10 Types of Legal Documents Your Start-Up Needs in the UK

Ownership Documents

As a newly formed business, your start-up will require legal documents which govern the relationship between co-owners of the business.

There are two main types of documents to consider depending on your business structure:

• Shareholders Agreements and Articles of Association

If you’ve set up a limited company with others, you will need a shareholder agreement and articles of association. These documents outline the rights and responsibilities attached to each type of share, rules around decision-making and share transfers, and outline what happens in various scenarios such as the departure or death of a shareholder or disputes between shareholders.

• Partnership Agreements

If your business is a partnership, a partnership agreement is essential. This document outlines the duties, rights and responsibilities of all partners involved. It can help streamline the decision-making process of the partnership, as you will know exactly how decisions are made at a strategic level within the company. A partnership agreement will also provide for what happens if a partner leaves the partnership. 

Data Protection Documents

Personal data is any information that relates to a person who could be identified, directly or indirectly, based on that information.

Most businesses nowadays will collect personal data in some way. For example, information relating to employees of the business, or email addresses of customers or clients. 

Handling personal data in the UK is regulated by UK GDPR, and the consequences of failing to comply can be very serious.  If your business deals with customers, suppliers or partners in other countries, you may have to comply with the data protection rules of that country also.

The data protection documents each company needs will depend on its data processing activities, but they will generally include a data protection policy, privacy notices and data processing agreements.

Having the right data protection documents in place helps businesses communicate what personal data they collect and process, as well as what they intend to do with it. This is a legal requirement, so it’s important to get it right. 

Terms and Conditions

If you’ve ever used an online store or business website, you’re probably familiar with the famous Terms and Conditions (or T&Cs). Any business that has a website that visitors interact with needs a comprehensive T&C document that contains:

• Terms of use for your visitors
• How products and services are delivered
• Cancellation and renewal policies

Your T&C document shouldn’t just be a template downloaded from the internet – it needs to be specifically tailored to your business and also updated regularly to avoid any issues. If you’re unsure how to write your T&C document, consider hiring an expert legal team specialised in advice for start-up businesses. 

Contracts for Goods/Services

As a business, you will also need legal documents to record any trades of goods and services, regardless of whether you are the buyer or the seller. 

There are two ways to go about it:

• Unique contracts, tailored to a specific deal (e.g. hiring a consultancy service)
• Standard contracts, presented on a take-it-or-leave-it basis (e.g. selling goods in an online store)

Whether unique or standard contracts are most appropriate will depend on the goods or services you’re buying or selling. In either case, it’s important that the contracts relate specifically to your business and cover key areas of risk. As a minimum, they should include:

• an accurate description of the goods or services being provided
• pricing and payment terms
• any relevant time frames for the supply of goods or services
• ownership of any deliverables
• term of the contract
• termination rights
• other provisions specific to the goods or services in question.

It’s important to get legal advice from an expert commercial lawyer on what to include in your contracts, to make sure your business is properly protected.

Intellectual Property

As a business owner just getting started on the fulfilling journey of entrepreneurship, you should become familiar with the term “intellectual property rights”. If you’re introducing new ideas, new designs, or any other form of intellectual property (“IP”), you will want to make sure you protect them from potentially being stolen. IP can also include things such as your brand name and logo, trade secrets, your website content, or your customer database. 

The form of IP protection you need will depend on the type of IP. It might include registering a patent to protect inventions or innovations, or a trade mark to protect your trading name and logo.

When working with third parties such as investors, vendors, suppliers, and independent contractors, you may have to share confidential IP with them. This is where a Non-Disclosure Agreement (NDA, or confidentiality agreement) comes into play. An NDA can help:

• State which information provided to third parties is to be kept secret
• Outline the potential legal recourse taken in case of confidentiality breach 

Some sensitive information could jeopardise your business if revealed to the wrong parties, so it’s important to protect yourself with an NDA. You should also consider what sensitive information you need to share and whether there are any technological or other ways of limiting how that information can be used.

