Launching a new business in the UK: What do I need to know before I get started?
Notwithstanding the current difficult climate caused by covid 19, new businesses continue to be formed. Creating a new enterprise is exciting but the list of considerations before launch day is long. At Lincoln & Rowe we work with start-ups to ensure they have a robust legal foundation in place to give them the best chance of success.
Behind every thriving enterprise is a solid organisational structure that allows the business to comply with legislation, provides certainty for directors and management and can rely on strong contractual documentation when dealing with suppliers and customers.
Seeking legal help from an expert in advising new businesses will ensure that your enterprise has covered all the essentials. We will focus on your aims and objectives and offer practical advice to help you create the successful business that you envisage.
No matter the size of your business, you need to make sure a structure is in place to provide you with a corporate safeguard. We work with clients across a range of areas in relation to business transactions, including formation, finance, contracts, disputes, day-to-day management and scaling of a business or downsizing a business. Read more about our service in corporate law, here.
One of the first decisions you will need to make is how to structure your organisation. The main options are a limited liability company, sole trader, partnership or limited liability partnership.
Provided a company is run in accordance with the legislation set out in the Companies Act 2016, liability for any losses is largely limited to the company and does not usually apply to the directors personally.
To incorporate a new company, you will need to choose a company name, select your directors, shareholders, have an address to use as your registered office and have your constitutional documents drawn up, to include a Memorandum of Association and Articles of Association giving details of how the company will be run and the powers that the directors will have. These documents need to be officially registered at Companies House.
We can advise you on the creation of bespoke Articles of Association that will provide a strong foundation for your new company and discuss with you the decisions that you will need to make regarding capital and shares in your business, to include who is entitled to vote or be paid dividends.
Operating as a sole trader means that you do not have to register a company. You will be solely responsible for the liabilities of your enterprise, to include payment of all taxes.
Creating a partnership with one or more other people means that the liabilities and risks can be shared, although you may well still have individual responsibility for the whole of any debt or other liability. It is important to have a well-drafted partnership agreement in place so that all of the partners understand their role in the business and what funds and voting rights they are entitled to.
A limited liability partnership restricts liability so that it does not extend to personal assets. This type of partnership has to be registered at Companies House meaning that the partnership information is publicly available.
Compliance for new businesses
Running a business requires compliance with numerous rules and legislation. Depending on the type of enterprise, you may need a licence or permit to trade. Strict rules govern some types of sale, for example, online selling and importing or exporting goods can involve complex regulations.
You will also need to comply with data protection laws in respect of any personal information held as well as health and safety requirements.
Along with regulatory compliance, you should also ensure that you have the right sort of insurance in place for your business and that you have adequate cover for all eventualities.
Taking on commercial premises
Leasing commercial premises is one of the biggest commitments a business can make. Commercial leases are notoriously onerous and you should always take independent legal advice before signing one. If a lease is taken on without full consideration of the implications, you run the risk of ending up bound to your premises for a long period of time, liable for extensive repairs or unlimited service charges and unable to sever ties even after you wish to leave.
Taking on employees
If you will be taking on employees, you will need to plan carefully the documentation needed. As well as a comprehensive employment contract, you will need clear disciplinary and grievance procedures which could be set out in an employee’s handbook.
Hiring employees for your business will also mean you need to comply with statutory requirements in respect of pay, working hours, sick pay and holiday and understand the rights and responsibilities that come with employment. You will be required to make National Insurance and pension contributions in respect of each person you take on.
For more information on hiring employees or advice from our solicitors on drafting employment contracts, contact our employment solicitors today.
Contract terms and conditions
The key to good working relationships with others is having strong contracts in place governing your dealings with them. This goes a long way towards avoiding misunderstandings and disputes. Robust contracts will not only protect your rights but can also limit your liabilities should things go wrong.
Read more about Breach of contract explained and the 5 questions you need to ask.
Obtaining finance is often complicated, requiring applications and agreements to be completed and guarantees given. We have the experience to advise you on the benefits and drawbacks of any proposal and will ensure that the legal documentation is in your best interests before you sign.
Expert legal advice
With a wide range of issues to deal with when starting a business, it is always recommended that you seek expert help to ensure that you have covered everything. An experienced corporate solicitor will be able to guide you through the required paperwork and ensure that your position is protected and that your corporate structure is solid.
As well as drawing up the necessary documentation, we will discuss your aims and objectives with you to make sure that your start-up is headed in the right direction.
Robust documentation provides a sound basis for a new business and goes a long way to helping an organisation become successful.
Get in touch with us
We have wide-ranging experience in property and commercial law, and were named as the ‘Commercial Disputes Specialists of the Year” in the Corporate Livewire Innovation & Excellence Awards 2020 as well as ‘Boutique Litigation Law Firm of the Year’ in both the 2019 and 2020 Global Awards by ACQ5.
If you would like to talk to one of our expert legal team about any queries you may have regarding setting up a business in the UK or legal measures to put in place to ensure your business is successful, contact the author, Hugh Mulley, or call the team today on 020 3968 6030 and we’ll be happy to help.
The above information is for general guidance on your rights and responsibilities and is not legal advice. If you need more details on your rights or legal advice about what action to take, please contact a legal advisor.