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 starting a business there are some very important legal matters that you should consider. Here are our corporate team’s top ten legal considerations that you should investigate further to ensure that you are following laws and regulations from the outset of your new venture.
1. 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 one of the following:
- Partnership
- Sole Trader
- Limited Liability Partnership (LLP)
- Limited Liability Company
- 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.
2. 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. Getting into this routine when setting up the business will ensure best practice going forward.
If you enter into a verbal agreement, make sure that you follow it up with a confirmation in writing. Anything agreed to verbally is extremely difficult, if not impossible, to prove or rely on if problems arise at a later stage. To safeguard yourself and your business, therefore, 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.
3. Make your terms and conditions clear and concise
It is important that you have suitable Terms and Conditions in place when starting a business. These will be incorporated in the contract between you and your customer for your supply of goods or services. Many new 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.
When starting a business venture, it is important that you draft your Terms & Conditions carefully. Doing so will 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.
4. 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. If you require guidance in drafting policies such as those around Equality, Diversity and Inclusion, your employment law solicitor will be able to advise.
5. Premises
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.
If you are starting a business that operates solely online, you will need to set up a website and/or a social media presence. It is important that you follow guidance in terms of data protection law and advertising standards to avoid complaints.
6. Register the company name and logo
You may have the perfect name in mind before you go about starting your business up. It is advise that you do a comprehensive search online before deciding which name to go for. If there is another business in existence with the same name, you will need to be aware of infringing on its trademark.
When you have decided on which name to go with, you may wish to register it, along with a logo, as a trademark before any other people try to register their company with the same name.
7. 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.
On top of trademarking your brand name, a qualified IP solicitor can help in identifying and protecting intellectual property rights and helping you to fully capitalise and exploit those rights.
8. 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. All documents and agreements should be updated in accordance with any such changes.
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.
9. Check for any industry specific legislation or licences
Depending on the type of business you are setting up, you may need to adhere to additional laws or rules in order to operate lawfully.
This could include licensing laws if you will be selling alcohol, or additional measures that must be taken such as DBS checks for those working with children or vulnerable adults.
Becoming a member of a regulating body within the industry that you work will not only prove that you are qualified, but you may also be able to get registered on their directories, which could give your business extra credibility
10. 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. You may be able to get ongoing support to ensure you stay on top of changes to the law and other requirements. This would mean to could carry on with your day to day work.
It sometimes pays to ask your solicitor to recommend to you an accountant or insurance broker. There may have an ongoing business relationship with other companies who may be able to offer you their services at discounted rates.
Remember, taking proper legal advice from the outset means 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 SME’s and anyone setting up a business.
- 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
- 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.