Starting your own business can be both exciting and nerve-wracking, especially if you’ve never done it before.
The legal requirements may seem overwhelming to anyone starting out, so we’ve set out a ten point guide outlining the key things that you will need to do or consider when starting up your business.
1. Register Your Business
You’ve had your business idea and you’re ready to go for it. The first step is to register your business. You’ll need to decide on your business structure. The four main types are:
- Limited Company
- Sole trader
- Partnership
- Limited Liability Partnership
There are different registration processes and requirements for each type and each has its own pros and cons. When starting a business, it’s not always easy deciding on a business structure so it is advisable to research your options so you can work out which best suits your plans.
2. Company Structure and Issuing of Shares
If you’re going into business with others, you will need to consider the company structure.
- Will one party own a larger percentage of the company than another or will you own it equally?
- Who will be appointed as directors?
- Will there be multiple shareholders?
If you are setting up a limited company there will be a Memorandum of Association signed by the shareholders or guarantors of the company on incorporation, and Articles of Association which will outline rules on running the company – this can either be in a standard form or specific to your company.
If your company has multiple shareholders, it would also be beneficial to put in place a shareholders agreement which can provide further provisions to the articles of association and greater protection if things go wrong later down the line. You can find further information on why it’s beneficial to put a shareholders agreement in place in our previous blog post here.
3. Insurance
While it’s not a legal requirement to take out business insurance, it is advisable to protect yourself in case things go wrong. But it doesn’t end there, you may be required to take out specific types of insurance by your regulator in order to operate.
If your business is planning to take on any employees, it’s also a legal requirement to have employers liability insurance in place, although this isn’t necessary if your employees are members of your immediate family.
4. Licences
Depending what the business is, you may need to obtain specific licences before you can start trading. Licences are required for a variety of industries, such as licences to sell alcohol, gambling services, importing or exporting goods or providing financial services. These are just a few of the activities that businesses require licences for in order to operate legally. Make sure you know if your company is required to hold any specific licences before you begin trading, or your business could be at risk of a fine or criminal conviction.
5. Intellectual Property
Intellectual property includes intangible creations that may form a big part of your business. This may be a logo, a process, symbols, designs or images. If you have any intellectual property that’s important to your business, it’s worthwhile taking the time to protect it. The main ways that this can be done are:
- Copyright
- Patents
- Trademarks
- Trade secrets
6. Taxation
Any new company will need to register with HMRC for Corporation Tax this can be done through the Government website. You will need to file Company Tax Returns – you can either prepare these yourself or get an accountant to do it for you.
You will also need to register for VAT if your taxable turnover is more that £85,000.
7. Data protection
If your business is storing or using personal data in any way, you will need to make sure that your business is GDPR compliant. This can include data on staff or potential job candidates, customers, and suppliers.
Personal data includes any information by which the person (data subject) can be identified from. This is not just their name but will include things like their address or other personal details that they can be identified from. In order to be GDPR compliant, you will need to establish where your data comes from and how it’s handled. This should be properly documented in a Privacy Policy.
If your company will be processing personal data of any kind, you may also need to pay a fee to the Information Commissioner’s Office (ICO), unless the reason for processing the data falls into one of the ICO’s exemptions. If you’re not sure whether you need to pay the fee, you can take a short survey at: https://ico.org.uk/for-organisations/data-protection-fee/self-assessment/ to find out.
8. Employment
If your business intends to recruit employees, there are a few things you’ll need to put in place or be aware of. These include:
- Applicant checks
- Employment contracts
- Registering as an employer with HMRC
- Employee liability insurance
- Pension auto-enrolment
- Health and safety obligations
- Staff handbooks and policies
9. Customer contracts
If your business is intending to supply services to customers, you may want to put contracts in place which will make sure you’re all on the same page, ensure you’re protected if anything goes wrong later on down the line and minimise the chances of a dispute.
You may want to consider:
- Terms and Conditions
- Supply of goods/services agreements.
10. Contracts with suppliers
In addition to customer contracts, it is also worth putting in place similar contracts with any suppliers. Again, this will make sure the relationship between the parties is clearly defined and ensures both parties understand how their relationship will work. Similarly to customer contracts, it is useful to have Terms and Conditions in place with your suppliers. Other commercial contracts that can be considered include:
- Distribution agreements
- Licencing agreements
Starting up a business is a big step, so we’re here to help however we can. We can assist with:
- Start-up advice
- Shareholders agreements
- Employment contracts
- Employment advice
- Commercial contract
Click here to contact us and find out how we can help.