The legal requirements for starting a business can seem intimidating, but these are things you cannot afford to ignore. As well as damage to the business’ reputation, there are potential fines if you fail to comply with legislation, even if unintentionally. Ignorance is no excuse in law. A great deal of the regulations involved will depend on the nature of your business and some sectors are more regulated than others.
One important thing to remember is that the legislation and regulations are also in place to protect your business from illegal acts by employees, competitors, customers and suppliers.
Our overview below covers all the key areas you need to think about ensuring your business’ compliance with, before you begin trading.
Depending on the nature of your business, you may need a licence from your local authority. Check the York or North Yorkshire council websites for full details in your area, but these will include a variety of businesses, such as: taxi services; animal businesses; restaurants/food businesses; tattooists; alcohol sales; hairdressers and street traders. The local authority will also handle environmental licences such as waste disposal.
Childminding and day care facilities will need to register with Ofsted (in England), and this can take several months.
If you are going to employ staff you will need to ensure you have covered all employment law issues, from terms and conditions, to staff handbooks and written contracts, as well as ensuring the person is entitled to work in the UK. Many businesses employ the services of a HR Consultant to give peace of mind, as employment law is constantly changing and you will need to keep ahead of the game.
To get started, have a look at the ACAS website for further information and find out more about what you need to take into consideration when taking on staff.
It is important to gain a basic understanding of tax law. Some key points to note include:
- For the 2023/24 tax year, the main rate for Corporation Tax is set at 25% of profits for companies with profits over £250,000. The Small Profits rate is set at 19% of profits for companies with profits under £50,000. Companies with profits between £50,000 and £250,000 will pay tax at the main rate, reduced by a marginal relief. Sole traders pay income tax on their profits.
- VAT registration is not optional once you have reached the revenue threshold, currently £85,000 per year until 31st March 2024.
- If you employ staff, you will have to report Payroll Information to HMRC. You also need to consider National Insurance contributions.
The Start Up Loans Company has a good overview of the different taxes that a start-up or small business may be required to pay.
Some insurances for your business are not mandatory, but advisable, and others are compulsory, such as Employer’s Liability Insurance. Always seek advice to ensure you have the appropriate insurance for your business. See our guide to the different types of insurance for more information.
If you play music that can be heard by members of the public, you may need a licence from the Performing Rights Society.
Whilst you may have Intellectual Property for your business, you do need to ensure you are not breaching that of any other business by trade mark, design, copyright infringement (think about your business name), even down to the images you may use on social media. Check out the Intellectual Property Office website for further information.
Health and Safety
Ensuring you meet required Health and Safety standards for your business is a must. You can visit the Health and Safety Executive’s website for a wealth of advice and information, including how to carry out risk assessments. There is a minimum standard for health and safety no matter what the nature of your business is.
If you have five or more employees, it is a legal obligation to have a written risk assessment. Ensure you have a policy in place that considers the health, safety and welfare of staff, customers and suppliers. In addition, ensure that you have an accident book available and if appropriate a first aid kit.
Environmental issues must also be considered and there are no ceilings to potential fines. If you use a contractor to remove your waste, it is your responsibility to ensure they are legally permitted to do so. Disposal of electrical goods and equipment must be done so under the WEEE regulations.
The GDPR and Data Protection Act gives clear guidance on how customer and employee information should be used, stored and retrieved. The Information Commissioner’s Office website gives a lot of guidance and advice which we strongly suggest you look at to ensure you understand the regulations.
Consider your obligations from the outset, and seek support and advice on your particular venture to avoid problems further down the line. You should get all of the important advice and support now, rather than when things go wrong and your reputation is damaged, or even worse you are in breach of legislation.
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