Build your business on strong legal foundations
The prospect of becoming your own boss and starting a new company is an exciting time for anyone. Once you have your business ideas and objectives, it is important not to get carried away and overlook the key legal steps you need to take when setting it up.
Firstly, you need to consider how your business will be structured. Do you intend to operate as a sole trader, a traditional partnership, a limited liability partnership or a limited company? If you are going it alone, setting up as a sole trader may seem the easiest and most straightforward option. However, in the long run it could leave you vulnerable and if you decide to grow and expand the business, you will be personally responsible if your business is sued or goes bankrupt.
The great advantage of being a limited liability partnership or a limited company is that your personal assets are unlikely to be called upon to satisfy any of the business liabilities. You will, however, have to comply with the legal formalities of running such entities, which will have cost implications, and there will also be tax considerations to be addressed.
Take notice of trademarks. Before naming your business, do a quick internet search to make sure that no one else is using the name and that it will not be infringing on someone else’s trademark, as this can prevent potential disputes over who has rights to the name in the future. Equally, make sure you trademark any unique products or services to prevent others from supplying them without your consent.
Find out if you will require a licence. Whilst most are aware that a licence is required to sell alcohol, taxi firms, pet shops, hairdressers, food outlets, tattooists and child-minders will also need to ensure they have appropriate licences before they can start running.
Finally, if you are going into business with someone else, you should always enter into an agreement with them setting out matters such as how the business should be run, how the finances should be dealt with and what you may withdraw from the business. It is import to decide these matters at the start while you are still friends because, if things go wrong, it may be costly to extract yourself and your finances.
Sarah Astley is an Associate
at Gullands Solicitors and
can be contacted at