Find a Solicitor to Set up a Business

Set Up A Business

Setting up a new business is an exciting venture, but it comes with a lot of legal and regulatory challenges. Whether you're launching a startup, expanding a family business, or exploring new business opportunities, having a trusted corporate lawyer by your side can ensure you start on the right foot and avoid costly mistakes.

How can a solicitor help you set up a business?

Legal structure

Choosing the right legal structure for your business is important for its success and growth.

Whether you opt for a sole trader, partnership, limited liability company, or other forms, a solicitor can guide you in making the best choice for your needs.

Compliance and regulations

Business laws and regulations can be difficult to grasp.

A solicitor ensures that your business complies with all legal requirements, from registering with Companies House to getting all the necessary licenses and permits.

Contracts and agreements

A solicitor can draft and review contracts and agreements including partnership agreements, shareholder agreements, terms of service, and supplier contracts to protect your interests.

Intellectual property

When you set up a business, protecting your intellectual property is vital for maintaining a competitive edge.

A solicitor can help you with trademark registration, patent applications, and safeguarding your brand.

At Lawhive, our network of specialist corporate lawyers is on hand to provide legal services for new businesses, helping you navigate the complexities of setting up your business with confidence and ease.

Contact us today for a free case evaluation and quote for the services of an expert corporate lawyer in our network.

How to set up a business

Setting up a business in the UK involves a few key steps.

If you've landed on an idea and are ready to get started, here's a simple step-by-step guide to help you get started.

• Choose your business structure;
• Register your business with HMRC or Companies House;
• Name your business and, if you're a limited company, check it isn't already taken;
• Set up a separate business bank account;
• Register for appropriate taxes such as VAT, Corporation Tax, and PAYE;
• Obtain the necessary licenses or permits depending on your business type;
• Consider getting insurance to protect your business from risks like liability, property damage, or loss.

Need help? We get it. Setting up a business can be complex, but you don't have to go it alone. Contact us today for quick, affordable expert legal guidance and support.

Our network of friendly corporate solicitors is here to support you every step of the way.

How to register a new business

Registering a new business in the UK is relatively straightforward. That being said, how you go about it depends on your business structure.

For example, if you choose to act as a sole trader, you only need to register as self-employed with HMRC. This can be done online.

On the other hand, if you're setting up a business as a limited company, you need to register with Companies House and provide a registered office address, along with other responsibilities like appointing at least one director and preparing articles of association.

What sources of finance are available when setting up a business?

When setting up a business, securing the right funding is vital for success.

Common sources of finance available to help get your business off the ground include:

• Using your own money;
• Borrowing money from family or friends;
• Getting a bank loan;
• Government grants and loans;
• Investment from venture capital firms in exchange for equity;
• Investment from angel investors;
• Crowdfunding;
• Business grants;
• Trade credit;
• Borrowing money against your business's unpaid invoices (invoice financing);
• Leasing and hire purchase agreements.

When financing your new business it's important to make sure the appropriate contracts and agreements are in place like personal loan agreements or shareholder agreements.

What are the tax implications of setting up a business?

Different business structures have different tax obligations. For example, sole traders pay income tax on business profits, while limited companies pay corporation tax.

Below we'll cover some of the common tax implications of setting up a business.

VAT

You should register VAT if your business turnover exceeds the VAT threshold.

You can also voluntarily register if your turnover is below the threshold to reclaim VAT on business expenses.

If you are VAT registered, you must submit regular VAT returns and make payments to HMRC.

Corporation Tax

Limited companies should register for corporation tax within three months of starting to trade and file annual corporation tax returns.

PAYE

If your business has employees, you must set up a PAYE scheme to deduct income tax and National Insurance from employee wages.

Self-Assessment

Sole traders and partners must complete a self-assessment tax return each year to report income and expenses.

Dividend Tax

If your business is a limited company and you pay dividends to shareholders, these dividends are subject to dividend tax. The rates vary depending on the shareholder's income tax bracket.

Capital Gains Tax

If you sell or dispose of business assets for more than you paid for them, you may need to pay capital gains tax. This applies to assets like property, equipment, or shares.

If you need support with any of the following, our experienced network of corporate lawyers is on hand to assist you in setting up your business correctly and making sure you meet all legal and tax obligations.

Contact us today to find out more.

What employment laws must I comply with when setting up a business?

If you hire staff for your new business, there are certain employment laws you must follow including:

• Providing written employment contracts;
• Verifying that all employees have the legal right to work in the UK;
• Compliance with National Minimum Wage and Living Wage requirements;
• Automatically enrolling eligible employees into workplace pension schemes.

What health and safety regulations must I follow?

