The essential legal checklist for start-ups

An attractive woman completes her start up tasks online

There are some important legal processes you'll need to tackle when you start a business. Get them right from day one and you'll soon be successfully up and running

Starting and running a new business in the UK is one heck of a journey. We've put together a simple checklist to ensure your company is staying on the right side of the law. Protect your business now rather than leaving it until it's too late - legal problems can be some of the worst, most stressful and shockingly expensive issues you could face.

1. Incorporation and business structure

Setting up incorrectly from day one means the entire foundation of your business is flawed. Contracts could be void, investment cancelled, IP deregistered, causing lots of business damage where you least expect it. Incorporation is an important step. Ensure you have the rights to use your company registered office, that your Articles of Association are suitable for your intended business and that all company documents such as share certificates have been issued.

2. Founder, director and shareholder documentation

If there's more than just you as the director and owner, then you must ensure agreements and other legal documents are in place which prevent any future disputes or problems. Did you know that more than 50% of new businesses that are controlled by more than two individuals have a dispute in their lifetime? Be certain that founder and shareholder agreements exist, together with the obligations and the requirements needed to be a lawful director and/or employee of the business.

3. Licences, authorisation and permits

Some new businesses require special authorisation to get started. Make sure your business is not missing any special approval, permits, licences or otherwise. Conduct a Google search for your industry and business type to see if other competitors have needed a special clearance of sorts. If you think something is needed, make sure you speak to a lawyer or advisor as soon as possible.

4. Taxes and HMRC

HMRC is a key stakeholder for every company in the UK - including yours; you must ensure you never get on the wrong side of your business taxes. Stressful investigations and expensive fines and penalties might follow. Be sure that your business has registered for all applicable taxes, including Corporation Tax (and VAT, if you have hit the threshold requirements). Equally, consider speaking with an accountant who can support you with all HMRC submissions.

5. Data protection and security

Data protection laws apply to every business. The Information Commissioner's Office (ICO) is the UK regulator for data protection matters and often takes proactive enforcement action against non-compliant businesses. Almost every company needs to register - the ICO has lots of advice, help and checklists on their website, be sure to take a read before you start storing, processing and transferring personal data relating to your customers, suppliers and employees.

6. Employees and independent workers

The laws on employment are simply staggering and have become even more complicated over the years. Getting it wrong is only too easy and it can be very expensive!

Be careful with all employment documentation - it is against the law not to have an employment contract which must set out certain things, such as duties, pay and benefits. As an employer, other documents and policies should be in place to prevent issues and disputes with poor performing employees.

Finally, be very careful with any independent worker that you choose to hire from the UK (eg a freelancer). You will be held responsible by appropriate authorities if that worker is, in fact, an employee according to the law (which is far more likely than you might think.)

7. Intellectual property

Protecting your company's IP is fundamental to safeguarding its future value. Without this, competitor businesses can steal your name, content, ideas, clients and lots more. It is a commercial risk not worth taking. Be sure to register trademarks, protect information disclosures through a company NDA and, if you're creating something totally new, consider getting a patent.

8. Trading

This is where most new businesses often fail to comply with the law. There are quite literally hundreds of laws that apply to a business when it is about to start trading. Marketing, websites, customer terms and conditions, dispute policies, NDAs and lots, lots, more.

9. Insurance

Some company insurance is mandatory, others are optional, and many are often very wise to have. Business insurance can be a great fail-safe in a seriously negative event. Make sure you have employer's liability insurance at £5 million coverage limit. Consider other forms of insurance such as professional indemnity (if you are an advisor) or public liability (if you are working in or around public spaces and other people). Better yet, speak to an insurance broker to get your business insurance properly sorted.

10. Company management

Just because you have incorporated a company does not mean your obligations to the company have ended. In fact, they have just started. Companies House imposes many requirements on directors to file certain documents and disclose selected information throughout the year. The best option here is to get a Company Secretary - they handle all this work for you, so you can spend more time focusing on your business, and less time on frustrating resolutions, board minutes and Companies House forms.

Mind blown by the above?

Newco Legal provides all the legal advice and documents your business needs to set up and run properly, including everything that has been identified above, all for a fraction of the traditional law firm cost.

Even better, all Start Up Donut readers and members receive a special 20% discount.

Get started and protected, now!

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