Top legal issues when starting in business
Thinking of starting a business on your own or with a business partner? Don’t leave it too late to consider the legal issues and budget for them! Here are the top issues we are most commonly asked to advise on by new entrepreneurs:
Business Entity: Will you start up as a sole trader (under your own name) or will you be trading through a company? The most important distinction to highlight is that you will incur personal liability in respect of the business if you trade as a sole trader, whereas, with a private limited company, you generally have limited liability (subject to certain exceptions under corporate and insolvency law). If you are starting your business with others, then you should consider putting in place a shareholders agreement or a partnership agreement to govern how the business will run and the timing of when profits will be extracted from the company or business, to avoid disagreements about key management decisions.
Intellectual Property: Do you have a trading name or trade mark? Are you using the name as a domain name? In order to avoid having to rebrand at a later date, you should choose your business name carefully and consider protecting the name and logo as a trade mark.
Property: Do you need premises for your business or will you operate from your home? You will need specialist legal advice if you intend to take on a lease so that you understand your obligations.
Employment: you will need to issue written terms and conditions of business to anyone you employ and make sure you have appropriate procedures in place to avoid claims of unfair dismissal or discrimination. Have you recently left employment yourself? Do you need advice on restrictive covenants which may impact on your new business?
Data Protection: are you going to be processing personal data? Make sure you understand what you need to do to avoid costly fines.
Consumers: will you be trading with consumers or other businesses? Consumers have additional rights in sales contracts and you should make sure you have appropriate terms and conditions of business in place in order to protect your business.
Please contact Sarah Liddiard if you would like more information about the issues raised in this article or any aspect of corporate commercial law.