By Steven Mather
So you’ve set up in business. You’ve got a great product or service and the customers are rolling in. Well done!
Here’s five of our top key legal issues you should think about now.
Get your legal structure right and document it.
If you’re setting up as a limited company and have other people involved as shareholders, then get a shareholders agreement in place sooner rather than later. There’s a multitude of reasons why you should get a shareholders agreement in place, outside the scope of this article. But in short, a shareholders agreement is a contract between the two or more shareholders of a company to deal with their relationship and deal with things like; what if there’s a dispute; transferring of shares; dividends; plus more besides.
Get some Terms and Conditions in place
Do you deal with consumers or businesses? Consumers get lots of rights by law, and so it’s important you know what these are and comply with them. If you’re dealing with businesses (B2B) then terms and conditions become even more important. They allow you to do great things such as:
Limit your liability
Set down payment terms and interest on unpaid sums
Control exactly what service you will provide and the processes involved
Dealing with Employees
When you grow, you’ll start taking on employees. As from April 2020, the law now requires you to provide all workers with a statement of terms of employment, setting out a number of key points, to the worker before or on the day they start. So make sure you’re ready.
Employees can be a godsend, but can also cause problems to! Dealing with employees is best managed by having a well written Staff Handbook, setting out all the important policies. This means that both you and your staff know what to expect, what will happen, and what the process is. A good handbook will have policies on:
- Disciplinary & Capability
- Family Friendly such as maternity and paternity leave
- Holiday leave
- Flexible working/ working from home
- Social media / IT
- Dress code
- No Drink and drugs
- Data protection
GDPR and Data Protection
GDPR is European regulations governing data. In the UK the law now stems from the Data Protection Act . Almost all businesses will be dealing with someone’s personal data – usually customers, but can be employees and other third parties.
Personal Data is any information that you store (whether on paper or electronically) that can identify a human being. So their name, address, phone, email, date of birth, are all personal data.
The first thing many small businesses do not realise is that you should be registered with Information Commissioner as a Data Controller. It’s quick and easy to register and costs £40. That, sadly, is not the end of it.
There can be big fines for not complying with data legislation, particularly if you suffer some kind of breach. And with consumers being very aware of their rights, it is important you know your position.
You’re going to die.
Sorry to break the bad news to you, but at some point you’re going to die and then what? What happens to your business.
Whatever your age, you should give serious though to future planning – get a Will sorted.
A will allows you to pass on your shares to who you want – or if you prefer, to the other shareholders under a shareholders agreement.
Many established businesses want their shares to be purchased by the other shareholders so that their estate just get cash rather than the hassle of dealing with shares. One usual way this is achieved is by taking out key man life insurance cover through the company to pay out when your co-director dies, given the remaining party to buy out the others shares. This is sometimes known as “cross option” insurance.
While you’re thinking about death, you should also think about capacity – whether you are mentally or physically able to make decisions. You should look at a Power of Attorney for the business which appoints someone in your place to take important decisions or to sign documents if you’re not able.
There you go – 5 top tips for small business owners like you. There are of course a million and one things to think about as a small business owner, but these are just some from a legal perspective.