Lease/Tenancy Agreements

If your business has physical premises, you’ll need a tenancy or licence agreement for it. This agreement will be provided by your landlord, but it is important to make sure you understand the terms and are not leaving your business unnecessarily exposed.

These terms and conditions include but are not limited to:

• Tenancy term
• Rent amount
• Insurance
• Liability for repairs, alterations, and improvements
• Subletting and assignment
• Termination and renewal rights of each party
• Security (for example rent deposit or personal guarantee) 

Tax

When starting a new business in the UK, there are several key tax documents you need to have in place:

1. Registration Documents: Depending on your business structure (sole trader, partnership, or limited company), you must register with HM Revenue and Customs (HMRC). Sole traders and partnerships need to register for self-assessment, while limited companies must register for Corporation Tax.
2. VAT Registration: If your business’s taxable turnover exceeds the VAT threshold (currently £85,000), you must register for VAT. You’ll need to keep records of sales and purchases, issue VAT invoices, and submit VAT returns.
3. PAYE Registration: If you plan to employ staff, you must register as an employer with HMRC and operate PAYE (Pay As You Earn) to handle income tax and National Insurance contributions.
4. Business Rates: If you operate from business premises, you may need to pay business rates. Ensure you have documentation related to your business property and any applicable reliefs.
5. Annual Accounts and Tax Returns: Limited companies must prepare annual accounts and submit a Company Tax Return to HMRC. Sole traders and partnerships need to complete an annual Self-assessment tax return.
6. Record Keeping: Maintain accurate records of all business income and expenses, as well as any other relevant financial documents. This is crucial for tax purposes and for preparing your annual accounts.

These documents are essential for ensuring your business complies with UK tax laws and operates smoothly.

Health and Safety

As a business, you will need to abide by strict health and safety regulations to ensure you, your customers, and your employees stay protected. If your business operations deal with heavy machinery or chemicals, you might have additional laws that you need to adhere to. The basic requirement for documents includes:

• Risk assessments (in writing if you have five or more employees)
• Health and safety policy (in writing if you have five or more employees)
• Accident and incident reports
• Information and training for employees
• Poster in your workplace setting out health and safety laws.

However, make sure to check your industry’s health and safety regulations, which could impose further obligations. You can find more details on the HSE website.

Employment 

Even if your business only has one or two employees, you will still need to make sure you keep a contract for each. The contract ensures that each employee is fully aware of their employment terms, responsibilities, and salary. It can also include clauses that give additional you additional protection, such as post-termination restrictive covenants which prevent departing employees from taking clients or colleagues with them.

You should also have policies that set out information on grievances, disciplinary action, and other HR procedures.

Insurance

When starting a new business in the UK, securing the right insurance policies is crucial to protect against unforeseen risks and liabilities. You will need:

• Employers’ liability insurance – legally required if you hire staff, covering claims for workplace injuries or illnesses. 
• Public liability insurance – essential for businesses interacting with the public, protecting against claims for injury or property damage caused by your business activities. 
• Professional indemnity insurance – vital for businesses providing professional services or advice, covering legal costs and compensation if a client suffers a financial loss due to your work. 
• Product liability insurance – important for businesses manufacturing or supplying products, safeguarding against claims of injury or damage caused by defective products. 

Other key insurances include commercial property insurance to protect your business premises and contents, and cyber insurance to cover data breaches and cyber-attacks. These insurances help ensure your business is well protected from various risks, allowing you to focus on growth and success.

Why Is It Important to Have The Right Legal Documents as a Start-up?

Now having the right documents in place exposes you and your business to risk. Not only can this affect your reputation, but it also leaves you vulnerable to potential legal issues and disputes. After all, the law can’t protect you if you don’t follow it. 

Any potential disputes that arise from non-existent or poorly made written contracts can lead to a lot of money and time loss, resources which are essential to running your business and achieving your goals. 

On the other hand, having the right documents in place reduces uncertainty and risk, and shows customers, partners and investors that you are a well-run business that takes compliance seriously and manages risk.