Business legal basics – What you need to know before setting up your business
Starting a business is an exciting journey but it can also become overwhelming. According to Business News Daily’s advice for startup founders, one of the biggest mistakes a company can make is not registering their business. There are many legal aspects to consider, some of which include: Choosing the correct business entity, filing for registration, choosing insurance, data compliance, trade mark searches, principles of equality, health & safety and reporting to HMRC.
Sole trader vs Limited companies vs Partnership
Before you can register your business, it may be a good idea to sit down and think about what business entity would suit your vision. For example, if you are thinking about setting up a small online business, it could be better register as a sole trader. This way you get to keep all your profits after tax but it also means you will be entirely responsible for any losses that the business makes. There are a number of questions to ask yourself and a great place to start is to speak to one of our experienced and qualified solicitors who will be able to guide you through the rest of this exciting process safely and effectively.
Registering your business
You can apply to register your business here once you have all the details of how you wish to run your company.
Insurance
Depending on the nature of your business, you may need to obtain several insurance products. It’s vital for instance to have adequate insurance in place in case something happens to an employee whilst working. Employers’ liability insurance can cover for any claims made against your business and it is a legal requirement to have this in place. Without this insurance, an employer could be faced with a daily fine of £2,500.
Business Lasting Power of Attorney
It is important to ensure that your business can legally function without you (in case of an accident or illness). You can download our free guide on BLPAs here.
Data compliance
Smaller companies are also required to comply with UK data law such as the GDPR. For example, if your business stores customers’ personal data, you must ensure you have sufficient IT security to prevent the data being hacked. You must also show that the information is obtained legally and is dealt with fairly. For further information on how your business needs to comply with the principles of GDPR, please fill in the form on our website and one of our solicitors will get back to you.
Employees’ right to work and other checks
This encompasses a range of issues such as:
- Proper documentation e.g. right to work
- DBS check
- A written statement of terms and conditions
- Employees must be paid the National Minimum Wage
Principles of equality
Under the Equality Act 2010, employers must avoid discrimination and promote equality of opportunity. This means it is unlawful for employers to discriminate against anyone on the basis of certain protected characteristics e.g. gender and ethnicity to name a few. Care must be taken when writing job descriptions, hiring and holding exit interviews to ensure potential and existing employees feel supported throughout the process.
Health and safety
Where a business has five or more employees, it is mandatory to have a written health and safety policy in place. As an employer, you are responsible for the safety and wellbeing of your employees which is why carrying out a risk assessment is important. For further information on how to go about this, check out a helpful guide here.
Reporting to HMRC
A successful business needs a good payroll, this will allow it to keep track of wages paid to employees and other information which can be used to report to HMRC. Certain changes to your business need to be reported, such as hiring a new employee or any PAYE deducted.
Without accurate information, a business can be given a penalty which can affect its reputation in the market.
At MLS, we work with clients to ensure that all legal aspects of their business are covered and that they are fully supported through their time with us. Our consultant solicitors have years of experience working in various sectors, which means they have specialist knowledge to provide all round service.
This article is for informational purposes only and does not constitute legal advice. To book your free initial consultation, please call on 01244 478730.
