Legal Matters to Consider for Setting Up a Business

March 23, 2016, By

Setting up a business can be both a fearful and exciting new venture, and even more so in today’s tough and challenging economic climate. Before setting up a new business there are some very important legal matters that you should consider before starting up. Here are some useful legal requirements that you should investigate further to ensure a successful start up.

Which legal structure is best for setting up a business?

Deciding on and selecting the correct legal structure for your new business is one of the first and most important decisions that you will need to make. You have a choice to trade as a Partnership, Sole Trader, Limited Liability Partnership (LLP), Limited Liability Company or a Franchise.

It is essential that you speak to a legal advisor and an accountant before making a final decision. Each legal structure has different rules; your choice will depend on a number of factors. These can include the size and nature of the business, your exposure to personal liability and the level of public disclosure of your business records. The tax rate will also vary dependent on each legal structure.

Bind all agreements in writing

It is surprising how many businesses supply goods and services merely on the basis of informal, verbal arrangements.

This is extremely risky. The chance of a dispute arising is high, as there is no agreement evidenced in writing. It is vital that you ensure that all your business deals and agreements are confirmed in writing.

If you enter into a verbal agreement, make sure that you follow it up with a confirmation in writing. Anything that is agreed to verbally is extremely difficult, if not impossible, to prove and rely on if problems arise at a later stage. Therefore, to safeguard yourself and your business, you must keep a written record of all agreements as this will help prevent any complications arising if things need to be proved at a later stage.

Make your terms and conditions clear and concise

It is important that you have suitable Terms and Conditions in place when setting up a business. These will be incorporated in the contract between you and your customer for your supply of goods or services. Many businesses often give their Terms & Conditions low priority until a dispute arises, by which time it is too late.

Terms & Conditions are designed to protect your rights, limit or define your liabilities and obligations and provide you with some security when you sell your goods or provide a service. Therefore, it is clear that having Terms & Conditions in place are best for you and your business.

It is important that you draft your Terms & Conditions carefully to ensure that they are enforceable. You should also ensure that they are incorporated into your business practices, so you can safely rely on them in the case of a dispute.

A qualified solicitor can help you draft suitable Terms & Conditions specific to your business.

Issue employment contracts to any employee, including yourself

Often, when setting up a business, employment contracts comprise another area that can be ineffectively set out. Businesses can also fail to keep them up to date, so it is encouraged to implement best practices from the outset.

Again, if any problems arise with an employee, having an employment contract in place which clearly sets out the terms of employment will help resolve matters much more quickly than merely relying on verbal arrangements.

For the benefit of your employees, make sure your employment contracts are worded clearly and are easy to understand. As well as basic working information, you should include all information that you feel is appropriate to include which is specific to the employee and employer relationship.

A qualified employment law solicitor can help you draft employment contracts and set out all the necessary legal requirements needed.


You will need some premises to trade from when setting up a business. Once you have located a possible site, you will legally need a lease or some other occupational licence in place to govern your occupation and protect you.

Intellectual Property

Intellectual property (IP) isn’t solely relevant to larger businesses or those involved in developing innovative new products. All businesses have IP – and it can be a highly valuable asset that needs protecting. It is the difference between the value of your business in terms of its physical assets, and its real value in the market.

A qualified IP solicitor can help in identifying and protecting intellectual property rights and helping you to fully capitalise and exploit those rights.

Keep up to date with changes in the law

Certain areas of the law regularly change. Both Employment and Health and Safety Law are areas that are constantly changing.

It’s important that you keep up-to-date with these changes, and that all documents and agreements that you have take effect of these.

There are also many other areas of law that you and your new business must comply with. You should appoint a qualified solicitor to advise you of these changes, how they affect your business and what action needs to be taken.

Get legal advice

Before setting up a business, it is highly recommended to seek legal advice from a reputable qualified solicitor.

Ask for an estimate of the cost of their services. Some solicitors will even offer a package price for jobs like forming a company.

It sometimes pays to ask your solicitor to recommend to you an accountant or insurance broker as they may have an ongoing business relationship with these other companies who may be able to offer to you their services at discounted rates.

Remember, if you take proper legal advice from the outset you are less likely to face problems in the future. It will save you money, as many problems that arise at a later stage will probably cost more to resolve.

How we can help

At Slater Heelis, our knowledgeable and experienced corporate solicitors can offer the best legal advice and help draft all legal documents for anyone looking to start up a business and for SME’s.

Putting in place a contractual framework is essential. The contracts you enter into with your customers are important documents; terms and conditions are essential to recovering debts and dealing with ownership of goods, and employment contracts are very important in order to avoid potential disputes with employees.

Our legal expertise will enable you to make sure that you have met all the legal requirements necessary for the running of a successful business and help avoid any problems arising in the future.

Call us on 0161 969 3131 or request a callback and we will be in touch.