Employment – Is Your Business Legal

When starting up a business the excitement that follows can often mean that the essentials that make your business legal can often be forgotten. Along with starting the business you love and believe in, creating your own hours and being your own boss, comes a great responsibility. But you don’t need to feel daunted when starting your business as we’ve put together a checklist of legal requirements that you may need to consider for your start up.

Choosing your Legal Structure

Firstly, you will need to decide on the legal structure of your business. The legal structure of your business will define how your business will be operated, what you are required to report and what information, if any need to be placed in the public domain. It is important to define your legal structure straight away or you may unknowingly begin operating in a structure that doesn’t suit you.

The four main structure types are; sole trader, partnership, limited company and limited liability partnership. The easiest to set up is as a sole trader as full control is retained, with little financial reporting. However, it’s important to note that you as an individual are responsible for any debt the company owes and will often pay more tax as a result. Whereas setting up as a limited company has less personal financial exposure and gives you the ability to work for corporate clients, however financial reports must be placed in the public domain. The government website is the best resource to use when deciding what you should register as.

Insurance Requirements

You will need to register for employers’ liability insurance to protect yourself from claims of compensation which have risen from employee injury or illness which were sustained during their working role. Employers’ liability insurance is required under law as the minimum standard to protect your business against claims made.

If your business will undertake work that requires work in or with the public then you may also need to take out public liability insurance to protect against claims made by the public or other companies. You may also wish to take out insurance to protect your premises or key staff member. Policies relating to health and safety and the environment may also help to protect your business.

Laws and Regulations

Your business will also need to adhere to laws and regulations set by the UK government. Laws and regulations aren’t there to hinder your business and can actually help to protect your business from competitors, customers, employees and suppliers.

Regulations you may need to read up on include; the rights on intellectual property, health and safety and environment requirements. Even naming your business may have implications so it’s important to check your company name does not conflict with other trademarks or intellectual property.

If your business revolves around customer data then you will also need to ensure you are aware of the data protection act and only use data for the purpose you obtained it under. It is best to seek professional legal advice on the laws and regulations you need to abide by.

Employee Rules

Employing your first business employee is an exciting step when starting up your business so ensuring you know your rights as an employer is essential. Employment law is there to keep you as an employer and your employees protected. When you become an employer you are required to register with HMRC to begin deducting tax and National Insurance from your employees pay.  You will also need to set up a payroll system and PAYE.

Employment contracts will need to detail the hours an employee is required to work, holiday entitlement and salary and adhere to the minimum statutory requirements which are set by the government. You may also wish to establish disciplinary and discrimination procedures in your contract.