As an entrepreneur, you have to become an expert at many many things all in the name of getting your start-up off the ground. One of the most important things you can do, right from the start, is ensuring that your enterprise is compliant with the law.
Calm down, it will be ok, you can do it.
Being legally compliant in the business sense is stuff like knowing what structure your operation will take, if and when you have to register your company, paying taxes, managing employees and getting insurance.
This might all seem quite heavy and confusing but fear not, we’ve pulled together a handy little guide to help you understand it all.
Registering your business
First things first – you need to decide how your business will be structured. This means choosing to operate as a sole trader, a limited company or a partnership.
- Becoming a sole trader is the simplest option. What this means is that you’re personally liable for all business debts.
- A limited company can be owned and operated by one or more people. As the business is its own legal entity, you aren’t personally liable for business debts.
- A partnership is a way for two or more people to run a business together.
A biggee. We’ve covered this in depth before in another blog, but in short-
- If you’re a sole trader and earn more than £1,000 you must register for self-assessment with HM Revenue & Customs (HMRC) and pay your taxes.
- If you have chosen to operate as a limited company, you must file accounts with HMRC and pay corporation tax on any profit your business makes.
- If your turnover exceeds £85,000 you must register for VAT.
Understanding whether your business needs insurance can be tricky. Some types of insurance may be required for certain businesses, while other types are simply recommended.
- If you have employees then you are legally required to have employers’ liability insurance.
- Professional indemnity insurance is recommended if your business provides advice or services, as it protects you if you face a legal claim from a client.
If you have employees then you need to be aware of employment regulations. There’s a lot of rules and regulations to get to grips with but here are some of the most important ones:
- Before your team member’s first payday, you must register as an employer with HMRC.
- You have to pay the National Minimum Wage
- You must give new staff a written statement of employment.
- While there are many sources of help and advice from government websites, you should seek professional legal advice if you’re unsure of your obligations or the regulations your business needs to meet.
- We’ve been working with Qlegal and Queen Mary University to create a legal toolkit which covers most all aspects of your business and the law. Contact us if you’d like to be informed when the toolkit is available.
Dealing with all this stuff may be the last thing on your mind when launching a business but believe us, getting this all right from the beginning can not only save you time later down the road, but also money. There are so many boxes to tick when starting your business, but don’t let it stress you out. We’re here every step of the way to help you to get your business off to the best start.