Starting a Business in the UK? Here are the Legal Considerations you Should Keep in Mind

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2 years ago

Starting a business involves a lot of work and many factors to consider, such as financing, finding investors, building the right team, and more. With so much to think about, certain things can fall between the gaps, but legal considerations are something you should not overlook.

It can be challenging for anyone who is not well-versed in the law to handle the legal needs of their business. Nonetheless, it is one of the most crucial aspects of launching a business, as even a small error could prove very costly.

This article will walk you through the legal aspects you should consider while starting a business in the United Kingdom. Keep in mind this is intended as general information rather than legal advice, and you should always consult a qualified lawyer regarding your own situation.

Business Registration

To legally start a business in the United Kingdom, the first thing you’ll need to do is to register your company with HMRC. However, you’ll need to register it under the business type which is most appropriate.

Here are the business categories you can register under:

  • Self-employed
  • Partnership
  • Limited company. If you’re not sure which is the right one for your business, talk to a lawyer or an accountant.

Get Comprehensive Insurance

Obtaining multiple types of insurance is an important legal consideration in any business. Being properly insured is essential to protect your assets and income from unforeseen events.

Employers liability insurance is one of the essential policies you’ll need – this means you’ll be protected if an employee is injuried or becomes ill at work. Getting vehicle insurance is also vital if your business involves deliveries or providing food service from a vehicle, as this will mean you comply with legal restrictions, as well as giving you security.

Aside from essential insurance coverage, there are a number of other insurance products which are more optional. For these it’s important to consider your needs and make a risk assessment to decide whether you want to take out a policy.

Avoid Discrimination

Everyone deserves an equal chance at employment, regardless of their race, gender, disability status, or sexuality. Businesses must not use prejudice when hiring, and the law has a number of protections to ensure this.

You must give employees and potential applicants equal opportunity under the law, regardless of their age, gender, religion, or race. You must also observe the law when managing your employees.

Make sure you don’t ask questions that could be perceived as biased during any interview. Under law, businesses cannot ask personal questions or queries unrelated to the employment or interviewing process.

Observe Data Privacy Laws

Businesses are responsible for keeping their customers’ and employees’ data safe. Small businesses and major organisations alike are required to have a clear data privacy policies that specify what information is stored by the company and who can access it. Data privacy is one of the legal conditions you must meet in order to start a business in the UK, as well as in Europe and many other countries.

Employee Rights

Businesses in the United Kingdom are restricted from hiring non-UK residents under immigration laws, which have tightened up since Brexit. As a result, it is critical to know your rights and responsibilities when it comes to hiring employees that are not UK nationals. If you failure to do your due diligence in this area, you could be fined £20,000 for each illegal employee you recruit.

Run a Background Check

Companies are required by law to conduct background checks on current and potential staff. However, this must be done in a formal manner so that the check’s legitimacy is not questioned afterwards.

The primary goal of a background check is to determine whether or not an employee is eligible to work for your company. You can do different types of background checks, including educational background checks, criminal history checks, and employee background checks.

Employment Contract

You need to set up formal employment contracts for all your staff, and formalise these within two months of hiring a new employee. Legally, the contract must include all of the information, commitments, obligations, bonuses, compensation, and other terms and conditions associated with their employment.

Health and Safety

Businesses are legally accountable for the health and safety of their staff while they’re at work. As a result, businesses must take steps to maintain a safe and secure working environment for their employees. This can include electrical safety, fire safety, and other safeguards associated with the work your employees do. In the United Kingdom, the law also requires companies to conduct risk assessments in order to identify and address potential risks.

Minimum Wage of an Employee in the UK

If you are launching a business in the United Kingdom, you must follow the minimum salary for employees set by the UK government. An employee above the age of 21 is required by law to earn a minimum of £9.18 per hour. Pay your employees any less than this, and your company may face legal action for violating your employees’ rights.

Pay your Taxes

As a business operating in the UK, you must pay your taxes to HM Revenue and Customs (HMRC). To pay your taxes, you must first register and create an account with HMRC, which makes it wasy to record and determine how much tax you must pay on an annual basis.

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