Top ten legal tips when starting and running your own business

Dealing with legal matters can be headache but it is a vital part of running a business. In no particular order here are ten top tips to help ensure the legal side of your business is watertight.

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Choose the right structure – you can run the business in your own name or set up a company or limited liability partnership. The latter option protects you from personal liability and might reduce the tax burden, but means dealing with a lot more paperwork.


Put things in writing – You will make agreements with staff, clients, landlords and suppliers. It is not true that it has to be in writing to be a contract, but proving the agreement is almost impossible otherwise. Keeping a record also helps resolve disputes about what was agreed.


Accept financing with caution – In the current climate, it is tempting to snap up any offer of investment or loan funds for your start up. However, depending on the nature of the investment, you could be taking personal liability for repayment, or sacrificing full control of your business.


Read your lease agreement carefully – A favourable lease agreement is a foundation for your business. Do not accept that a lease is “standard”. Almost everything is up for negotiation in a commercial lease – for example the use and subletting restrictions, rent increase arrangements, and terms for ending the lease.


Understand employee rights – These include the minimum wage, working time restrictions, parental rights and annual leave as well as things like fair complaints and disciplinary procedure. You must be aware of your obligations – otherwise you could be involved in a costly claim at the Employment Tribunal.


Protect your Intellectual Property – A great name, a new invention or design, media or artworks – your intellectual property could be the most important asset your business has. Therefore, taking steps to protect it legally (for example, through a patent or trademark) should be done as soon as possible.


Know your insurance obligations – If you employ staff you must have employer’s liability insurance to a minimum cover level of £5 million (in practice nearly all policies provide coverage to £10 million). Depending on the nature of your business, you might also have to take out professional indemnity insurance.  


Take care with health and safety law – Falling foul of these rules is no joke – you could incur a hefty fine and even have to close your business. You must take reasonable steps to protect the safety of staff; clients; and visitors. There are specific rules for certain areas, such as for food preparation, and for work involving dangerous machines and chemicals.


Avoiding litigation – Sadly, there are many opportunities for disputes when you run a business and, if these reach the court, in practice both parties nearly always end up losers. Make use of alternative dispute resolution processes like mediation and avoid arguments by setting our agreements comprehensively in writing.


Get Professional Advice – The last and most important tip. The law touches all aspects of your business and there is no substitute for professional advice. Regular consultations with a recommended business lawyer are one of the best business investments you can make.



Dominic Higgins wrote this article on behalf of Contact Law for Mojomums. Dominic graduated from UCL in 2005 with a degree in Law, he then went on to work as a legal adviser in the South Africa and the United Kingdom, practicing in many different areas of law. If you’d like to find out more about running your own business.




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