Work Confidently with Rocket Lawyer

When you start a business you must decide how to structure your business. Different legal business structures have different advantages and disadvantages. For example, some sole traders often have a lower administrative burden, whereas a limited company protects its owners from personal liability in case of loss.

Depending on your legal structure, starting your business will involve specific requirements, like registering at Companies House, or creating your Articles of association to set out how a company will be run.

When you start a business you should know its purpose. Creating a Business plan lets you set out your business' goals. You can take a comprehensive approach to your business' aims and governance by considering issues like sustainability and fair trade when setting out your business' plans and values.

There are many different ways to fund your business. The type of funding most suitable for your situation will depend on a variety of factors, including:

• how much funding you need

• your business structure

• how long you need the funding for

The different types of funding include:

• loans - including loans from other businesses using a Loan agreement, bank loans and loans from family members or friends using a Promissory note

• investment finance - involving the sale of company shares to investors, who will have a share of the profits and losses your company

• grants - including Government and charity grants

• invoice financing - involving a third-party financier buying your unpaid invoices for a fee

• crowdfunding - involving the general public investing, lending or contributing to your business (typically online)

For more information, read Funding your business.

Creating an Employment contract or Zero-hours contract is an excellent way to establish the parameters of your employment relationship with anybody working for you. It can also set out your commitment to employment rights, such as holiday pay, to help you keep track of your legal obligations to your workers.

You can also use documents to keep up with legal obligations throughout the lifetime of an employment relationship - from advertising a Job description to handling disciplinary issues or dismissal.

Creating employment policies is an important way of setting out an employer’s and their workers' rights and responsibilities related to a range of employment matters. Having comprehensive policies in place also guides employers toward meeting their various legal obligations. Important employment policies include:

• Health and safety policies

• Equal opportunities policies

• Parental leave policies, such as Maternity policies

• Sickness policies

If you want to engage independent contractors, consider using a Consultancy agreement.

A business that designs a product, invents a product or process, makes original creations (eg songs or artworks), or simply creates a brand for their business will likely be generating intellectual property (IP) which brings value to their business.

It’s important to protect this value by:

• registering your IP, when appropriate

• ensuring confidentiality when sharing information with other businesses, eg by creating a Non-disclosure agreement

• making provisions in employment or consultancy agreements setting out who owns IP created during the relationship

• issuing Cease and desist letters or making claims when somebody else infringes on your IP

It’s also vital to avoid infringing on others' IP rights (eg their trade marks or copyrights) if you use somebody else’s IP. Sometimes, you can avoid this issue by agreeing on a Licence agreement or an Assignment of intellectual property.

Any UK business that handles personal data (ie any information from which an individual may be identified) must adhere to the data protection rules imposed by the Data Protection Act 2018 and the UK General Data Protection Regulations (UK GDPR).

Data protection rules ensure that all businesses that handle (ie ‘process’) personal data do so in line with the data protection principles (eg fairly, transparently, securely, and for legitimate purposes). Compliance usually involves the creation of various data protection documents. For example:

• a Data processing agreement (DPA) is used to set out how a business' data will be processed by another business (eg as the other latter provides services for the former)

• a Data protection impact assessment (DPIA) is used to identify and evaluate the data protection risks involved in a project.

It can also be beneficial for your business to undergo a data protection health check to ensure that it is UK GDPR compliant.

Nearly all modern businesses opt to use a website for marketing or retail purposes. If you want to sell or promote your goods or services online, it's important that your website terms of use are outlined clearly for customers.

Website terms and conditions govern the use of a website by visitors. Any business with an online presence - even those which are not actually selling goods or services on their website - must include certain details (eg the business' full name and address) under the Electronic Commerce Regulations.

Any businesses that are processing personal user data on their website, must, under the UK GDPR, notify customers about how this data is handled. This can be done using a Privacy policy. Similarly, the usage of any cookies should be outlined in a Cookie policy.

All businesses should have reliable Terms and conditions to govern their relationships with clients, businesses and private individuals (ie consumers) alike. Which terms and conditions your business needs depends on:

• who your customers are (ie businesses or consumers)

• whether you are selling goods or supplying services, and

• where you are selling these goods or services (eg online or on your business premises, like a store)

Other contracts you may need include:

• a Services agreement - an agreement between two businesses for the supply of services. It sets out the agreed terms between both parties for the provision of services

• a Statement of work (SOW) - to set out the details relating to the provision of services of a commercial project

• a Bill of sale - a written record of a transaction between a seller and a buyer, which transfers ownership of an item from one party to another

• an Invoice - to provide a record of goods sold or services provided and the amount payable