Starting a business can be a daunting prospect. There are loads of people to help you establish one and the law is there to guide you with each step. Just follow them and you are open for business.
Before the start-up
You need to gather your finances, decide upon the type of company structure (solo, LLP, partnership, limited company), the area of business, the supply demand in the current market, etc have to be very carefully planned.
A part of your hard-earned cash is in some way going to go into the government’s pockets. If you are running a limited company, corporation tax (21%) is levied. Value added tax is levied on goods within UK (15%). If you have employee then additional national insurance has to be contributed. Solo traders pay taxes via self assessment and register with Her Majesty’s Revenue & Customs.
Banking and insurance
It is mandated by the law to have a separate business account for all traders. Insurance is another integral part of business. This too is a legal requirement. A commercial lawyer can give you accurate advice on how to handle insurance. Solo traders are exempted from these laws if they own 50% of the share capital. Some types of insurance are:
Insurance is mandatory as per public liability in case somebody visits your company premises.
Employer’s liability in case you hire employee.
Professional indemnity is for those businesses providing services. It is a legal requirement for accountants and highly recommended for others.
Funding and payments
Sometimes it can be difficult to raise the capital all on your own. You may want an investor. The laws dealing with business and finances come into action.
For payments, the Late payment of commercial debts Act 1998 gives businesses the rights to charge interest for late payments.
The sales of goods act, 1979 and amendment act of 1994 form the legal bridge between you and the consumers. These laws talk of the consumer’s rights, disputes and remedies. If you want to export the gods, there are separate export laws and taxes to be looked into.
Hire an employment solicitor to draft an employment contract between you and the employee. The contract needs to be very clear and crisp, addressing every possible situation. There should be no loopholes for unnecessary compensation claims. The contract must speak of the damages to be paid for in case of breach of contract.