Starting a business is an exciting venture, but it comes with a range of legal requirements that you must adhere to. Here's a brief introduction to some key legal areas you need to consider.
Choosing Your Company’s Legal Status
One of the first decisions you’ll make when starting your business is deciding its legal status. This choice affects how you run your business, pay taxes, and record accounts. The main options include:
Sole Trader: Simple setup, personal liability.
Limited Company: Separate legal entity, limited liability.
Limited Liability Partnership (LLP): Partnership with limited liability.
Community Interest Company (CIC): For businesses with a social purpose.
Changing your company’s legal status later can be disruptive and costly, so it’s important to choose carefully from the start.
Registering Your Company Name
For limited companies, your company name must be registered with Companies House. This registration:
Is legally required.
Must be displayed at your registered office and on all company literature.
Does not protect your name from being used by others in trade.
To protect your trading name and logo, consider trademark registration through the Intellectual Property Office.
Sole traders using a trading name other than their own must display this name at their business premises and on all company materials.
Understanding Tax, National Insurance, and Financial Obligations
Your tax and National Insurance obligations vary depending on your business’s legal status:
Sole Traders: Pay taxes through HMRC’s self-assessment system.
Limited Companies: Directors pay through PAYE; the company deducts tax and National Insurance for employees.
Some businesses may need to register for VAT.
More tax information can be found on the HMRC website but appointing an Accountant can take out some of the stress!
Complying with Health and Safety Laws
Health and Safety legislation applies to all businesses, regardless of size. Key requirements include:
Risk Assessments: Must be conducted by all businesses.
Recording Assessments: Legally required if you employ more than five people.
Safe Environment: Employers must ensure the safety of employees and customers.
Additional regulations may apply to specific equipment and hazardous substances.
Securing Insurance Cover
Businesses must have certain types of insurance, and it is good practice to have other policies typically:
Employer’s Liability Insurance: Minimum £5 million cover required if staff are employed; certificate displayed on premises.
Public Liability Insurance: Covers accidents or injuries involving the public.
Professional Indemnity Insurance: Protects against professional errors.
Income Protection Insurance: Recommended for sole traders in case of illness or injury.
Abiding by Consumer Law and Trading Licences
All businesses selling goods or services to consumers must comply with consumer legislation, such as The Consumer Rights Act 2015. Some specific types of business will also require trading licences that are normally granted by the relevant local authority.
Adhering to Employment Law
If your business employs staff, you must comply with various employment laws, including:
National Minimum Wage Act
Equality Act
Working Time Regulations
Employment Act
How Claric can help
There isn’t a one-stop shop encompassing all your legal requirements however our team at Claric specializes in commercial and corporate law and can help with a multitude of legal matters including:
Contracts for the sale/supply of goods and services: Many businesses will require these.
Website Terms & Conditions: almost all businesses will have a website.
Agency and Distribution Agreements: Essential for businesses with supply chains.
Outsourcing Agreements: Covering intellectual property, data protection, and employment law to create robust outsourcing contracts.
Joint Ventures, Partnership and Shareholder Agreements: For multi-party ventures.
Consumer Protection: Compliance with consumer laws to protect your customer relationships.
Additional Consultations
As mentioned, it’s crucial to seek out the further specialised help. For example:
An Employment Law Legal Adviser
An Accountant
A Business Insurance Company or Broker
Your Local Authority
Conclusion
Starting a business involves many legal steps, but with careful planning and the right support, you can set a solid foundation for your entrepreneurial success.
Good luck with your new venture!
To learn more about the services Claric provides, contact Richard Jenkins at 024 7698 0613 or richard@clariclegal.co.uk. Claric is here to support your new business in building a solid foundation for future success.
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