Legal Requirements You Need To Know To Start a Small Business in the UK

Legal requirements you need to know to start a small business in the UK
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It can be challenging and confusing to understand all of the legal requirements for Starting a Small Business. One of the major concerns has to do with hiring employees and being aware of the laws and regulations for a business to meet employment regulations in the UK.
In this article, we want to put your concerns to rest by outlining the measures for consideration when Starting a Small Business in the UK.

Intellectual Property refers to Intellectual Assets, Ideas, Patents, Trademarks, Copyright etc.

Name Your Company

Your first job is to give your new company a name and make it distinctive. You can be accused of trying to present your company as another if the name is too close to one of an already existing company. Therefore you should do your research when selecting your business’ name.

Start.Biz has a unique Business Name Search Tool which allows you check whether the name of the business you want to use has already been registered with Company’s House, it also allows you to check various Social Media Handles, Domain Names and allows you to see what email addresses are available.

Companies House is a typical place many go to check whether the business name they want has already been taken, but it must be remembered that this does not cover the work of Sole Traders and Non Limited Businesses. There are also some words that are sensitive terms that are unable to be used when forming a company. It is also good practice to also complete a Trade Mark Check to ensure your business’ name hasn’t already been registered as a trade mark as you may be infringing someone else’s IP before you even start.

Start.Biz is on hand to assist in this, either through the tool or by contacting our team we are able to ensure the business name you register is not a copy of someone else’s business and no infringement of trade marks is taking place.

Register Your Company

You must officially register your business in order to start trading. You need to decide which business structure—Sole Trader, Partnership, or Limited Company—best meets your goals. It can be intimidating to launch a small business, but once you’re registered, the possibilities are endless!

It can be intimidating to launch a small business, but once you're registered, the possibilities are endless!

For more on this, read our Ultimate Guide to Registering a Business Name in the UK. It lays out in detail how you can pursue Business Name Registration or Trade Mark Registration.

Obtain a Licence

For certain enterprises to operate lawfully, the local government must provide a licence. Hotels, hair salons, street vendors, boarding kennels, and restaurants are a few examples.
To find out if you need to register or receive a licence, get in touch with your local government and ask to talk with Local Planning or the Building Control Office.

Get Insured

Once you’ve established your company, it’s vital to safeguard it in case something goes wrong. This is where insurance comes in.

Employer’s Liability Insurance

All companies with employees are required to have employer’s liability insurance. This is to shield you against any disputes an employee could bring after experiencing sickness or injury while working for you.

Commercial Motor Insurance

If staff need to use vehicles, commercial motor insurance is also required. You might also need to apply for licences if you sell food or perform music.

Public Liability Insurance

This covers the cost of claims made by members of the public for incidents that occur in connection with your business activities, for example, personal injuries or the loss or damage to property.

Professional Indemnity Insurance

This is mandated by law for certain professions, such as those of architects, attorneys, and some healthcare providers. This takes care of the price of any compensation granted to clients for losses or damages brought on by poor service.

Employing People

When the question is to describe the legal obligations of a small business, employing people is the front where much of it applies. If you plan to hire people, you must ensure that you abide by all applicable employment laws. You need to ensure that you are undertaking or setting up the following:

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Perform Applicant Screening

It is your legal obligation as an employer to confirm that all potential employees are eligible to work in the UK. You can also be required to undergo a DBS check, often known as a criminal records check, depending on the industry you work in. If you and your company don’t, you might be subject to a civil fine.

It is your legal obligation as an employer to confirm that all potential employees are eligible to work in the UK.

Register with the HMRC

After hiring your first employee, you typically have four weeks to register with HMRC. Any taxes and National Insurance contributions must be withheld from your staff members’ salaries by you. If you don’t make the necessary preparations, you’ll also be accountable for paying any outstanding business or employee taxes at the year’s end.

Ensure Minimum Wage

The national minimum wage must be paid to all employees for all hours worked. Each employee’s age and position do, however, affect their pay.

Auto-Enrol in Pensions

Employers are required to enrol all eligible employees in workplace pension plans. There are a number of things such as age or hours worked/salary earned which may make an employee ineligible but this needs to be looked into on a case by case basis. There are many pension plans that either demand that you or the govt match a certain amount of each employee’s pension.

Employment Statement

All employees who will work for you for more than a month must have a formal statement of employment from you. Within eight weeks of their date of joining, employees must receive this statement that outlines the terms of their employment, including the hours and salary. In addition, staff should receive a contract. You can do so by integrating it to the statement of employment. Their rights, obligations, and working circumstances are specifically described in the contract.

Health and Safety

All businesses are expected to give their employees a safe place to work. A formal, documented health and safety policy is required if you employ more than five people. This covers a safe working environment, safe entry to the workplace, safe work processes, safe use of tools, safe worker relationships, and protection against injury hazards.

Create Internal Legal Documentation

Making internal legal documentation is one of the key requirements to start a business and a way to give your customers, workers, and possible investors trust in your company.

internal legal documentation

Privacy Policy

The current GDPR requirement in place mean that you need to ensure you have a Privacy Policy. Describe how your customers’ data will be gathered, utilised, kept, and safeguarded in your privacy policy. It ought to specify whether sharing of any personal information could be necessary.
Small firms are also legally required to protect employee information and to lay out a clear plan for its usage. The best approach to safeguard data is to store it in HR software. To guarantee that your employees are fully informed of how their personal data will be held, for what reason, and how long it will be retained, have a transparent Privacy Policy and make it accessible and up-to-date.

Company Manual

You will probably update and add to your company manual as your firm expands. In essence, it is a book that summarises how you run your firm. It must always be accessible to the workforce; you may either provide each employee with a copy or keep it easily accessible in another way for review. It may include:

Mission Statement

The mission statement should outline your company’s history, goals, and desired outcomes.

Rules of Your Business

Your company’s rules, together with any other company-specific regulations, are often extensions of any additional legal requirements. This might include things like responding to calls, desk policy beyond work hours etc.

Ensure Equal Opportunity

Employers are not permitted to discriminate against any employee based on protected traits like race, age, gender etc. There are several points in the hiring process when businesses might unintentionally slip up, so it’s critical to get knowledgeable about discrimination laws right away and ensure that you do not fall foul of them!

Employers are not permitted to discriminate against any employee based on protected traits like race, age, gender etc.

Don’t let legal obligations overwhelm you.

There is a lot to consider, so this may all seem overwhelming, but I hope this information will help you prepare and fulfil your legal requirements. It is preferable to begin small while keeping the overall vision in mind. To stay focused on your original goals, keep returning to your standard business strategy.
Visit the official UK govt website or get in touch with a legal professional immediately for help or advice if you ever have concerns or questions about certain legal obligations. Good luck with your business endeavours!

At Start.Biz, we help businesses get things set up. So, reach out to us today for all your business needs–legal or otherwise–and let’s position you for success!

Summary

  • Research potential names to ensure no infringement.
  • Register your company and give it a distinctive name.
  • Obtain a licence if your business is required to have it.
  • Get insurance coverage to mitigate possible risks. This may include employer’s liability insurance, commercial motor insurance and professional indemnity insurance.
  • When employing people, perform a DBS check, register with HMRC, ensure a minimum wage for employees, auto-enrol in pensions, provide an employment state that may possibly also include the contract, and set out a health and safety policy.
  • Create internal legal documentation, such as a privacy policy and a company manual.
  • Lastly, ensure equal opportunity.

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