Starting your own business can be quite a mammoth task, but once you’ve begun, running a business can be a great way of earning your livelihood. Whether your business provides products or services, is based in a brick-and-mortar store or purely online, and whether you employ staff or not, there are a number of legal requirements that must be met before you can start trading. If you’re a budding entrepreneur with a desire to start your own business, you’ll want to know exactly what these legal requirements are – so we’ve compiled a handy list for you.
Before you start, you’ll need to register your new business with HMRC in order to pay business tax, otherwise, you could up dealing with HMRC arrears which is obviously not a great thing when you start up your business.
You can use the service provided to register for Self Assessment if you’re a Sole Trader, Corporation Tax if you’re setting up a Limited company, for VAT as a new company, and for Pay As You Earn (PAYE) if you’re planning on employing staff members. However, if you’re setting up a limited liability partnership, or you’re not the ‘nominated partner’ in a self-employed or sole trader partnership, you can’t use HMRC’s online service, you will need to register in a different way.
Before you set up your business, you will need to decide on a legal structure. This decision is dependent on a number of factors, and will define your legal responsibilities as a business. Whether your company is defined as a sole trader, limited company, or a business partnership will determine the kinds of paperwork that you’ll need to initially fill in, the type of taxes that you’ll need to pay, how your profits are managed, and where your responsibilities lie if your business makes a loss.
There is always the option to change the legal structure – for example you could start out as a sole trader, and change to being a limited company as your business expands. If you’re unsure of how your company should be legally structured, it might be a good idea to speak to a solicitor specialising in business law.
If you are going to need a little extra help running your business, you’ll probably take on some employees. Even if you’re a sole trader, you will need to register as an employer with HMRC before you take on any staff. You’ll also need to be fully aware of your legal obligations as an employer including factors such as pay, insurance and tax, as well as managing your employees. Remember that you’ll need to ensure that all employees have fair working hours, holiday pay and sick pay and are paid regularly and on time.
There are just some legal requirements – remember that you’ll also need to take out insurance for your business, obtain any necessary licenses or permits depending on the nature of your business, and it’s also a good idea to enlist the services of an accountant or a legal advisor.
Running your own business can be an extremely exciting opportunity, but it’s vital to ensure you are running it legally. So keep these tips in mind.