Business Law

The Law applicable to running a business.

Starting and running a business

Running a Business

Running your own business can be both rewarding and satisfying and if you have decided to start your own business-well done, go for it. for it. But what are your choices? There are a number:

  • Run a franchise.
  • Buy an existing business.
  • Purchase a license to sell an existing product.
  • Find a partner with an existing business.
  • Offer freelance services either full or part-time.

However you decide to start up your business, research is needed to see if your idea is viable. Market research is needed to see if there will be customers for your business idea. You will need to research the competition. Decide on your unique selling point and what you have to offer to bring in the paying customers. How much people will pay for what you have to offer. If these preliminary enquirers show that there could be a market for what you are intending to offer, it will be time to sit down and put your ideas on paper.

  • Get cash flowing as soon as possible.
  • Keep outgoings to a minimum at least at the start.
  • Always overestimate expenses and underestimate income.
  • Don’t discount, instead add value.

Preparing a business plan

In your business plan you must deal with:

  • Where your business will be based? To start with at home is best where possible.
  • How will you finance your business?
  • What money do you have available yourself? But be careful, as you do not want to end up homeless, if things do not work out. Do you have friends and relatives who would invest in you?
  • What government grants are available?

Speak to an accountant who may be able to suggest sources of finance. Show your business plan to the business manager of your bank and consider applying for a business loan.

You will need a good accountant and lawyer. And maybe a website designer.

Have you got all the skills you will need? Might you need to take on a business partner?

Are you going to be able to find the right staff and employees needed when the time comes? Brainstorm all possible names and write down a shortlist. Google possibilities to see if they are available.

If you are thinking of running as a limited company or LLP, check availability at Companies House.

Register with Companies House if you are starting a company or working as a Limited Liability Partnership. You should also think about:

  • insurance;
  • patents and IP;
  • health and safety regulations;
  • planning and authorities from your local council;
  • tax and VAT.


The first thing to do when you have a business idea is to thoroughly research your market. Identify customers, the demand for what you have to offer and what you can charge. You are going to have to decide early on whether you can do it alone or whether you will need partners. Put your ideas down in writing. Prepare a business plan. Financing a business is not just about raising the money you require. You need to understand cash flow.

Types of business.

There are basically 3 ways that you can run your own business. Each has their own advantages and disadvantages. Advice on what might be most suitable for a start up business should be taken.

They are:
• as a sole trader
• in partnership with one or more other people
• as a limited company.

Sole trader

This is the simplest form of business model. There are no legal formalities required to set yourself up in business as your own boss. The downside is that you also carry the can if things go wrong. You are personally liable for all the debts of the business, and creditors could look to your house, car, savings etc to settle any money owed to them. You do not have to produce audited accounts, but you will need to keep records for the taxman. If you do set up in business on your own in this way, you should advise your tax office, as you will now be taxed as a self-employed person.


If you set up your business with one or more people, then you will be in partnership, whether or not you actually set anything down on paper – even if the partners are other members of your family. In the absence of a written partnership agreement your partnership will be governed by the Partnership Act 1896. In most cases this will not be what you want and those working together in a business partnership should always get a formal partnership agreement drawn up. This will cover how the partnership will work on a day-to-day basis, how it can develop and how it can be ended.Unless it is a limited liability partnership each of the partners will be personally responsible for all the businesses liabilities on a joint and several basis, whether they know about them or not. Therefore, choose your partners carefully. Partners remain self-employed and only need to prepare accounts for tax purposes.

Limited liability company

This is the most formal way to run a business, and it has its main advantage in limiting your liability to the amount of the share capital you have invested in the business. However banks and others will inevitably ask you for personal guarantees for loans etc. The disadvantages are that there is a cost involved in setting up a company although you can buy one off-the-shelf for less than £100. Also, you will have to comply with Companies Act legislation – accounts, records and returns at Companies House. As a director, you are no longer self-employed, but employed by the company, so you are likely to have to pay national insurance and PAYE income tax.


Business Regulation

There are a wide range of business laws to be complied with and it is also necessary to have a working knowledge of the laws of tort, contract and civil procedure as well as employment law. Some types of business are subjected to heavier regulation than others. Among the other considerations for a start up business will be the need for insurance, compliance with health and safety regulations and compliance with data protection regulations. Compliance  with every rule and regulation can seem intimidating for a start up a new business but there is plenty of help and support available.


Employing staff

There is much employment legislation with which to comply. LawZone can assist with forms and documents to comply with the legislation.

If you are employing people to help run your business you the law requires you to pay a minimum wage and there are entitlements relating to time off, pensions, redundancy and terminating the employment. Consumer law and consumer rights will apply if you are selling goods or services.


Trading names

Business names no longer need to be registered with any Government Department. They are, however, governed by the Business Names Act 1985. Trading names must be displayed in accordance with the Act at each place of business, and on stationery and invoices etc.

You will need to check that the name you choose to trade under is not the same or similar to any other business, particularly in your locality. If it is, then you may find yourself being sued for ‘passing-off’, i.e. trading on the back of someone else’s reputation, or even in breach of a trademark.

If you set up a limited company, then you will only be able to register a name which is not already on the register. You should first search the Companies House Register of Companies.

Trading laws

If supplying goods, you should have a working knowledge of consumer law.

Terms of business

These deal with your contractual relationship with your customers and suppliers. They should cover such items as estimates for work, payment terms, transfer of title to goods, failure to perform contractual duties etc.

Trademarks, copyright and patents (intellectual property)

If you have a distinctive style or mark, then it may well be worth registering it as a trademark. A trademark is any sign which can distinguish the goods or services of one trader from another. Registering it will prevent others from using a similar style. Copyright automatically arises to prevent certain types of work from being copied without permission.

Patents need to be registered to protect inventions and processes from being copied by competitors.

Insurance issues

If you have employees, then you must take out employers liability insurance, and display the certificate where your employees can see it.

Our business law department contains helpful sections to explain those areas of law which mostly commonly concern a business owner.

Business Law Articles and Blogs

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