Last Updated on 18.7.16 by Gemma Lingard
Setting up your own business is no mean feat. With umpteen considerations to take into account before your bright idea gets off the ground, where on earth do you start? Probably one of the most confusing, not to mention daunting, areas that you must contemplate are the legalities behind a new start-up.
You will undoubtedly have countless questions running through your head: What do I need to consider to protect my new company? What can I put in place? How do I make sure I’m not going to be sued if I accidently copy someone’s design? Where will my business live? Can I set up my company to be more financial efficient?
Starting up your own enterprise is extremely demanding. With the correct professional advice and guidance along the way however, it can be made a whole lot easier, more efficient and in the end more cost-effective. A little planned expenditure at the beginning of your start-up to help get your legal affairs in order can be a drop in the ocean compared to the costs of sorting a mess out.
Five basic considerations when setting up a business:
1. Company Structure
As you start-up and eventually expand, the structure of your business is vital to success. A good commercial solicitor can explain all your options and tailor advice to your individual circumstances. The most common options are to set up as either: a sole trader, a partnership, a limited company or limited liability partnership.
If you are going into business with other people, a wise decision would be to have a shareholders’ agreement (for a limited company) or a partnership agreement drafted. This ensures that your financial or non-financial investment is made crystal clear and that the co-partner/co-shareholder know exactly how the relationship is going to be governed from the outset; this makes things so much easier for all parties going forward.
For each of the different company structures, the tax and legal requirements vary, so it is best to get the advice that’s going to help your own personal circumstances and future plans.
2. Intellectual Property
Intellectual Property (IP) is all about protecting your ideas and the creative work you rightfully own. Things such as your designs, artistic works, symbols, images and names can be protected from competitors and other businesses in general who may want to nab your clever ideas. If you own your designs and logos it not only stops other people using them, but also means you can sell them at a later date or make money by allowing people to use them with your permission.
A top tip is to make sure your contracts state that you, and you alone, own the IP for anything that any other agency or designer creates on your behalf.
3. Terms of Business
Arranging your Terms of Business, sometimes known as the T&Cs, are integral right from the start of your venture. With the introduction of the new Consumer Rights Act 2015, sorting out your Terms of Business is especially important now if you trade to the consumer market.
Why? Trading to consumers can be a complex legal setting anyway, but the CRA 2015 has been slimmed down and reorganised which has made it easier for consumers not only to know their rights but to contest bad business practice too. As a business owner therefore, you need to be fully aware of all your obligations.
Even if you are a B2B trading firm your terms of business are a vital part of your business. Doing this correctly will limit potential exposure to regulations and protect your company’s position.
4. Business Premises
Where will your business be operating from? If you are starting off as a home-run business you may want to think about the possible restrictions. Once it comes to choosing a premises there are a number of key questions that need to be answered to help your start-up on the way to success. Questions surrounding the terms of the lease such as: what are the service charges? Can they increase? Can the rent be increased, if so by how much and when? Will you need to obtain planning permission?
5. Networking & Communication
This final point is absolutely key for the success of any SME. Building relationships with useful outside contacts can lead to all sorts of paths, but you have to be active. Speaking to other businesses, owners, people, potential customers and attending networking groups will greatly help to expand your reach and potentially bring the work in either immediately or further down the line. It’s also much better to forge relationships with people who can help you before you actually need them! Get to know a good and trustworthy professionals, such as an accountant, financial advisor and a solicitor.
Communication also needs to utilised internally; this is imperative. It’s amazing how often business owners neglect to speak to their partner or other shareholders.