When setting up a business, the key health and safety regulations you need to follow include:

• Conducting risk assessments
• Providing a safe work environment;
• Fire safety;
• Employee health and safety training and information;
• Health and safety policies;
• First aid;
• Incident reporting.

When starting a new business, protecting your intellectual property is essential to establishing and maintaining your competitive edge.

You can protect your intellectual property in several ways depending on the type of business and what you're trying to protect.

Brand names, logos, and slogans

Trademarks protect brand names, logos, and slogans, giving you the exclusive right to use them in connection with your goods or services.

To do this, you must apply for trademark registration with the UK Intellectual Property Office.

Inventions

Patents protect inventions and grant exclusive rights to use and commercialise them.

To do this, you should file a patent application with the IPO.

Literature, music, art, and software

Copyrights protect 'original works of authorship.'

Copyright protection is automatic in the UK as soon as work is created and fixed in a tangible form. However, registering your work with a copyright service can provide evidence of ownership.

Visual appearance of products

Design rights protect the visual appearance of products, including the shape, configuration, and decoration.

While unregistered design rights provide some automatic protection, registered rights offer stronger protection.

As such, you can apply for design registration with the IPO. This gives you exclusive rights to a design.

Confidential business information

When you set up a business, there will likely be information you want to keep secret from competitors.

To protect this, it's important to use non-disclosure agreements when sharing confidential information with anyone and implement internal policies to safeguard trade secrets, like access controls and confidentiality agreements.

There are several ways and means to protect your intellectual property when setting up a business.

When these are in place you can enforce your rights through legal channels, such as sending cease and desist letters or filing lawsuits in the event of intellectual property infringement.

What consumer protection laws should I know about?

When you set up a business, it's important to understand and follow the various consumer protection laws that are in place to make sure consumers are treated fairly.

Here are some key consumer protection laws you should be aware of:

Consumer Rights Act 2015

The Consumer Rights Act 2015 consolidates various consumer rights laws, ensuring fair treatment for consumers regarding goods, services, and digital content.

Under the Act, consumers have the right to refunds, repairs, or replacements if goods or services are not up to standard.

Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013

The Consumer Contracts (Information, Cancellation, and Additional Charges) Regulations 2013 apply to distance selling, off-premises contracts, and on-premises contracts.

Under these regulations, consumers have the right to cancel certain contracts within 14 days without any reason.

Furthermore, businesses must provide clear and comprehensive pre-contract information to consumers.

Unfair Trading Regulations 2008

Unfair Trading Regulations 2008 prevent businesses from engaging in unfair commercial practices, such as:

• Providing false information or missing out crucial information that could mislead consumers;
• Aggressive commercial practices that could coerce or harass consumers;
• Advertising products you do not intend to supply.

General Data Protection Regulations (GDPR)

GDPR regulates how business collect, use, and protect personal data.

Under these laws, data processing must be lawful, fair, and transparent. Further, consumers have rights regarding their data including the right to erasure.

What licenses or permits might my business need?

General business licenses

Some local councils require businesses to get a general business license.

You should check with your local authority for specific requirements.

Food and drink businesses

If your business involves the sale of food or beverages, you will need specific licenses, such as:

• Food Business Registration
• Alcohol License
• Street Trading License.

Businesses that impact the environment, such as those that produce waste or emissions, may require environmental permits.

Certain professions require specific licenses to operate legally. Examples include:

• Medical Practitioners
• Lawyers
• Accountants.

If your business involves public entertainment, events, or performances, you might need:

• Entertainment License: For live music, performances, or other public entertainment.
• Event Permits: For public events, including street fairs or festivals.

Do I need a business bank account to set up a business?

Sole traders are not legally required to have a separate business bank account. Nor are partnerships unless the partnership agreement stipulates it.

Limited companies, however, are legally required to have a separate business bank account. This is because a limited company is a separate legal entity from its owners. As such, its finances must be kept separate from personal finances.

Why is managing cash flow important when setting up a business?

Cash flow management is important for making sure your business can cover its operations and operate smoothly.

Proper cash flow management helps you:

• Pay your suppliers, employees, and taxes;
• Avoid insolvency or financial distress;
• Plan for future investments and growth opportunities;
• Secure financing.

To help you with cash flow when setting up a business, a solicitor can draft and review contracts to ensure favourable, clear payment terms including late payment penalties and termination clauses.

What types of insurance are legally required for my business?

Employers' Liability Insurance

If you employ staff, you are legally required to have employers' liability insurance, which covers claims made by employees who are injured or become ill due to their work.

The law requires a minimum coverage of £5 million. Failure to have this insurance can result in substantial fines of up to £2,500 per day!

Public Liability Insurance

Public liability insurance is not required by law, but highly recommended.

This type of insurance covers claims made by third parties (customers, clients, or the public) for injury or property damage caused by your business activities.

