intellectual property
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Is your IP Protected

Is your IP protected in your business? IP, intellectual property, all the information that drives the knowledge around what you do in your business.

Generally, all business have some form of intellectual property which is owned by the business. If that business gets into financial strife, then that is something that can be sold to by the liquidators to get some return on the business.

Best practice is actually to have your IP in a separate entity to your trading entity.

Whether this be research and development, or whether it be processes and procedures,(the way we do things), having this in a separate entity creates a barrier. This IP is then leased to the Trading Entity for a reasonable fee with a legal document creating the usage rights.

This lease of IP is income to the second  company, similar to paying a franchise fee for franchise IP.

That puts a value on that IP, but it also protects it from an asset protection point of view. If this trading company has a financial hiccup, the IP is still held by the second company which keep sit safe and as long as there are no pheonixing issues, you can potentially start a new business and enter into a new agreement to use the IP. (Best to get advice on this before going ahead of course).

Having your IP in a separate company  also means that if you want to franchise or license your business to other people in other locations or other states in the future, you’ve already got it set up in an entity of its own.

Consider separating your IP from your trading entity, it is best practice.

As a side note, you can also register your IP company for Research & Development Tax Incentive. It is only available to companies.  There are some tips and tricks for this that will be the content of a separate blog in the future.  My suggestion is that if you believe you do significant R&D ($20k of expenses), talk to us to see how this can happen, even if your trading entity isn’t a company.

To expand your knowledge, we invite you to visit our YouTube channel by clicking the link below. Don’t miss the opportunity to subscribe and stay informed about our latest uploads.

YouTube link: www.youtube.com/channel/UCvpSgE5c-ZsKaeB-HO4umkg

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