Starting a Business?
Includes Naming your business, Choosing the legal status of your business
Starting a new business is a busy time for an entrepreneur. You’re developing a business plan, getting your financial plan in order, and possibly pitching to investors or seeking funding. One thing that can be overlooked but is incredibly vital, is ensuring all legal obligations are met. The failure to do so can result in fines or possibly even court proceedings.
This guide should help you tackle the legal aspects of starting a business in the UK, from choosing a name for your business right at the start all the way to employing staff later on. You can work the relevant legal points into your traditional business plan, or even draw up a separate legal plan or checklist to ensure you have covered everything.
While the legal processes covered are specific to the UK, the general categories are likely applicable no matter where your business located. That being said, let’s dive in.
Naming your business
You need to choose a unique name for your business, that is not being used already, to avoid running into problems. If the name is too similar to other businesses, it can suggest there is a connection between the companies and you could be seen as trying to pass your company off as theirs, taking business from them as a result. If they complain or file for trademark infringement, you could be required to change your business name, possibly pay damages, and spend extra time and money re-doing signs, stationery, advertising, etc.
You can easily check to see if your name idea has been taken yet using Made Simple and it’s also wise to verify if a similar trademark already exists.
Choosing the legal status of your business
The legal status you choose determines whether you need to register your business with Companies House, which is the UK’s registrar of companies. The legal status also affects the records and accounts that you have to keep, the amount of tax and National Insurance (NI) you will pay, and your financial liability if the business were to go under.
It’s also worth noting that in the UK employees pay NI contributions to qualify for certain state benefits and a state pension when they retire. This total will vary based on the legal status of your business. Here are the most common types of legal business structures to choose from when setting up a new business.