There are many demands on the time and resources of anyone running a small business, and bringing lawyers on board to advise on these at the outset will probably not be at the top of the agenda. Here are our 5 suggestions to help small businesses avoid legal issues from the start.
1. Have clear contractual terms in place
Whether you are selling goods or services (or both) you should have a clear set of terms and conditions which apply to your transactions. These will provide certainty for both you and your customers, help your business come across professionally, and avoid the time, stress and possible expense of any disputes with your customers.
2. Tax registrations and compliance
Regardless of what structure you use to run your small business you will need to account to HMRC for the money you make. It pays to ensure you have the correct tax registrations in place, ensure you are keeping the necessary documentation to support your tax position, be clear on when filing deadlines are and find an accountant that can support you in doing this. Tax penalties are an unnecessary cost for your business, which quickly mount up.
3. Protect your intellectual property and ensure you don’t infringe other people’s
Intellectual property can take many different forms – it can be the mark or logo you use for your business, copyright in the work that you do, rights in the designs or inventions you have which may be protected by patent. Protecting these, whether by official registrations, confidentiality agreements or in your standard terms can help protect the value you are working hard to create in your business and avoid any disputes about ownership of intellectual property.
4. Get the right legal framework in place for your business
There are many different legal forms which you can use to run your business – sole trader, partnerships and companies are 3 of the most common. You should consider which is most appropriate for your business and ensure it is established correctly. For example, a partnership can be created when 2 or more people carry on business together with a view to making a profit. You may therefore, already be in partnership with someone and be subject to general principles of partnership law (which date back to 1890!) without being aware of it. If you clearly set out your intentions in writing from the outset it can avoid disputes and costs at a later date. Different tax regimes apply to different business forms, which should also be taken account of, and different legal frameworks will be easier to gain investment or loans through.
5. Be aware of regulations which apply to your business
There are regulations which apply to businesses across the board, such as data protection regulations, and also industry specific regulations which you will need to be aware of and comply with. In addition, where you are dealing with consumers they enjoy additional rights under consumer protection legislation, which you need to put steps in place to comply with. Aside of any regulatory penalties you may suffer damage to your business reputation if you fall foul of these.
By Hannah Ives, Lawbite