No matter how enthusiastic an entrepreneur, legal obligations are something he least looks forward to. In this article we provide for you the key issues that you need to address to kick start your business swiftly with minimum resistance from the law makers.
The law might appear to be a constraint on the upfront, but in effect it is a tool aimed at protecting you and your business. All you have to do is be aware of your responsibilities and stick to the right side for a smooth ride. Following are the main legal considerations that you must take care of before plunging headlong into the operations of your business.
The Key Legal Issues:
There are 7 in 10 chances that the trade you want to be involved in requires you to obtain a license. Check with your council. Restaurants and café’s for example have to be registered for food and health safety standards. Operating in the entertainment industry also requires a license.
Additionally, don’t forget to get your business insured to benefit from loss of license cover if ever fate puts you in a difficult situation.
Your legal structure has the make it or break it power. There are three structure types to choose from each with its own set of advantages and disadvantages – sole proprietorship, partnership and limited company.
The sole trader option involves the least hassle. In return for taking complete personal risk for your business, you come under the category of self employed. You are required to fill a self assessment form at year end, together with your accounts. Though administrative tasks are reduced to a bare minimum, be prepared to lose your home in case your venture fails.
If you go for partnership, the risk that you were facing above now falls on two shoulders instead of one. Additionally, you are required to submit accounts to HM Revenue and Customs alongside the self assessments. To avoid conflicts, you must formulate a partnership agreement to specify the rights and obligations of yourself and your partner.
As a limited company, there will be complete separation between your business and personal assets. The legal administrative tasks will increase multifold though for the law needs to safeguard the interests of those who put their assets to risk by investing in your business. You are required to register with the Companies House and submit accounts annually otherwise you will have to pay penalties. A number of other restrictions are also put in terms of staffing and taxes.
Your business name should be unique in title and essence. Check online and with local area authorities to make sure the name you choose for your business isn’t already in use. Ideally, it shouldn’t even be close to another business’s name. If a Shoe House already exists, The Shoe House or The House of Shoes is definitely not advisable. You don’t want competitors suing you for stealing their brand name.
4. Intellectual Capital
If you feel your products or processes are novel in nature, make it a point to file for a patent. It is not uncommon for your employees to get attracted to the greener pastures of your competitor. When that happens, there is a possibility that your competition can make your competitive advantage an industry trend.
If you plan to expand internationally, then UK patent protection is not enough. International patenting will be needed. Trademark, design and copyright are other forms of protecting your intellectual capital. You might want to check out www.ipo.gov.uk , the Intellectual Property Office website.
Taxes are best handled by taxmen. Hire an accountant. It is prudent to seek professional advice in this area. VAT registration, yearly returns and tax leeway can all be taken care of by an accountant.
To sum up, mere research can help you cross the law maze.
- Find out if your business needs a license to operate and get one.
- Decide upon a structure that balances risk with return.
- Make sure you document everything from Day 1.
- Choose a unique name.
- Research again to find out if what you do is novel in nature and needs to be safeguarded.
- Take professional advice where needed specifically for taxes.
Given you do the above, dealing with the law will be less strenuous than generating cash for your business or finding the first customer.