Starting a business is an exciting venture, but it’s essential to ensure you have all your legal ducks in a row before diving in. From registering your company to complying with employment laws and consumer protection, navigating the legal landscape can be daunting for new entrepreneurs.
To get you started on your journey, we have put together our top 7 legal requirements that you need to know before starting a business in the UK.
1. Select the Right Business Structure
You must first decide on the appropriate business structure for your new business. The most common options include being a sole trader, a limited company, or a partnership.
Each structure has its own requirements and legal implications. It is important to carefully consider the advantages and disadvantages of each option before deciding.
- Sole Trader: A sole trader operates a business independently, with full responsibility and ownership. They enjoy flexibility and simplicity but bear personal liability for any business debts or legal issues.
- Limited Company: A limited company is a distinct legal entity owned by shareholders, offering limited liability protection. Setting up involves more paperwork and financial reporting but allows for profit distribution through dividends.
- Partnership: Partnerships involve multiple individuals sharing responsibilities, profits, and liabilities. General partnerships entail joint liability for debts, while limited partnerships offer some partners limited liability based on their investment.
2. Registering Your Business
Once you have selected your business structure, the next step is to register your business. This process will depend on the type of business structure you have selected.
For example, if you are a sole trader, you will need to register with HM Revenue and Customs (HMRC) for tax purposes. If you have opted for a limited company, you will need to register with Companies House.
3. Develop Internal Legal Documents
To guarantee a strong legal foundation for your business, make sure you create the key internal legal documents. These will include the likes of a privacy policy, terms and conditions for your services or products, contracts for your staff, and any other rules that are important for your business and industry.
Having these documents in place doesn’t just protect your business legally, it also helps everyone understand the expectations.
4. Obtaining Business Insurance
Obtaining the correct insurance coverage is essential to protecting your business.
Some types of insurance are mandatory, such as employer’s liability insurance, which covers compensation costs for employee injuries or illnesses. However, other forms of insurance, such as professional indemnity insurance, may be specific to your industry.
It is therefore crucial you do your homework and assess the risks associated with your business. We recommend consulting with an insurance provider to determine the most suitable coverage for your needs.
5. Acquire Your Industry-Specific Licenses
To operate legally in the UK, certain businesses require industry-specific licenses, accreditation, or permits.
These licenses will vary depending on the nature of your business, such as selling food, playing music, or operating as a street trader. You should research and understand the licensing requirements specific to your industry and comply with them to avoid any legal issues or penalties.
6. Understanding Employment Law
If you intend on employing staff, it is important to familiarise yourself with employment law – understanding the rights of employees, anti-discrimination laws, and the obligations of employers.
It is mandatory to create written contracts or statements of employment that outline the terms and conditions of employment, including pay, working hours, and holiday entitlement. You must also comply with minimum wage laws and ensure that you have proper procedures in place for disciplinary actions or grievances.
The same applies for health and safety obligations. Businesses with five or more employees are required to have a written health and safety policy in place. This policy should outline the steps you will take to ensure the safety and well-being of your employees, identify potential risks, and establish procedures for reporting accidents or incidents.
7. Comply with Data Protection Laws
In today’s digital society, it is more important than ever to ensure your business is complying with the strict data protection laws that safeguard the personal information of customers and employees.
The General Data Protection Regulation (GDPR), now a part of UK law, sets out the rules for businesses that collect, process, and store personal data. You must have a comprehensive data privacy policy in place that outlines how personal data is collected, used, and protected.
Businesses must obtain explicit consent from individuals before processing their personal data and must take appropriate measures to ensure data security.
Commercial & Business Law Solicitors: Howell Jones
Navigating the legal requirements of starting a business can be complex, but it’s an essential part of building a solid foundation for future success. Howell Jones Solicitors in Surrey have been advising businesses for over 35 years – so let us help you too.
Pass your legal administration over to us so you can get on with running your business. By working with our team of commercial and business law solicitors, you will benefit from:
- Direct access to a dedicated, specialist lawyer
- Regular and consistent reports to stay updated.
- A flexible working style with out of hours support if necessary.
- A realistic price to suit your budget.
For more information and to get started, contact one of our solicitors today.
