If you are considering starting a business, then you could be excused for feeling bewildered. After all, there are reams of laws applicable to the process of forming a business – and you may fear that it would take an age for you to discern which of these laws would come into play for you specifically.
For this reason, we have decided to untangle some of the legal complexities of starting a business – and so help you see which legal needs to which you should pay the most attention.
What technical form will your business take?
A business can have one of various types of legal structure. However, the majority of businesses are registered as a sole trader, limited company or partnership, says the GOV.UK site. Which of these structures you should choose for your firm can strongly depend on personal needs and preferences.
It would be most straightforward for you to start out as a sole trader; this would give you personal responsibility for the company’s debts and some accounting, too. Forming as a limited company would separate your corporate and personal finances, but also task you with a greater degree of reporting and management.
If you intend to run the business with at least one other person, forming that business as a partnership would be the simplest strategy – and share out responsibility for corporate debts.
Choose a legally sound business name
Your company’s name must be distinct from names of other companies in the same sector. Otherwise, people could be misled into thinking your company is a different one. This, in turn, may lead you to incur a charge of “passing off” that could expensively land you in court.
For this reason, Law Donut advises that you look through the Companies House index of companies before you settle on a name, which also must not already be trademarked.
Will insurance be legally necessary?
There are various types of insurance available for businesses – and your startup is likely to need at least one of these types. If you are an employer rather than handling all of the corporate responsibilities alone, one legal necessity is employers’ liability insurance, as the ABI points out.
This insurance can help you fund compensation payouts to staff if they become ill or injured due to carrying out work for your business. Even if you aren’t an employer but do use vehicles for business use, then this would, by law, require you to hold commercial motor insurance.
There are other forms of insurance that are legally optional, but could still be wise for you to take out, depending on your business. For example, commercial property insurance could assist you in paying for repair or rebuilding of your corporate premises if they incur damage, while cyber insurance can ease your making of financial amends for losses resulting from damaged IT systems.
You could treat a single broker, Be Wiser Business Insurance, as a source for various types of corporate insurance that meet your needs while remaining favourably priced.