There is little doubt that launching a new business is going to take up a good amount of your time in the following years.
Although you may be incredibly busy and there are numerous exciting things to focus on, it is imperative to put time aside to ensure all the legal obligations for setting up a business are met. To help you we have explained the main requirements below.
Why not also take our Legal Health Check for Startups (it’s free!) - get started.
Legally starting a business
- funding for your business and issuing shares
- intellectual property (IP) rights and protection
- commercial property to run your new business
Naming your business
Your new business must have a name and this name must be unique. If it is too similar to the name of an existing business, you may find yourself facing allegations that you are trying to ‘pass off’ your business as that of another.
To check whether your business name is already taken, you can run a search through the free company name check tool provided by the UK government.
Choose the best legal structure
There are four main types of business structures in the UK:
- Sole trader
- Limited liability partnership
- Limited liability company
One of our commercial law solicitors can discuss the advantages and disadvantages of each of the above options and advise you on which one is best for your business long term.
Keep reading this article to find out what the best legal structure is for your new small business.
Traditional Partnership / Limited Liability Partnership
- the division of profits
- duties, and responsibilities of each partner
- what happens if one partner resigns or retires
- dispute resolution
Limited Liability Partnership (LLP) is a business structure often used by professionals such as lawyers, accountants, architects, engineers etc. The main difference between a traditional partnership and an LLP is that each partners’ liability is limited. Every LLP must file accounts with Companies House, and these will be publicly available.
Limited Liability Company
- Form IN01 (which provides information as to the company name, the names of the initial directors and company secretary, and the identities of the shareholders)
- Memorandum of Association
- Articles of Association
The advantages of setting up a limited company include:
- you may pay less tax than a sole trader
- a limited company is a separate legal entity which can enter into contracts and loan agreements which limits your personal liability
- as your business grows, further shareholders can invest, and different types of share classes can be created, limiting the rights attached to shares – this is important if you are seeking private investment
As with an LLP, with a Limited Company will need to file annual accounts with Companies House and these will be available to the public.
For more information on choosing the right structure for your venture, read our article on structuring your new business.
Safeguard your intellectual property
In today’s digital world intellectual property is a valuable asset. Protect aspects of your brand such as your business name and logo by registering them as a trademark. If your business is based on a unique invention, it may be advisable to apply for a patent. If you have created a new app, you may be able to rely on copyright law if someone uses the software code without your permission.
If you need help protecting your IP, find out more about our intellectual property services.
Get legal assistance from LawBite
There are several other legal requirements you must consider when launching your start- up, for example, business insurance, tax obligations and applying for funding.
By building a relationship with one of our commercial law solicitors you can be confident that when you need legal advice, you have someone on your side who understands your business and wants to celebrate your success.