Five legal must-do’s for entrepreneurs
Running a business can be both exciting and stressful. Misjudging your legal requirements however will only lead to stress through costly claims and investigations – not to mention occupying your time which should be focused on managing your business. This has never been truer than today and with GDPR just around the corner the time is ripe to consider your business model and ensure that you understand the legal foundations underpinning your operations.
Sole Trader? Partnership? Limited Company? Getting the right structure is very important to ensure that you are protected. Each has its own implications and merits from a legal, tax and accounting perspective. Whichever structure you chose it must meet the business’ needs and provide sufficient protection considering its nature and assets. Are you willing to risk your family home and personal assets should someone bring a claim?
A limited company needs Articles of Association; multiple Shareholders need a Shareholders’ Agreement and a Partnership needs a Partnership Agreement. It may sound obvious, but many people don’t realise that they are in a partnership and the impositions that the Partnership Act 1890 (yes, this legislation is very dated) has. These documents establish the principle expectations between the parties and help prevent misunderstandings. Issues that I would expect them to tackle include exit strategies, deadlock, the event of death and commitment to the business. There can be nothing worse than being in business with someone who isn’t pulling their weight and having no remedy available.
Standard form contract
This outlines the relationship between you, your clients and suppliers. By clearly defining the scope of work and key terms upon which you operate, you minimise the chance of disagreements arising. Failing this, you could end up with a dissatisfied client or cash flow issues if a customer persistently fails to pay on time.
It is important to remember this can work two ways. Not only is it important to protect your own IP, making sure competitors cannot use your ideas, it is also important to make sure you don’t infringe someone else’s opening yourself up to a potential claim. IP can be a particularly tricky area to navigate and getting it wrong is likely to result in a costly law suit.
Compliance and regulations
Each industry has its own niche regulations however two common areas are data protection and employment. At the risk of stating the obvious, employees have rights. Not only is it fundamental for you that you establish a clear relationship, but you must also understand these rights and ensure that you do not fall foul of the ever-growing regulatory requirements of operating a business. Data protection in particular is key moving forwards and if you want to avoid a costly investigation and penalties under the new GDPR regime you need to understand these risks and plan your compliance.
As an entrepreneur, you are not alone in facing these issues. We have specialist teams ready and available to assist if you would like to discuss any of the above further, please do contact Andrea Smith, Partner & Head of Business Services at Franklins Solicitors LLP on 01604 828282, 01908 660966 email firstname.lastname@example.org, or via our website: