Starting a business is exciting and often the fulfilment of a long-held dream or the result of a light bulb moment. It’s only natural that you want to get started straight away and get on with the important job of finding customers. But a note of caution, before you start trading you need to make sure you dot the i’s and cross the t’s from a legal perspective. At Better Business at Hand, we help business owners solve problems. We’ve put together a legal checklist for small businesses to help ensure you don’t fall foul of the law when starting and running your business.
Legal checklist: 10 legal requirements to check off your list
As business owners we have to wear so many hats, performing tasks from marketing to bookkeeping. Ensuring that a business meets regulatory requirements and has the correct legal documentation is a must for businesses of any size. If you do this from the get-go you will avoid the stress of dealing with the fallout from not protecting your business. Here are 10 legal issues to be aware of and check off your list from intellectual property to taxes and employee contracts.
Legal checklist 1: Decide on the legal structure of your business
A common question when starting up is how to legally establish a business. The process itself is fairly straightforward but choosing the right legal structure for your business is important as this will influence how it is taxed and regulated. The majority of businesses choose to set up as a sole trader or a limited company. If you need legal advice on what is best for your business, Better Business at Hand Consultant, Paralegal, Maria Pombo can help. Contact Maria.
Legal checklist 2: Choose a business name
What’s in a name? Well quite a lot actually. What you call your business will affect how your brand is perceived and even signpost to customers that you are the right choice for them. If you are setting up a limited company you must choose a name. It’s essential that you check that the name is not already in use when choosing one for your business. There are rules about what you can use for a company name. Use the step by step advice on the gov.uk website to choose a company name for your business: https://www.gov.uk/limited-company-formation/choose-company-name
Legal checklist 3: Protect your Intellectual Property
How often have you seen a business fail to secure investors on Dragon’s Den because they haven’t got the all important Intellectual Property protection? It is vital that you protect your company’s IP to guard against people stealing or copying everything from your brand name to the name of your products and your designs. Make sure you register trademarks and if you create something new, investigate getting a patent. Visit the Intellectual Property Office website for further advice: https://www.gov.uk/government/organisations/intellectual-property-office
Legal checklist 4: Register for taxes
When you start-up, it’s essential that you register for all the taxes that apply to your business including VAT and corporation tax. There is no room for error, so you might want to consider speaking to an accountant for advice on HMRC submissions. Keep documents such as bank statements and invoices to provide as evidence should your business be subject to tax investigation. For advice on tax and other business accounting issues, book an appointment with Better Business at Hand Consultant, Chartered Accountant, Tim Vogel.
Legal checklist 5: Draft agreements
It could be that right now you are the only person in your business. However, if you have other Directors or Shareholders you need to draw up agreements documenting obligations and other important issues to help prevent disputes further down the line. Outlining any relationships in agreements also really helps everyone know where they stand and what’s expected of them which avoids any confusion. If you need help drafting agreements, book an appointment with Better Business at Hand Consultant, Paralegal, Maria Pombo.
Legal checklist 6: Arrange insurance
When you start your business make sure you have the correct insurance in place, some is mandatory whereas others are optional. You must hold employer’s liability insurance to compensate employees who become ill or are injured through work. Advisors such as Marketing Consultants should have professional indemnity insurance and if you work with people and in public spaces you should consider public liability insurance. Check with your industry body to see which insurance cover is essential for your business. Insurance will help to protect your business against everyday risks including damage to stock and also cover legal costs.
Legal checklist 7: Be data compliant
Whatever the size of your business, data protection laws will apply. You must ensure that you are compliant and follow General Data Protection Regulations (GDPR). The Information Commissioner’s Office (ICO) takes action against non-compliant businesses and you could face a hefty fine. The ICO website has a checklist created with small business owners and sole traders in mind which will suggest practical steps to improve your data protection and compliance: https://ico.org.uk/for-organisations/sme-web-hub/checklists/
Legal checklist 8: Draft employment contracts
The documentation you require by law as an employer includes employment contracts which set out duties, pay and benefits. You also need to detail the rights and responsibilities of employees, which while protecting them, can also protect you as the employer in the case of employment tribunals. If you work with freelancers, you must determine whether they are inside or outside IR35. Employment law is a complex area and you could benefit from talking to a Human Resources specialist. At Better Business at Hand, we work with a qualified HR Consultant who can advise on employment contracts and more. For further information, Contact Us using the form at the bottom of our website.
Legal checklist 9: Document health and safety
As a business owner, you must ensure that you adhere to the Health and Safety at Work Act which protects employees, contractors, customers and visitors to your premises. Steps should be taken to manage risks, and health and safety procedures put in place. Make sure that risk assessments are completed where applicable and that any accidents are logged. Health and safety in the workplace should be a priority for your business. Contact Maria if you need further guidance on this.
Legal checklist 10: Check what licences you require
Depending on the nature of your business, you may require permits and licences. Make sure you have these before you start trading and regularly review requirements to ensure you are not trading illegally. The gov.uk website has a handy licence finder: https://www.gov.uk/licence-finder
Ongoing management of legal requirements
So, this concludes our roundup of legal pointers, we hope you’ve found our Legal Checklist helpful. This is not a complete list, there are lots of other legal considerations you will need to address for your business, from office tenancy agreements to contracts for products and services, and terms and conditions on your website.
You will have to stay on top of legal regulations throughout the life of your business. If you are a Director of a limited company you will need to file documents with Companies House throughout the year. As a small business owner, you should regularly review your legal documents and legal obligations. If you need help navigating any business legal issues, book an appointment with Maria Pombo.
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To protect your business and stay on the right side of the law, it’s essential that you have the right legal procedures and documents in place. You can then focus on running your business and meeting the needs of your customers. Doing the groundwork when you start-up will help to ensure that everything runs smoothly and leave you free to enjoy your business journey without the stress of legal issues that could have been avoided.
The Better Business at Hand team are here to support you throughout, so do contact us if you have a legal question or need advice to solve a business problem. We’re here to help small business owners.