Starting a business? The ‘dos and don’ts’
11th July 2016
The number of new business start-ups is rising and, according to government statistics, 99% of all businesses in the private sector are regarded as ‘small’ or ‘medium’ sized.
Here are some important matters to consider before commencing a new business venture.
What’s in a name?
- Do check that someone else is not already trading with the same business name in the same sector.
- Don’t forget there are certain restrictions to consider when choosing a company name – check at Companies House.
- Don’t forget the legal requirements for business stationery, emails and websites.
- Don’t forget to think about domain names too.
Structure of the business
- Do spend time deciding on the legal structure of the business, e.g. sole trader, (unlimited) partnership, limited liability partnership or company.
You will need to consider the level of financial risk you are prepared to take and the level of control you want to have in the daily running of the business. The tax treatment is often a decisive factor and do speak to your accountant. You will also need to consider reporting, accounts and records that you need to keep and filing requirements.
If you choose to set up a company then:
- Don’t underestimate the importance of a shareholders’ agreement as agreeing specific provisions between the shareholders at the outset can save costly disputes later. Shareholders’ agreements regulate the management of the company and provide a structure in the event of deadlock, or a party wishing to exit, as well as clarifying the position in the event of the demise of a party.
- Don’t overlook your company books and deadlines for Companies House filings – a company secretarial assistant or accountant can help with this.
- Do have a standard non-disclosure agreement setting out how you share sensitive information about your business for dealing with investors, banks, suppliers and customers.
- Do ensure that you have written contracts in place with key customers and suppliers.
- Do invest time and money in preparing your standard terms and conditions of trading. These set out the key commercial and legal terms on which you are willing to do business and help to create certainty and minimise legal disputes. Getting your terms and conditions right is also crucial to maintaining a healthy cash flow.
- Do review long term contracts during their lifetime.
Protect your assets
- Don’t forget to protect/register your intellectual property. Make sure that you own it, and consider the terms of any licences that you may grant.
- Don’t forget to organise insurance for your business, e.g.: Employer’s Liability Insurance – if you are employing staff;
- Public Liability Insurance – if you are dealing with members of the public on your premises to cover accidents or injuries; an
- Professional Indemnity Insurance – to protect against claims made against the company for professional errors.
- Don’t forget about data protection. If you handle personal information about individuals, such as name, address, date of birth or other information from which they can be identified, you should register with the Information Commissioner’s Office, unless you are exempt.
Taking on employees
- Do assess the status of your workforce and ensure that you agree contracts based on their correct status, i.e. directors’ service agreements, consultancy agreements or employment contracts.
- Do ensure that you have adequate non-contractual policies in place to minimise liability and maximise company protection, e.g. anti-bribery, data protection, equal opportunities, IT and communications, health and safety and social media.
Above all, take specialist legal or business advice if you are unsure. Taking advice early on should be viewed as an investment in your business to maximise value and minimise risk of issues or disputes arising.