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6 Important Legal Aspects of Setting Up Your Business
6 Important Legal Aspects of Setting Up Your Business
If you’re thinking of setting As you’re no doubt aware by now, there are fun and
not so fun aspects to this process. But starting your
up your own business — own venture can expose you to all sorts of risks so it’s
Ideally you should start thinking of these issues before you even
start your business, but you should continue to monitor them as
the business grows.
1. Legal
structure
There are a number of different ways you can set up your
business. Reasons why you might choose one form over another
include tax, ease of administration, and confidentiality of the
business’s information.
Sole trader
Partnership
They might choose the other partner because they have more
money. And whilst that partner could claim back half of the
liability from the original partner, if that partner has no money,
there would be little value in such a claim.
Company
For almost all businesses, it’s prudent to put in place terms and
conditions that govern the relationship between your business
and its customers. So, for example, when they buy something
from you, the purchase will be subject to your terms and
conditions and should protect your business from liability.
In your terms and conditions you should set out what risks the
customer takes on themselves that you are not responsible for.
For example, if you provide links to third party websites, you state
that customers visit these at their own risk.
You can also use your terms and conditions to clarify that you do
not guarantee certain things that are outside your control, such as
the internet always working. You set out clearly what you are not
liable for, or alternatively put caps on your liability.
Obviously you can’t say that you aren’t liable for anything. Any
terms and conditions must be reasonable, so you may want to
take professional advice before drawing them up.
This won’t stop you getting sued, but it could cover the costs of
dealing with any such claims, including both the legal costs of
handling the claim, and also any potential pay out if you lose.
If you are dealing with personal data you need to be aware of the
data protection act. ‘Personal data’ is very widely defined and is
essentially anything that enables you to identify an individual such
as name or email address.
Strict restrictions exist around what you can do with that data e.g.
you can’t disclose it or transfer it.
• employment conditions
• rights e.g. salary, holiday entitlement, benefits
• responsibilities — working hours
• duties — role, what is expected of them
You will need to ‘set out your mark ’, and list the goods and
services which you want to provide in relation to that mark.
These goods and services are divided into classes as set out on
the website, so you would need to identify which class(es) are
relevant. Think broadly —and also consider future expansion.
So for an accounting software company, you would consider the
product but also training and any other services which might go
along with it.
If you will be using your brand in countries other than the UK you
also need to get protection in those countries.
Please see below for a list of contact details for the organisations
mentioned above:
• Companies House
https://www.gov.uk/government/organisations/companies-
house
• Information Commissioner
https://ico.org.uk/
• UK Trademark Database
https://www.gov.uk/search-for-trademark
• UK Intellectual Property Office
https://www.gov.uk/government/organisations/intellectual-
property-office
• World Intellectual Property Organisation
http://www.wipo.int/portal/en/index.html
• *Federation of Small Businesses
http://www.fsb.org.uk/stats
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