Top business tips from a lawyer

Starting a new business or launching a start-up can sometimes feel overwhelming.

There are many challenges, from managing finances to understanding legal requirements and building a customer base.

Luckily, new businesses can access a lot of free support, regardless of where they are in their journey.

We talked to Yulia Barnes, Managing Director of Barnes Law Associates, to get some insights on the key aspects of starting a business.

Keep reading to find out her top tips, and check out our videos to learn more.

How to register a business

You’ve decided to start your own business, but which company structure should you choose, and how can you register it?

According to Yulia, forming a company is like the “birth” of your business, making choosing a structure a crucial step.

“You need to take careful consideration what your business concept is to be able to tailor the model you’re going to adopt,” she explains.

Several company structures exist, each with different legal and operational features, tax implications, and regulations.

It’s important to thoroughly research before deciding on the best structure for your business.

The main business structures for start-ups include:

sole trader – the simplest form of business where you work for yourself and are responsible for business liabilities
partnership – two or more people share ownership and responsibility for the business. This can be a general partnership, limited partnership (LP), or limited liability partnership (LLP)
private limited company – this involves shareholders with limited liability based on their investment. The company is legally separate from its owners
community interest company (CIC) – aimed at benefiting the community, this structure is used for social enterprises
charitable incorporated organisation (CIO) – offers the advantages of a charity with limited liability, used for charities in England and Wales.

Read our guide to business structure.

Sole traders

To register as a sole trader, you must register for Self-Assessment with HM Revenue and Customs (HMRC).

This is to report your earnings and pay income tax and National Insurance.

You must choose a business name and keep financial records for tax purposes.

If your turnover is over £90,000, you will also need to register for VAT.

Once registered, you’ll receive a Unique Taxpayer Reference number (UTR) from HMRC.

Limited companies

If you form a limited company as the sole shareholder, you would need to take the following steps to register your business:

1. Choose a company name

You can check that another company on the Companies House website does not already use the name you choose.

Make sure the name you choose adheres to UK rules and regulations.

Find out more about choosing a company name.

2. Get your documentation ready

Sign a document called a Memorandum of Association as a sole shareholder.

You can also use a standard Articles of Association document outlining how the company will be run.

3. Prepare your company details

You can be the only director and shareholder of your company unless you wish to delegate others.

You will also need to provide a UK address.

4. Register with Companies House

The easiest way to do this is online, but you can also send a paper IN01 form in the post.

You will then receive a Certificate of Incorporation confirming your company is legally registered.

You’ll need to open a business bank account, which is necessary for managing your company’s finances separately from your own.

It’s also a requirement to register with HMRC for Corporation Tax within three months.

How to register a business

Business founders, founder terms sheets, and shareholder agreements

If you’re establishing a start-up with others, you might want to use a founder’s term sheet.

This is essentially an agreement that decides on the main terms and conditions of your business arrangement.

You may also use this type of document if you have investors or mentors in your new business.

The aim is to ensure everyone is aligned as your business is launched and as it grows.

A term sheet might cover:

share distribution
roles and responsibilities
how decisions will be made and what the processes will be
who owns the rights to the ideas (intellectual property)
exit strategies and what happens if someone leaves the business.

Shareholder agreements

A shareholder agreement is a legal document for your business.

It sets out how the company will be run.

It is designed to avoid any misunderstandings between shareholders and directors.

Usually drafted by a lawyer, a shareholder agreement covers details such as:

management – how the business will be managed and how decisions are made
how to manage disputes – the process for how to handle conflict can be included in the agreement
how profits are shared – the rules for sharing dividends
confidentiality – details of the information that should be kept private
how to leave the company – the process for exiting the business can be clearly explained.

“Shareholder agreements are extremely important,” says Yulia.

“A shareholder agreement is a contract between co-founders that defines the terms of your relationship and makes it binding.”

“It’s a private document,’ she adds, “so you have the freedom of discussing your relationship without making it public.”

Business partners and shareholders agreements

Hiring employees

Hiring employees for your business is an exciting step, but it’s essential to follow the proper steps.