Professional Indemnity Insurance

Professional indemnity insurance is mandatory for some professions, like solicitors, accountants, and architects.

It covers legal costs and damages if a client claims that professional advice or services caused them financial loss.

What legal documents do I need when setting up a business?

While setting up a business is exciting, it does come with its fair share of paperwork, such as:

• Business plans
• Articles of association
• Partnership agreement
• Employment contracts
• Shareholder agreement
• Non-disclosure agreements
• Health and safety policy
• Terms and conditions
• Privacy policy
• Franchise agreement.

If you need any help drafting or reviewing these documents, contact us for a fixed fee quote for the services of our specialist lawyers today.

What legal obligations do I have regarding financial record-keeping?

Maintaining accurate records

You must keep detailed records of all income and expenses related to your business. This includes:

• Sales invoices;
• Receipts;
• Bank statements.

You are required to keep financial records for at least six years from the end of the last company financial year they relate to.

Payroll records

If you employ staff, you must keep payroll records, including details of employees' pay and deductions.

You must also report this information to HMRC through Real-Time Information.

What happens if I fall out with a partner or a shareholder?

When you set up a business, there are steps you can take to mitigate the risks in the event of disputes between you and your partners or shareholders.

Both partnership agreements and shareholders' agreements can be used to outline how such disputes will be handled and cover decision-making processes, roles, and responsibilities.

It's also a good idea to include clauses in such agreements that require mediation or arbitration before pursuing legal action.

Furthermore, it's a good idea to specify conditions under which one partner can buy out the other's shares.

Can I be forced out of the business?

Under certain conditions, you can be forced out of your business.

Shareholders and partnership agreements can include terms for the removal of a partner under certain circumstances.

In some cases, other partners or shareholders can also seek legal action to remove a member if they are harming a business.

How should we divide profits and responsibilities fairly?

When setting up your business, you should clearly outline the division in your partnership or shareholders' agreement and use objective performance metrics to determine profit-sharing responsibilities.

What will happen to my business if I get ill or die?

While not particularly pleasant to think about, when you set up your business it's important to come up with both a business continuity plan that includes procedures for temporary management if you become ill and a succession plan that stipulates who will take over the business, or your share of it if you die.

You can also specify what happens to your business interests in your will, and following professional advice may decide to set up a trust to manage business assets.

Do I need to register my business premises?

You may need to register your business premises depending on your business type and activities, particularly if you require premises licenses or you employ staff.

What should I consider when choosing business premises?

If you need to secure a business premises as part of setting up a business, key considerations include:

• Location
• Cost (including rent, utilities, and any service charges)
• Size and layout;
• Legal requirements for your business type.

When choosing a business premises, it's also important to thoroughly understand your legal obligations, especially when leasing.

As such, make sure you understand the terms of the commercial lease agreement and your responsibilities for maintaining and repairing the premises.

Do I need a solicitor to set up a business?

It's not strictly necessary to hire a solicitor to set up a business, but doing so can help you put your best foot forward on your entrepreneurial journey.

A solicitor can help you avoid common pitfalls of setting up a business, ensure compliance with regulations, and protect your business interests from the outset.

More specifically, a solicitor can provide valuable guidance on the best business structure, draft and review critical legal documents, and help you get to grips with complex legal requirements.

How can Lawhive help me set up a business?

At Lawhive, we understand that setting up a business can be both exciting and overwhelming.

Our network of experienced corporate solicitors is here to provide comprehensive support and guidance throughout the process.

Choosing the right business structure

Your solicitor will help you determine the best business structure for your needs and explain the legal and tax implications of each structure.

Drafting and reviewing legal documents

From partnership agreements and shareholder agreements to customised articles of association and all-important employment contracts, your solicitor is on hand to draft and review contracts and agreements to meet your obligations and protect your business interests.

Intellectual property protection

Your solicitor can assist in registering trademarks and patents to protect your brand and inventions.

Further, if your business involves the production of original works, like software, they can support you with copyright protection.

Compliance with regulations

Your solicitor can help you identify and obtain the necessary licenses and permits for your business activities.

What's more, they can provide actionable advice on data protection laws to ensure your business complies with GDPR.

Business continuity and planning

Your solicitor can help you plan for the future of your new business in case of illness or death.

Further, they can support you with buy-sell agreements to manage the transfer of business ownership smoothly if you decide to sell your business or buy a new one.

Why choose Lawhive?

• We offer tailored advice and services to meet the unique needs of your business;
• Our network of solicitors has extensive experience in corporate law and business setup.
• From initial setup to ongoing legal support, we provide all the legal services your business needs in one place for affordable fixed fees.

Contact us today for a free case evaluation and quote for the services of a specialist lawyer.

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