While starting a new business is an exciting adventure to embark on, as you turn your ideas into reality, there are some complex aspects to a business that you need to think about, such as the legal requirements you need to know to start a business to meet. Not only will this ensure that your business is capable of running efficiently, but it will also reduce your risk of getting a fine or penalty, as well as protect you and your business if in the unfortunate event you run into problems with a customer, supplier, employee or competitor.
It can be a challenging area to navigate, as the law is extremely complex. Here are some of the most important legal requirements you need to know about to start a business.
Setting up your tax is vital. The tax rules for your business will depend on your business structure, for example, a sole trader or a limited company. Income tax is payable on an individual’s income, so if you are registered as a sole trader or limited company, you will be liable to pay once the salary goes over the personal threshold. Corporation tax is paid on the profit of a limited company, minus any losses. This is not paid by sole traders. Regardless of the structure of your business, all businesses will have to register and pay VAT if it makes more than £85,000 in sales a year. National Insurance is not the same as corporation tax and VAT but is still money paid to the government. The amount of National Insurance you pay will depend on your type of business, and which class it fits into.
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Insurance and licenses
Some insurance policies are recommended for protection, while others are necessary. For example, if you hire employees, then you are required to have Employer’s Liability Insurance. It is recommended that you also invest in public liability insurance, contents insurance, professional indemnity insurance, cyber liability insurance, and more. It is important before you start selling your goods or services, that you check with your local authority to see what licenses are required. Some industries, such as the sale of alcohol, hairdressers, taxis, restaurants, etc. require specific licenses to run.
There is a range of documents that are legally required when you have a business. Some of these include certificates of incorporation from the company’s house, which may need certificate attestation, contracts for selling to individuals and businesses, confidentiality agreements, data protection policies, and much more. It is vital that you have the correct documentation for your business and industry before you sell anything.
You have to be careful when you act as a business. From designing your logo to posting on social media, you need to ensure that you are not breaching the trademark of another individual or business. You should also ensure that you get a trademark and copyright on your business information and designs to protect them.
If you plan to employ staff, you will need to ensure that you have the correct contracts in place that meet legal requirements, have suitable working conditions, terms and conditions, work permits, and much more. Employment laws are constantly evolving, but you must stay up-to-date with them, or your business may risk problems, such as penalties.
These legal requirements you need to know to start a business and to ensure your business can run successfully, and thrive, so you must put all the legal components in place first.