What Should I get Legal Advice on as a Small Business Owner?
Posted on 25th August 2021 at 09:21
We’ve consulted our legal experts and complied the 5 areas of what the essentials are for business owners when it comes to legal compliance and safeguarding.
There are other areas you may look into depending on your particular industry but this covers the fundamentals.
1. Intellectual Property (IP) protection
Protecting your businesses intellectual property can come in many different forms and should be done as early as possible when setting up your venture. It’s also essential you check you’re not infringing on anyone else’s IP accidentally. Types of IP protection include:
Business name protection – when another business copies your name or has a similar name and / or branding to you, even if your company isn’t limited, this falls under common law and is called ‘Passing Off’. You can take action against the other business if you have prove they have caused you financial lose.
Limited Formations – by forming a limited company no one can form a limited company with the exact same name as you after you have registered. However they can register a company with a very similar name, still causing confusion with customers and therefore you can take out business name protection for your limited company to assist you in this case.
Trade marks - can be words, names, initials, logos, monograms, shapes or signatures, numerals and designs customers associate with your business.
Watching services – these are conducted once you have taken out a trade mark and contest any new trade mark applications that may infringe on your registered mark. Without a watching service your trade mark may become compromised and end up invalid.
Registered design - protects the appearance, physical shape, configuration and the decoration of products whereas trade mark registration protects the names of your products or brands.
National Business Register, as part of Start.biz, offers services that cover all of the above. We have more than 35 years experience protecting businesses and brands. Click on each service to apply or contact us today for advice.
Setting clear guidelines and rules between yourself and any employees from the out set will help keep you both on the same page. Please note the below is based on an employer/employee PAYE agreement, not when instructing freelancers, contracts, sub-contractors etc. We will cover those separately.
This process will not only manages expectations, on both sides, but can legally protect you in the future. You’re wording and ethos should be consistent throughout these documents alongside adhering to statutory employment law. You can find templates for most of these documents online, and some of them are free, we’ve liked to a few sites for you. Alternatively you can hire HR freelancers to help you set everything up or advise on a particular issue.
Job Description – this can be written for advertising the role you’re employing for but the internal one will be more detailed. When writing this to attract applicants you may keep it top line and add some extras about company ethos however the internal job description will go into a lot more depth about the role and not include things like the applicant must love dogs or make an amazing cup of tea!
Offer Letter – this should clearly state title of the role, company name, salary or pay, bonus scheme if applicable, basic holiday allowance, required start date and notice period. This should be sent as soon as the decision has been made to employee an individual.
Employment Contract – this should be drawn up and given to the employee whilst they are waiting to start with you or on their first day. It’s good practice to let them have a few days to read through it and discuss any questions. This is where you need to make sure you are compliant with the law so having a template and doing a little bit of research is good.
Disciplinaries / settlement agreements – these should be covered in the above but we wanted to mention them separately as they are important. Of course, you don’t want to think the worst and wouldn’t employ someone you thought you would have disagreements with but it happens. Having clear steps set up for bringing grievances and disciplinaries will make awkward situations easier to navigate. Also informing the employee and knowing the law when it comes to letting people go is essential.
Company handbook – this is where you can go into more detail about your policies and terms within the contract.
Template resources –
3. Shareholder agreements comprising of Shareholders Agreements, Memorandum and Articles of Association
This is clearly setting out what each partner can and can’t do. Again, like when employing someone, you wouldn’t go into business with someone that you envision having problems with but having clear guidelines make situations easier to navigate for everyone. There are many subjects that can be covered in these agreements, some examples are:
Perimeters of how you value shares.
Permissions on spends. For example, one shareholder can’t spend £15,000 of the businesses money without it being signed off with the other shareholders.
What happens when sell business, also what happens when one of you wants out.
On top of the headache of trying to negotiate when in a tense situation, if you don’t have a shareholders agreement it may cause problems when selling to someone else, they may even ask for one to be drawn up. If you go through formation agent, you’ll get standard memorandum and articles but a shareholders agreement is a bespoke piece that you can go more into detail.
All of the above have been focused on internal affairs of the business but now it’s time to think about your customers.
Terms and conditions – are obviously really important, especially if you are a sole trader providing service. We don’t recommend writing a get out of jail free clause for everything but be honest about the limitations of the service or product your providing. Keep it in plain language and reasonable; this will help with customer disagreements. A rule book of what you are providing so you and the customer are on the same page.
Partner agreements – if you want to set up networks, referrals, kick-backs, commercial arrangements you will need partner agreements. These are pretty straightforward and not everyone will ask for one however we advise drawing up a short agreement for both parties to sign so everyone is on the same page.
5. Buying and Selling Businesses
If you’re not setting up your own business but rather buying one, you will have to cover the above but what about the legal element of the buying / selling process? Best practice includes:
Offer Letter – this is the ‘heads of terms’, it should include the top line details of the transaction and shows your serious intent to buy the business.
Due Diligence – this is when you get into the business to find the skeletons! Share holder agreements, current employment contracts, T&C’s, the money structure of the business will all be gone through.
SPA (Sale and Purchase Agreement) – this is the most detailed, legally binding document that is agreeing to the transaction, once this is signed the sale in final.
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