Laws apply in every established business and startups are no exception. A lot of legal considerations impact businesses of any type. It’s important to know which ones apply to your business right from the beginning.

Legal structure

This is one of the biggest concerns you will have to address when you decide to launch a business. The structure of a business is the basic foundation needed to kick start a new business.

Don’t take it lightly. The form of the company will determine  whether the entrepreneur behind the business will be personally responsible for its debts and obligations.

One of the best things you can do as a business owner is to separate your business from your personal responsibilities. Limited liability companies, limited partnerships, corporations and other types of limited liability entities all protect founders from obligations they have not personally guaranteed.

There are basically three choices for entrepreneurs. You can operate as a sole trader, establish a partnership or incorporate as a limited company.

Sole traders always assume significant personal risk but limited companies’ finances are separate from their business owners. Sole traders are normally self-employed, with every profit being counted as personal income.

Partners assume joint liability for any debts and risks. It’s a good practice to document the terms of your partnership right from the beginning to avoid potential conflict in the future. If you want to be insulated from potential liabilities, choose to incorporate as a limited company.

Partner’s individual liability is limited to the total sum that they initially invested and  they cannot ben held liable for any debts unless of course they personally guarantee against the debts.

The details of a legal structure could be overwhelming for first time entrepreneurs. You can seek legal help whilst you concentrate on your core business. The Business Law experts at Peacock Solicitors can help. An attorney not versed in business can be costly for your business.

The legal structure will define your legal responsibilities, like:

  • the paperwork you must fill in to get started
  • the taxes you’ll have to manage and pay
  • how you can personally take the profit your business makes
  • your personal responsibilities if your business makes a loss


The relationship of employer and employee can be a complicated one. You may not be an expert on employment law, but you have to be educated on the basic employment issues. Things like workers’ regulations, safety, payroll tax code, etc will keep coming up at some point. You may want to look at legal
staffing agencies
for expertise in the beginning.

There are several pieces of legislation (specific to each country) that will affect the terms of the relationship and the obligations of both parties. Be clear with employees and vendors on relationship.

If you don’t handle the workplace agreements as a business owner, hire someone to deal with it among other things he or she may do for your business.

Once you start hiring people to work for your business, you have to look into employment contracts and find out which ones apply to your company.

You have a duty of care for anyone who joins your business as an employee. Make sure every business process is documented for future reference.

Your employment contract should explain everything employees need to know to do their jobs and other details about code of conduct specific to your company and its values.

If you start working with independent contractors, make sure agreements are made and signed to prevent unforeseen legal issues as your business grows.

And don’t terminate a non-performing employee without the proper procedure: make sure he or she signs documents carefully drafted by an attorney upon termination to make the terms of dismissal clear.

Other legal essentials

All the legal details of starting a business cannot be covered in this post. Educate yourself on other legal issues like accounting, taxation, business relationships, contracts, copyrights, credit and debt recovery, insurance, health and safety, intellectual property, business failure and exit strategies.

Related: The Biggest Legal Mistakes Entrepreneurs Are Making (And How to Avoid Them)