How to Set Up a New Business Legally in the UK

Creating a new business can be an exciting and rewarding experience. However, the process of starting your own company is often fraught with challenges, especially when it comes to legal matters. However, with over 835,000 new businesses registered in the UK from 2020-2021, this is something many people navigate each year. In fact, it can be said this is probably the easiest part of running a business; getting it off the ground and running successfully is the real challenge.

Getting your new venture off the ground is easier than you might think – if you know where to seek help. In this blog post, we’ll explain how to legally set up a new business in the UK and introduce you to some primary documents that constitute company formation. If you’re ready to start, read on for valuable tips about forming a company as soon as possible.

Register Your Business Name

Before you consider setting up your business, you’ll need to register your business name. This is a straightforward process, and you can do so by filling out a form with Companies House. Your business name must relate to your business. The government has created a central business database to prevent people from registering the same name across the country. Once you’ve registered your business name, you’ll get a unique reference number that you’ll use for all your future dealings with the government. Having a unique business name may not seem like a big deal, but it’s essential for protecting your intellectual property. If you’re planning on expanding your business in the near (or far) future, choosing a name that can grow with you is a good idea.

Choose the Right Legal Structure

While you’re taking the time to set up your business, you might be tempted to choose the legal structure that seems easiest. However, you should resist this urge and determine the proper legal structure for your business. This will ensure that your new company is set up legally and can conduct business in a way acceptable to your customers, suppliers, employees, and investors. The two most common legal structures for businesses are: 

• Sole Traders

Sole traders are individuals who run their business as a single-person business without incorporating. Sole traders are the easiest form of company to set up, but they only have limited liability. This means that if your business gets sued, your personal assets like your savings and property are at risk of being taken by the courts. 

• Limited Companies

The most common form of company that is registered is a limited company. Limited companies are often referred to as corporations and are the most popular choice for businesses that want to protect themselves from lawsuits.

If you are looking for an easy way to register your business, you can find companies online with packages to help you get up and running easier. These services come with a fee, but you can Register a limited liability partnership online for your convenience amongst other legal entities.

Secure Funding

You’ll need to secure funding to get your business up and running. Depending on the type of business you’re setting up, you may be eligible for government funding or grants. Depending on what kind of business you open, you may also be able to apply for a business loan. You’ll need a good business plan if you’re planning on applying for a loan. A well-written plan can help secure funding from investors, banks, or other lending institutions. It can also help you evaluate the strengths and weaknesses of your business. If you’re unsure where to start, there are plenty of guides and templates online that you can use to create a business plan.

Get The Right Insurances

One of the first tasks you’ll want to complete when setting up your business is securing the correct level of insurance coverage. Business insurance can be incredibly complicated, so you’ll want to ensure you understand what types of coverage you require and what level of coverage your business needs. You might not think insurance is a critical part of company formation, but it’s crucial to staying compliant with current laws. It’s also one of the best ways to protect yourself, your employees, and your customers from negligence or wrongdoing. Here are a few common types of insurance that every business should have: 

• Business Insurance: You’ll need to ensure the right business insurance level before opening your doors. Business insurance is designed to protect you in an accident or lawsuit. 
• Product Liability Insurance: Product liability insurance is essential to company formation. Product liability insurance protects you if someone is injured while using one of your products.
• Cyber Liability Insurance: Cyber liability insurance is a relatively new type of coverage included in many business insurance policies. Cyber liability insurance helps you cover the cost of repairing or replacing damaged computer systems.
• Employers Liability Insurance: The insurance is mandatory if any employee falls ill or injures themselves due to working for you.
• Car/Vehicle Insurance: Again, a legal requirement if you are driving for business or you use vehicles in your operations, you need motor insurance.

Define Your Business Plan

While creating your business plan, you should also consider how your company will be eco-friendly. Doing so could help you achieve your goals, attract investors, and win public support. Plus, eco-friendly policies are expected to grow in popularity as the world becomes more and more environmentally conscious. If you’re unsure how to make your business eco-friendly, plenty of guides online can help you get started. 

Your business plan doesn’t have to be a long and tedious document only your accountant wants to read. It can be as short or as long as you want it to be – the key is ensuring that it includes all of the essential information that investors need to make informed decisions about your company. There are plenty of templates online that you can use to get started.

Ensure You Are Complying With Data Protection Laws

Data security has become a crucial issue for almost every business in the modern age. From banking to travel, nearly every industry has been transformed by technology. With new technology comes new challenges, and you must be prepared for them. To protect the personal data of your customers, employees, and other stakeholders, you’ll need to know your data protection laws inside and out. 

Depending on the type of business you’re setting up, you may have to register as a data controller or data processor. Data controllers oversee the collection and processing of data, while data processors manage the data. If you’re unsure which category your business falls under, there are a few ways to find out:

1. You can read about data protection laws on the ICO’s website.
2. You can seek advice from a dedicated data protection lawyer. 
3. You can talk to a representative at your local ICO branch if applicable.

Carry Out Health and Safety Assessments

If you’re opening up a brick-and-mortar business, you’ll need to conduct a health and safety assessment for your premises. This is a legal requirement for all companies that employ staff and/or have customers on the premises. While health and safety laws can seem intimidating at first glance, they are pretty straightforward. You just have to answer three simple questions: 

• What hazards exist in your business? 
• What risks do those hazards create? 
• What are your plans to prevent and control those risks? 

If you’re unsure where to start, there are plenty of free online resources you can use to prepare for these assessments.

Be Aware of Employment Laws If You’re Hiring Staff

If hiring staff, you’ll need to be aware of employment laws. Before hiring your first employees, you’ll want to make sure you understand the following employment laws:

• Minimum Wage – In the UK, all workers over 23 are legally entitled to earn at least £9.50 per hour. This amount increases over time to account for inflation. Employees under 21 need to be paid according to their age range: 21 to 22, £9.18;18 to 20, £6.83; Under 18, £4.81.
• National Minimum Standards – Besides earning the minimum wage, workers are also entitled to certain fundamental rights. These include paid annual leave, rest breaks, and protection from discrimination.
• National Sick Leave Scheme – All employees are legally entitled to take up to 28 days off annually.

Be Aware of Tax Requirements

When starting a new business, you will have to make sure you are compliant with all tax laws in the UK. This includes knowing the tax rates for your industry, the appropriate ways to deduct expenses, and the proper ways to file your taxes.

Depending on your business and your profits, you may be required to pay taxes at different rates. Some industries, such as the construction and retail industries, are subject to higher taxes.

Conclusion

Starting a new business can be challenging, but it doesn’t have to be overwhelming. You can ensure your company complies with all relevant laws and regulations with the right tools and knowledge.