When you're starting a business, there are a few things that will likely take up a lot of your attention. Your business plan, for one – that essential document that lays out your vision in all its glorious detail, as well as providing a key piece of documentation when applying for a business loan. Then there's Branding. Advertising. Your online presence.

But there are also legal requirements that you need to meet. There are ample resources out there to help you do this in an informed and sensible way. But you may find that, amid everything else, you need external help. Legal advice can help ensure you get off on the right foot.

Registering your business

There are three main types of businesses that you can register as.

• Sole trader. This is the simplest route to go down. The main consideration is whether you're willing to personally shoulder debts and do your own accounting.
• Limited companies. This is where your business is a separate legal and financial entity from you as a director. You have limited liability – if the business goes under, you'll lose your share in the business but not any personal assets.
• Partnerships. As you'd expect, this is where two or more people run a business together and share liability for any debts.

Do you need a licence or permit?

This could apply in a number of cases – if you want to sell food or alcohol, for instance, or play music on your premises.

Insurance

Some types of business insurance are optional. Others are compulsory.

As an employer, you're legally obliged to take out employers' liability insurance – unless you have no employees or employ only family members. This is so that if an employee falls ill or suffers an injury you're able to cover the cost of compensating them.

If you use a car or van for work, you'll need commercial motor insurance. You're only covered by standard personal vehicle insurance for social use and commuting, whereas business vehicle insurance protects you whenever you use your vehicle for work – giving an employee or colleague a lift, for example.

If your job involves imparting knowledge, skills or advice, then you may need professional indemnity insurance. A client can sue you if they're unhappy with your work or believe that you've been negligent. Professional indemnity insurance covers legal fees in this eventuality.

Some professions have to take out professional indemnity insurance. These include solicitors, accountants, architects, chartered surveyors and financial advisors. For others, it's not a legal requirement but is still considered advisable. This category includes advertising, consultancies, design agencies and PR firms.

Rules about buying and selling

You're legally required to follow guidelines if you sell goods online, buy goods from abroad or sell goods abroad.

Your legal obligations as an employer

When you take on new employees, there's a whole raft of legal obligations that you need to stay on top of. You have to run payroll, for instance, pay for National Insurance and provide workplace pensions where appropriate.

Other legal requirements include:

• Checking your employees' right to work. If you knowingly take on someone who doesn't have the right to work in the UK you can be sent to jail for five years and pay an unlimited fine.
• Carrying out DBS checks for new employees (in some sectors). This will apply to you if you work regularly with children or vulnerable adults. The DBS certificate discloses any unspent criminal convictions to the government.
• Complying with health and safety regulations. This includes taking reasonable steps to prevent harm to anyone who visits your workplace.
• Paying National Minimum Wage or above. The government has several measures in place to ensure that employers pay the minimum wage. These range from enforced payback to a fine of up to £20,000, from legal action to naming and shaming.
• Complying with legislation regarding personal data. If you hold personal data then you're legally bound by the Data Protection Act 2018. This is the case regardless of your company's size.
• Ensuring your company is run in accordance with the Equality Act. This wide-ranging policy makes it illegal to discriminate against anyone in the workplace because of a protected characteristic.
• Providing employees with a contract. This needs to cover the terms and conditions of their employment, as well as their rights, responsibilities and duties.
  
  

Running a business from home

Depending on the nature of your tenancy and your business, you may need to seek permission to run a business from home.

If you're renting, you'll need to check that running a business on the premises isn't prohibited by your tenancy agreement. If you're paying off a mortgage, you may need to check with your provider.

Another question to answer is whether your business will cause any disruption to your neighbours. If it's you and a laptop, you're good to go. But if you're likely to start receiving lots of visitors or are making structural changes to the property or putting up a sign, you may need planning permission.

If in doubt, ask yourself: will my home look out of place in a residential area?

The same rule of thumb applies to business rates. Is your front window now a shop window? Have you renovated or converted part of the property into a workplace? Are employees working there? If the answer is "yes" to any of these questions then you're legally obliged to pay business rates on top of Council Tax.

That said, small businesses can apply for a discount on business rates and in some cases don't have to pay any at all.

Year-end reporting

Limited companies are legally obliged to submit an end-of-year financial report to HMRC. This is often carried out by an accountant.

What next?

This isn't a comprehensive list, but it should give you a good overview of your legal requirements when setting up a business. If in doubt, your first port of call is usually the government website.

You may find, however, that you could do with outside help. Instructing a commercial solicitor can give you peace of mind that every "t" has been crossed and every "i" dotted.

If this sounds like you, good news: at Milners, we have a tight-knit team of experienced corporate solicitors. If you're looking for legal help, please get in touch for a free, no-obligation consultation.