Legal Requirements Every Small Business Should Know


Starting a new business is a busy time for an entrepreneur, you’re developing a business plan and getting your finances in order. As important as this is, you also need to ensure is that all legal obligations are met, as failure to do so can result in fines and possibly court proceedings.

From choosing a name for your business to employing staff, this guide should help you understand some of the basic legal requirements of starting a business in the UK.

Business Structure

You may have decided to start off as a sole trader, and then incorporate as a company once your profits really start to increase, but there can be legal and tax implications of switching once you’re established. In some cases, it may be more beneficial to just incorporate straight away. If you have a partnership or a company with more than one shareholder, then you should take legal advice on how to protect your interests, and will need an agreement in place to deal with resignations or other situations similar.


General Data Protection governs how an organisation processes and uses personal data to provide consumers with greater protection.Failure to comply with GDPR can result in fines of up to 18 million pounds. It is important to note that GDPR is an EU initiative and some regulations may have changed since Brexit. Having a lawyer that can review your data protection procedures ensures that you keep up to date with any changes to the law.


Having a legally binding contract in place can save you time and money, as well as help you to understand your options when there is a breach of contract. You need to take the time to understand every single clause in your contract to prevent any confusion and miscommunication in the future. 

Legal Documentation

You should regularly review and update your legal documentation to ensure your business is fully compliant.This includes agreements and contracts, to policies and procedures. This applies across the board and covers everything from employment and business law, to tax and health and safety

Compliance Considerations

If you are setting up a company, some of the most important areas of business compliance to consider include; complying with applicable industry regulations, such as the Financial Conduct Authority, complying with finance regulations such as tax, payroll and HMRC, and ensuring contracts and agreements are in place with third parties.

Selling your business

Many founders will plan to build their business and then sell on for profits. Whether you sell all or some of your shares in a business to a third party or other partners, a business lawyer can offer you advice to get the best deal. This includes transferring ownership and reviewing the shareholders’ agreement.  Your lawyer can advise on everything from your shares and assets, to your liabilities and  taxes, and act as the middle man for you and other parties involved.

If this is your first business, it can be hard to work out what kind of legal advice and support will help you reach your goals. Get Legal Advice work with small businesses and start-ups to identify their legal priorities and take time understanding the goals to ensure a successful business. Contact them today for a free, no obligation chat to find out how they can help you.


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