Q&A - What are the main legal areas that a start-up business needs to consider?

A start-up soon finds that it needs to consider a variety of legal issues, both before and after it has started to trade. The key legal areas it must cover include:

Legal structure

The main choice is between forming a private limited company or operating as a sole trader with unlimited liability. Some businesses are formed as partnerships – where the partners also have unlimited liability. Generally it is best for a start-up to set-up a limited company, given the important protection provided to shareholders.

Employment

Many start-ups don’t employ people at first. However, once someone is employed, even on a part-time or temporary basis, then there are significant legal responsibilities to be complied with. For example:
- An employee has to be provided with a legally-binding employment contract
- Recruitment and selection procedures must comply with laws aimed at preventing discrimination
- Business must maintain proper staff records (vital for tax purposes)
- Working conditions must comply with health & safety requirements
- Employer must check that employees are eligible to work in the UK

Consumer protection

Almost every business that sells goods and services to someone gets customers who are unhappy with some aspect of the transaction. Consumers are well protected by a variety of laws, including the Sale of Goods Act, the Trade Descriptions Act and laws that protect customers who buy online or via distance-selling.

Environmental protection:

A business needs to ensure that it complies with:
- Waste disposal regulations (e.g. landfill, packaging, waste water)
- Legislation on carbon emissions

For many smaller businesses these legal issues don’t turn out to be significant.