Start-Up Guides

Business start-up: legal checklist to bullet-proof your company

1. Choose the right legal structure for your business

The starting point when setting up a new business is deciding what type of trading entity you will be. Broadly speaking there are three main trading entities: sole trader, partnership and private limited company (although there are also variations on each of these e.g. public company, unlimited company, limited liability partnership).

See our guide on ‘Choosing the right legal structure for your business’ which discusses the general advantages and disadvantages of each entity.

2. Choose a business name

Follow this simple four step process when deciding what to call your business:

a) Search for the same or similar company names already registered at Companies House
b) Check that you have not chosen a name containing a prohibited term
c) Check the Trade Mark register that your name does not conflict with a registered trade mark
d) Search Google to see if there is any unregistered trade marks trading in your locality

For more information see the detailed guide on the Companies House website.

3. Do an intellectual property (IP) infringement check

Check the Trade Mark register to see if your intended trading name conflicts with a trade mark that has already been registered

Search Google to see if there are any other businesses already using your intended trading name in your locality, or in your industry

4. Consider registering a trademark

Trade Marks operate on a first come, first served basis. If your brand name is crucial to your business (often in product style businesses) and if your initial budget allows for it, then consider registering your trading name as a trade mark at the Trade Mark register. It is a lot easier to stop someone infringing your intellectual property if you have registered a trade mark to protect your business.

5. Get a business bank account

Keep your business money separate from your personal money by using a business bank account, rather than using a personal for both.

6. Get business insurance

Mistakes happen! Business insurance is there to protect you from customer claims and other unfortunate events that could threaten the existence of your business.

7. Register for data protection

If you hold any personal data about your customers or suppliers (almost every business does) – e.g. because you will be marketing to them, then it is a legal requirement to register with the Information Commissioners Office. It only costs £35 per year, and is therefore a low cost protection against a potentially expensive business risk.

8. Get a set of ‘terms and conditions’ to use with clients and suppliers

Before you form contracts with clients or suppliers make sure you have a robust set of terms and conditions that will protect you against common business risks such as late payment and disputes over service delivery.

9. Get a robust employment contract if you are employing people

If you are employing someone it is a legal requirement that you put the terms of their employment in writing. Better still have a decent employment contract to protect you against employee disputes.