Setting up your own business will be one of the most exciting yet daunting challenges you will likely ever face. Although it can be easy to get caught up in anticipation of what is to come, it is imperative to take the time to consider all of your legal obligations to prevent issues from arising in the future.
In this article, Langley Wellington’s commercially minded business law solicitors outline some of the main requirements you must consider when setting up your company.
How to Legally Start a Business
Since the coronavirus pandemic, the number of people starting businesses in the UK has grown exponentially. The newfound flexibility introduced by the work-from-home phenomenon has filtered into many people seeking financial freedom from being their own boss and setting up a business.
Although the process of setting up a company is relatively straightforward for many small start-ups, there are often more considerations to address than a person might think.
Depending on the scope of the venture, there are a few core areas that must be considered, including:
- Finances, funding and insurance.
- Intellectual property (IP) rights and protection.
- Commercial property.
- Legal structure.
- Employment law.
Finances, Funding and Insurance
Setting up a business can be expensive, and whether you have utilised loans from family and friends or obtained finances through a government scheme, you should always ensure that you have the appropriate agreements in place to pay back accordingly.
In addition, ensuring that you have implemented the appropriate business insurances before you start trading is vital. Some, such as employers’ liability insurance, are a legal requirement, whilst others, although not legally required, are essential nonetheless.
The exact insurance and documentation pertaining to funding and insuring your company will depend on the nature of your firm, so speaking to a solicitor about the appropriate course of action is vital.
Intellectual Property (IP) Rights and Protection
In today’s digital world, intellectual property is a highly valuable asset. Once you have researched your proposed company name, you will want to register it, alongside your branding, as a trademark. Depending on your business model, you may also consider applying for a patent, particularly in cases where your idea or product is a unique model.
Commercial Property
If you require a physical location, such as a shopfront, factory or distribution centre for your business, you will need to invest in a commercial property. For start-ups, renting a commercial property is likely more realistic and financially attainable. However, some business owners may be in the position to buy premises.
Whether you are looking to lease or buy your commercial property, there are several considerations to be made that will entirely depend on your business model.
Find out more in this article – Points to Consider When Searching for Commercial Premises.
Langley Wellington has an experienced and knowledgeable team of commercial property solicitors. To speak to them today, please call 01452 521 286 (Gloucester Office) or 01242 269 998 (Cheltenham Office).
Legal Structure
The main business structures are sole traders, limited liability partnerships and limited liability companies. Speaking to a legal professional about which structure might be most appropriate for you to adopt is sensible.
- Sole Trader
This is the simplest form of legal structure. To set up in this format, you must notify HMRC, register for self-assessment and file a yearly tax return.
- Partnership/Limited Liability Partnership (LLP)
When merging your capital and expertise with others, you can form either a traditional partnership, which doesn’t require registration with Companies House, or opt for a limited liability partnership, which does. Whichever form of partnership you consider, drafting a thorough partnership agreement is crucial. This document should detail essential business operations such as profit distribution, each partner’s responsibilities, and dispute resolution methods. A comprehensive partnership agreement is important to avoid defaulting to outdated laws, ensuring it mirrors the agreed terms among partners and provides an effective decision-making framework for your business.
- Limited Liability Company
Setting up as a Limited Liability Company is relatively straightforward. A series of documents must be filed with Companies House, including an IN01 Form, Memorandum of Association and Articles of Association. You may choose to set up as a Limited Liability Company rather than as a sole trader, as it is a separate legal entity, meaning your personal liability is limited.
Employment Law
Employment law is a complex area and is ever-changing. As a minimum, if you take on employees, you will need to issue a written statement of their terms of employment. However, it is recommended to take the time and embody particulars relating to your company within a more detailed written contract of employment.
In addition, you will need to consider data protection, health and safety, social media use and pensions.
Solicitor for Company Formation
Research conducted by Legal Services Board (LSB) indicates that the total financial impact of legal issues faced by small businesses in 2017 amounted to £40 billion. Although it can be easy to bypass the importance of focusing on the legalities of setting up your firm, the potential impact of doing so in the future may be financially detrimental to your new business.
At Langley Wellington, we will take the time to carefully understand your business intentions and advise accordingly, ensuring we prioritise your best interests and help you set off on the right foot.
To speak to our team of experienced solicitors about forming your company today, please call 01452 521 286 (Gloucester Office) or 01242 269 998 (Cheltenham Office). Alternatively, email lawyers@langleywellington.co.uk or fill in this contact form.
This blog is not intended to be taken as advice or acted upon. If you are seeking legal advice, please get in touch with our team of solicitors.