Charlotte Higgins explains the main legal issues to consider when starting a business
If you are thinking about setting up a new business, where do you start? What legal documents do you need to put in place? Carrying out an internet search can bring up so many results – here is a short guide to the key considerations at the beginning of your journey.
Step one – Legal Form and set up
Although it is very simple to start trading as a sole trader, you will be personally responsible for your business’s debts, together with accounting responsibilities. You may therefore want to look at forming a limited company. A limited company is a separate legal entity, but there are more reporting responsibilities than being a sole trader. Finally, if you have a business partner, you could set up as a partnership and run the business together. Partnerships can take two different legal forms, an unincorporated partnership, or a limited liability partnership (LLP). An LLP has the benefit of the partners not being personally liable for debts.
Step two – Contracts/Terms and conditions
Once you have set up your new business, you will need to consider putting a robust set of terms and conditions in place. These conditions will govern the sale of your products/services or digital content. Where you are dealing with consumers, the Consumer Rights Act 2015 requires certain information to be provided to consumers before they enter into a contract, including, but not limited to, details of the cooling off period, where they can cancel the contract penalty-free.
You will also need to consider putting contracts in place with your suppliers and customers. Your larger suppliers may already have their own contracts, so always ensure that you review these carefully, or ask a lawyer to review the same, to check what obligations you or the company are committing to.
Step three – Property
If you are running your business from home, you may need permission from your mortgage provider or landlord. You may also need permission from your local council, where you are receiving customer deliveries.
If you are renting or buying a commercial property, you may have to pay business rates. Small businesses can apply for a discount on business rates, and some may pay nothing.
Get help and support with your business set up – call Charlotte Higgins on 0114 249 5969.