answer your questions like I said you can still connect with us and ask those questions and then we&#39;ll be able to our mentors will reach out and answer them just like you can connect with Miss Osa on at connect in.org she will be over there to answer your questions um please note that the attendance form will be available at the description box after this session so you can go back to the video check the description box and then you will see the attendance link so click on that and then fill out your attendance form a big thank you to all our sponsors we have Africa&#39;s business Ubuntu soft Nono Technologies and spirit TV thank you so much for this opportunity to be able to hear from wonderful speakers such as U Miss Osa and our other speakers it is really a wonderful time and very insightful also please don&#39;t forget to join us also please um subscribe to our YouTube channel and click on the notific notification Bell so that you can be notified and every time the session begins you don&#39;t have to miss the session and then you can be also be able to ask your questions live so we look forward to seeing you again tomorrow from me myself have a wonderful day thank you Miss Ola bye you&#39;re welcome bye

Transcript for:NTEEP 4.0: Business Formations for African Startups

Transcript for:
NTEEP 4.0: Business Formations for African Startups