What Are the Legal Requirements for Business To Start?
Getting a new business off the ground and running is no small feat. There is a lot that goes into it, requiring careful planning and preparation. Moreover, there are also essential legal requirements for business to start that must be considered.
Not sure where to start? We have you covered. This guide explains each legal requirement to ensure that you don’t overlook anything in your business venture.
Here’s What We’ll Cover:
Your Legal Requirements
Business owners have a lot to consider. Not only do you need to formulate a strong business plan, but you also have legal obligations. Unfortunately, so much is involved in starting a business that the legalities often get overlooked.
But that’s one area that you want to ensure absolute adherence to. Failure to comply is likely to result in legal troubles. But you can avoid such concerns by addressing the following:
Choose a Unique Business Name
It might seem like an easy task, but choosing a business name that isn’t already taken is often easier said than done. What’s more, you want to try to avoid selecting a name that shares similarities with an existing company.
Failure to choose a unique name could result in intellectual property disputes and court proceedings. There are many ways to check if your name is available. Check with your local government office and don’t neglect the internet. A quick web search will likely tell you what you need to know.
Select a Business Structure
Your business’s legal status affects how you operate your company. It will affect the records you have to keep, what National Insurance and taxes you will pay, and other legal aspects. If you have to register your business type with the government Companies House, that’s another step you will need to complete.
As a business owner in the UK, you can register as either a sole trader, a limited liability company, or a partnership. The latter is the easiest route for new business owners. However, that doesn’t mean it’s the best long-term option.
It’s important to choose the structure that benefits you the most. So you will want to consider your possibilities and plan accordingly.
You’ll have to invest in one of the various types of business insurance. And you might have to maintain certain policies, as well. If you operate a business that has company vehicles, for example, you will need to make sure they are insured.
Other types of insurance that you might have to secure include:
- Workers Compensation Insurance
- Professional Liability Insurance
- Professional Indemnity
You’ll want to speak with several insurance companies to ensure that you’re getting the best rates. But this is one area that could end your business if you don’t follow through with it.
Another essential in the UK is Value-Added Tax (VAT). This is a sales tax that applies to most goods and services. Whether you need to charge this sales tax depends on what you sell. Most children’s clothing items and foods don’t have VAT.
As such, you’ll need to check with the government’s website to see if VAT applies to your business.
Business License and Planning Permission
The type of business you operate determines whether you need a license. And if you have a home-based business, you may need to get an operating agreement that says you can run a business from there.
Register with HMRC
If you have at least one business employee, you will need to register with HMRC. From the time you hire an employee, you have four weeks to register. It’s your responsibility to deduct any National Insurance and business income tax contributions.
These are some of the most common requirements that you will need to adhere to. However, there are many others that might affect you, including:
- National Minimum Wage
- Employee Statement
- Health and Safety
- Applicant Checks
The government’s website will inform you on what applies to you based on your business’s legal structure.
If you’re struggling to get started, you might consider retaining legal counsel. A business lawyer can assist you in making the right decisions based on the law. You can also find support on our Resource Hub. We have articles discussing VAT, how to start a business, and much more.