Starting and running a business can be one of the most rewarding and FUN things to do but it’s also important that you do so keeping on the right side of the law all the time.
There are a few different aspects that have clear legal requirements – some with expensive consequences for getting them wrong. So it’s worth taking the time to look into each aspect carefully and consider taking legal advice. We are NOT legal experts and our pointers here are just that – starters for ten. It’s important to take your own legal advice and speak to a solicitor specialising in commercial law for advice that is tailored to your needs.
The kinds of legal considerations you’ll have to think of start from Day One, with how your business is legally structured. The most common options include sole trader, partnership, limited liability partnership or limited company. Each has specific legal requirements, reporting and registration considerations and risks to your own personal liability (and others, if you are going in business in a partnership or with other founders and directors) – more explanation here. Careful consideration of each option now – with advice from an expert – can help prevent costly problems later on.
As you start and run your business you may also need contracts and other legal documents created, or you may be asked to sign one – for example if you’re borrowing money from a lender for your business, or if you’re leasing premises. Everything you are asked to sign may be legally binding and the cost of having a solicitor review the documents and make you aware of any implications, means you can decide whether to proceed confident that you understand the requirements on either side.
As a new business there is a legal requirement to register with HM Revenue & Customs which oversees tax issues such as VAT, trading abroad and corporation tax. Your legal structure, how much money the business turns over and how much profit is made at the end of the year all determine whether you are liable for these taxes and how much to pay. Chartered Accountants can assist with registration and help you manage your accounts to stay on the right side of the law. The business will also be expected to pay national insurance.
Speaking of insurance – there are different types of business insurance and some are legally required. Insurance can protect the business from liability in certain operating circumstances; other policies will ensure you are protected from financial losses. Types of policy include
- Public liability insurance
- Product liability insurance
- Professional indemnity insurance
- Employers’ liability insurance – if you employ staff
- Buildings cover
- Contents and stock cover
- Home insurance – if you’re operating your business from home you should check that your contents policy covers this
The Association of British Insurers explains more about legal requirements and you can find links to insurers here too.
A relatively new legal requirement covers the need to have a responsible approach to handling people’s personal data. If you handle any kind of contact list, even if it only includes names, contact numbers or addresses – you need to have a system in place that ensures privacy will be respected and helps to prevent against that information getting into the wrong hands – called a breach. The General Data Protection Regulation (GDPR) is the law which enforces this and breaching could cost a business millions of pounds. The Information Commissioner’s Office is responsible for overseeing claims for breaches to the GDPR and this section of their website is a good place to start to understand the legal requirements a business has to fulfil. More likely than not, you will have to register on this site.
With the right advice, starting and running your business on the right side of the law needn’t be complicated!