Running a business can present you with many unexpected legal issues. This article is just a brief guide, for specific advice you need to seek professional legal advice. Here is a selection of legal issues that you will need to consider or address:
1. Don’t put your personal assets at risk.
If you are starting a business with one or more people, you can choose to set up a partnership, limited liability partnership (LLP) or limited company. In a partnership, all partners are jointly liable for any debts and you will be risking your personal assets if you come up against a legal problem. A limited company is better than a partnership or sole proprietorship because the company becomes an entity in its own right and you are less likely to risk your own assets like your house. Check with a lawyer which sort of company you should set up.
2. Put it in writing
Make sure all your business agreements are confirmed in writing. If you agree something verbally then get a written confirmation as well as verbal agreements are hard to prove. Having a written record also prevents people from trying to change their minds in the future or trying to change their story later.
3. Get advice early on
To avoid problems later, which are harder to sort out once they have happened, you should seek and pay for professional advice early on. Lawyers can give you an estimated price and might give a package price for services like drawing up contracts or forming a company.
4. Find a recommended solicitor
Because there are so many different types of law, and solicitors specialise in different areas, it can be hard to find what you want. A good way to start is to ask other companies who they use. Also ask the solicitors for testimonials and references from clients and don’t afraid to follow them up.
5. The health and safety minefield
All businesses have to assess potential risks in the workplace by law and fines for health and safety problems can be substantial. If your firm has more than five people you need to have a written statement that should address what to do in the event of a fire and the procedure for reporting and dealing with accidents. There are legal obligations for displaying health and safety notices, having first aid facilities and much more. In the UK see the Health and Safety Executive for more information www.hse.gov.uk.
6. Always have terms and conditions
Always ensure your customers are aware of your terms and conditions and that they confirm in writing to confirm them each time you do a transaction with them. T&Cs outline what the client can expect but more importantly what you expect of them, in particular when you would expect to be paid. Always have terms (when you want to be paid by) and get them to agree to them to avoid delayed payments. You might also want to put in clauses for what happens with late payments – perhaps adding interest.
7. Keep regularly updated on changes in the law
It is important to keep up-to-date and you might do this through your solicitor or government agencies that send out newsletters. Employment law in particular is one area that is constantly changing so it is important to keep up. For example every employer must now provide a statement of employment, clearly laying down certain details, but these may be a little too basic so you might want to include policies that are not needed by law, but that would be beneficial to you (for example the notice period).
8. Keep employment contracts clear and simple
The way you word a contract of employment is very important – it should be as clear and easy to understand as possible with sentences that are short and to the point. You are not expected to be an expert in employment law so this might be a good case for getting a lawyer involved. Once written, employment contracts can be used for most staff. There are companies that provide template documents that are kept up to date legally – we like ‘Simply Docs’ – search them on Google.
9. Make sure you are insured
All businesses need insurances that are relevant to the size of the company and what it does so it is important to get it right and not pay too much. An insurance broker with experience in business insurance will be happy to help you but make sure you get at least three quotes and you don’t let them over insure you (they get commission!). Try asking your business contacts if they can recommend anyone.
10. Protect your intellectual property
If you create a new product or service, check through a patent search and a trademark search to avoid potential conflicts with any existing products, trademarks or patents. You don’t want to have to go to the expense of renaming or re-launching your product.