FAQs about Start-Up/Small Business Advice
HILLINGDON SOLICITOR
What tips do you have to help my business avoid getting into trouble when entering transactions with other businesses?
You should always check who it is you are contracting with. Companies, partnerships and sole traders all have different liabilities (sole traders can be personally liable whilst companies are not). If you are dealing with a company, you can find out further information by checking records at company house. Even though a company can be registered under different names, the registration number will stay the same, so make sure you get this number prior to conducting business. Of course, it also makes sense to conduct credit checks of businesses and ask for deposits to minimise risk and induce the other party into following through with the transaction.
How can I avoid personal liability when starting a business?
Although they are legally the most tricky to set-up, within companies there is a separation between personal and commercial liability meaning your personal assets will not be put at risk should the company have problems repaying debts and so long as your actions are not considered reckless. If you are thinking of going into business with a number of other people, you might want to consider starting a partnership. Whilst you will be jointly liable with other partners for debts and the like (which in itself dilutes the individual burden), the extent of your own liabilities can be modified through partnership agreements. Also, when borrowing, it is important to check whether you are required to give personal guarantees. Whilst unavoidable in some case, you can at try and negotiate the extent of your liability. It also pays to check how any personal guarantees can be cancelled.
What tips do you have to help ensure I run my business in compliance with the law?
Young and small businesses in particular often fail to properly draft their terms and conditions of trading. If you are dealing directly with consumers, it is particularly important to ensure that you are compliant with various consumer laws, such as the Sale of Goods Act. The Consumer Protection from Unfair Trading Regulations 2008 were introduced fairly recently and prohibit businesses from using unfair or misleading sales practices. If you omit key information that would reasonably dictate the consumer’s decision to buy, for example, you can be fined and investigated by the Office of Fair Trading and indeed other consumer watchdogs, so it is absolutely vital you are aware of your obligations to consumers. The contractual process can be particularly complicated, although having properly drafted terms and conditions can alleviate the burden. If you do have terms and conditions, make sure they are available prior to purchase, otherwise you will not be able to rely on them should a dispute arise. The law is ever-changing, so above all, make sure you are up to date with changes.
My business has employees. What things should I consider?
First of all, it is absolutely vital that you are compliant with health and safety laws. You are responsible for assessing the extent and types of risks within your business. If you employ more than five people, you will be required to supply your employees with a health and safety written statement providing guidance on what to do in an event of an accident and fire.
Employment law can be demanding on businesses. To avoid disputes, you must make sure your hiring and firing procedures are in compliance with general norms of employment law and the Equality Act 2010. When firing an employee for example, you will be expected to give the employee a hearing, the right to representation (via a colleague or trade union official) and the right to appeal any decision. The Equality Act 2010 is a fairly recent introduction to the law. As well as outlawing indirect and direct discrimination, employers can be liable for not protecting employees from discrimination from other employees, business partners and customers, which illustrates the reach and importance of the Act.
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What tips do you have to help my business avoid getting into trouble when entering transactions with other businesses?
You should always check who it is you are contracting with. Companies, partnerships and sole traders all have different liabilities (sole traders can be personally liable whilst companies are not). If you are dealing with a company, you can find out further information by checking records at company house. Even though a company can be registered under different names, the registration number will stay the same, so make sure you get this number prior to conducting business. Of course, it also makes sense to conduct credit checks of businesses and ask for deposits to minimise risk and induce the other party into following through with the transaction.
How can I avoid personal liability when starting a business?
Although they are legally the most tricky to set-up, within companies there is a separation between personal and commercial liability meaning your personal assets will not be put at risk should the company have problems repaying debts and so long as your actions are not considered reckless. If you are thinking of going into business with a number of other people, you might want to consider starting a partnership. Whilst you will be jointly liable with other partners for debts and the like (which in itself dilutes the individual burden), the extent of your own liabilities can be modified through partnership agreements. Also, when borrowing, it is important to check whether you are required to give personal guarantees. Whilst unavoidable in some case, you can at try and negotiate the extent of your liability. It also pays to check how any personal guarantees can be cancelled.
What tips do you have to help ensure I run my business in compliance with the law?
Young and small businesses in particular often fail to properly draft their terms and conditions of trading. If you are dealing directly with consumers, it is particularly important to ensure that you are compliant with various consumer laws, such as the Sale of Goods Act. The Consumer Protection from Unfair Trading Regulations 2008 were introduced fairly recently and prohibit businesses from using unfair or misleading sales practices. If you omit key information that would reasonably dictate the consumer’s decision to buy, for example, you can be fined and investigated by the Office of Fair Trading and indeed other consumer watchdogs, so it is absolutely vital you are aware of your obligations to consumers. The contractual process can be particularly complicated, although having properly drafted terms and conditions can alleviate the burden. If you do have terms and conditions, make sure they are available prior to purchase, otherwise you will not be able to rely on them should a dispute arise. The law is ever-changing, so above all, make sure you are up to date with changes.
My business has employees. What things should I consider?
First of all, it is absolutely vital that you are compliant with health and safety laws. You are responsible for assessing the extent and types of risks within your business. If you employ more than five people, you will be required to supply your employees with a health and safety written statement providing guidance on what to do in an event of an accident and fire.
Employment law can be demanding on businesses. To avoid disputes, you must make sure your hiring and firing procedures are in compliance with general norms of employment law and the Equality Act 2010. When firing an employee for example, you will be expected to give the employee a hearing, the right to representation (via a colleague or trade union official) and the right to appeal any decision. The Equality Act 2010 is a fairly recent introduction to the law. As well as outlawing indirect and direct discrimination, employers can be liable for not protecting employees from discrimination from other employees, business partners and customers, which illustrates the reach and importance of the Act.