If you have a great business idea, don’t let the fear of the unknown stop you from putting your plans into action.
It can take surprisingly little effort to establish a new business, as long as attention is paid to the potential pitfalls.
Create a business plan
Most new businesses require finance. There are different sources of finance for businesses at different stages of growth and you should consider all options. Lenders will want to see a clear plan to show you know your market and how you will invest their money to see a return. Free templates are available from various sources.
You need to decide how to operate your business, whether self-employed, in partnership or as a limited liability company or partnership. Your choice of business vehicle will affect the extent of your personal liability and how your business is taxed, therefore you should take both legal and accountancy advice on what approach best suits you.
When looking at property to lease it is very dangerous to take a short-term view. Whilst a landlord is usually represented by an agent, a tenant is usually not. Before agreeing any terms legal advice is essential. Your solicitor will give you important advice on the negotiation of the key terms, the lease, will make enquiries of the landlord, submit searches and check the title. If you sign a lease for a property you are still liable for rent and other obligations, even if you later find you are restricted by planning laws or covenants from using the property for your business.
If you plan on operating from home, you should check that there are no covenants in your deeds against use of your house for business purposes.
Taking on staff comes with great responsibility. Employment law is one of the most complex and frequently changing areas of legislation and it’s vital you are aware of the various risks and pitfalls involved. Ultimately, you need to be clear about how someone is retained (employed or self-employed) and clearly set out the rights and responsibilities of both parties in a properly prepared document. If you have employees, you also need to be sure you’re complying with all the relevant legal obligations that will apply once you’ve taken this major step.
The value in your business might be in its unique designs or methods of production. You may even have aspects of your business that you can protect without even knowing it! You need to identify what intellectual property you have, or might develop and then take the appropriate steps to protect it.
You should also consider whether your business might infringe others’ rights. Registers of intellectual property can be checked to make sure you do not invest in material that you later need to destroy.
New businesses often make one of two mistakes; either ignoring contracts altogether or spending too much money on unnecessary documents. The best approach is to explain your business to a solicitor to help identify any risks and the key terms you need to cover in your contracts. Key terms typically include payment, delivery and limitation of liability.
For more information about the legal aspects of creating a business, please contact Farleys’ commercial department on 0845 287 0939 or submit your enquiry online.