Employment law in the UK is strict, so as Yulia Barnes explains, you need to understand how to protect your business and ensure compliance.

“You have to have a core understanding of how to protect yourself as a business and how to make it compliant from an employment law point of view,” she explains.

Before hiring, familiarise yourself with UK employment laws.

The Equality Act 2010, for example, helps prevent discrimination and ensures fair hiring practices.

Start by creating a detailed job description to attract suitable candidates.

This makes hiring more efficient and helps you find the right person.

You can advertise the position through online recruitment websites, recruitment agencies, noticeboards, or social media.

When reviewing applications, focus on candidates’ skills and experience and ensure they have the legal right to work in the UK.

Next, draft an employment contract that includes details such as:

salary
duties
working hours
benefits
any other important information, such as out-of-hours working requirements.

“You absolutely must have an employment contract in writing, which has to be provided before someone starts,” says Yulia.

For support and guidance, Yulia recommends visiting the ACAS website or calling the organisation’s helpline for information.

The Advisory, Conciliation and Arbitration Service (ACAS) is an independent government-funded public body, which provides advice, dispute resolution, training, and support for employers and employees.

Hiring and employment law

Supplier and customer contracts

If you’re about to start trading, it’s crucial to set clear terms for dealing with suppliers and customers.

“The legal health of your business is as important as the financial health of your business,” says Yulia.

To ensure this, you must understand key aspects of your interactions with suppliers and customers.

This can include the following types of considerations:

Contracts with suppliers

what you’re buying and any specific details required
how you’re buying it, including payment and delivery processes
payment terms, schedules, and what happens if payments are late
quality standards and procedures that need to be followed
steps to take if things go wrong, including resolutions and penalties.

Contracts with customers

the products or services you’re offering and any timelines
your responsibilities and obligations
payment terms and how payments should be made
any guarantees or warranties on products and services
clear refund policies to manage expectations.

Learn more about legal documents for start-ups.

“It’s important to understand the difference between dealing with a business customer and the general public because there are consumer law protections in place,” says Yulia.

Consulting a lawyer to create supplier and customer contracts is highly recommended.

A lawyer can tailor your contracts to your specific needs and help to ensure your business complies with the law.

Supplier customer contracts

Top legal tips for business

Getting helpful tips and support from experts can guide your business towards success.

Here are some ideas to stay organised and strengthen your start-up’s legal foundations.

Tip: Have a legal health check

Giving your start-up or established smaller business a legal health MOT can be a smart move.

“Make sure that you have all the right processes in place,” advises Yulia.

This might mean asking a lawyer to prepare or review contracts for your business.

A legal professional could look at your current processes and documents and identify any gaps that should be addressed or changes that should be made to comply with UK law.

Top tips for businesses from a lawyer

Tip: Regularly update your policies and processes

Keep a close eye on changing laws and review your business policies regularly to remain in compliance.

This can help to prevent unnecessary fines and penalties in the future.

Being proactive can also improve efficiency, boost your business reputation, and build trust with customers.

Tip: Train your team

Keep your employees or partners informed about important legal issues.

For example, you could provide training on areas like data protection and GDPR, workplace health and safety, and discrimination.

For more information and guidance, visit British Business Bank's Business Guidance section and the Support and Guidance section on the Start Up Loans website.

Disclaimer: We make reasonable efforts to keep the content of this article up to date, but we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. This article is intended for general information purposes only and does not constitute advice of any kind, including legal, financial, tax or other professional advice. You should always seek professional or specialist advice or support before doing anything on the basis of the content of this article.

Neither British Business Bank plc nor any of its subsidiaries are liable for any loss or damage (foreseeable or not) that may come from relying on this article, whether as result of our negligence, breach of contract or otherwise. “Loss” includes (but is not limited to) any direct, indirect or consequential loss, loss of income, revenue, benefits, profits, opportunity, anticipated savings, data. We do not exclude liability for any liability which cannot be excluded or limited under English law.

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