Starting a business correctly is vital

Some essential tips for entrepreneurs as they prepare to launch or expand their own business from Eleanor Parkinson, Commercial Law Solicitor at Neves Solicitors.

Have you ever thought about making it on your own or expanding your current business offerings? In recent years, reports state there have been approximately 800,000 new businesses set up each year and record number of businesses currently being run in the UK, with many people taking the plunge.  

Whilst you are dreaming of success, it is still vital that you consider the below (what some would consider) mundane points to ensure the best possible start for your business. 

Structure

Your first and crucial decision is how you wish to set up your company. Each legal structure comes with its own pros and cons, from filing obligations (i.e. Companies House requirements), tax consequences to the limitation of your own personal liabilities.

With various options available to you, including being a sole trader, running a partnership, a limited liability partnership or a limited company, it is important that you make an informed decision as to what is best for you and your future company. 

Financing

Whether a family member or friend is providing capital or whether you are obtaining a loan from a recognised lender to assist with the initial costs of your business, care should be taken before you sign on the dotted line. 
Particular attention should be taken to ensure that the terms on which the funds are being loaned to you are fair, with no disproportionate penalties for non-payment or limitation to your rights as a borrower. 

Protecting your interests

You’ve decided to set up a limited company and have made your long running business partner or even current best friend a shareholder, but what happens if the relationship sours? You need to consider putting a shareholders agreement in place to dictate what happens in such an event. A shareholders agreement can not only govern the distribution of profits, it can also provide a mechanism for dealing with disputes. The same, of course, applies to partnerships and partnership agreements. 

Without this, you may find yourself in a pretty uncomfortable position, with potentially high financial ramifications and the risk of not holding as much control over your business as intended.

Going forward

Your legal requirements don’t stop with the creation of your business – there are GDPR requirements, terms and conditions for your services or products, the list goes on.

It may be tempting to obtain contracts written by certain online AI tools, however, there is a long-term benefit from obtaining professional advice to protect you from risk. For example, you do not want to enter into a dispute with a client to find out your terms are written entirely in their favour. 

Starting your business correctly is vital, from incorporation through to your day to day contracts. Careful consideration should be taken as to what you and your business require, not only to run smoothly but to succeed. 

At Neves, we understand both new and small businesses, and will work alongside you whether you are a shareholder, director, sole trader or partner to advise you at every step of your new venture. 

Get in touch with our Commercial Law team by calling 0330 0945 500, emailing info@neves.co.uk or complete our contact form and we'll get back to you.