Legal requirements
Current affairs programmes have been heard to comment on the number of
new pieces of legislation that have been introduced in the first decade
of the 21st centaury. One figure that was proposed was 6,000, and that
was legislation that directly impacted on businesses. It is little
wonder that political parties are now taking up the mantle and offering
to be the real party for business and promising to cut legislation and
bureaucracy. But until that time, if you are going to set yourself up in
business, and stay legal for that matter, you would be well advised to
seek council on the current legal framework. But what are the overriding
consideration?
Set up
When you go independent you are setting yourself up as a trading entity.
You may decide to trade as an individual and have unlimited liabilities
or set up a limited liability company or partnership. Both of these have
advantages and disadvantages. The advantages of the individual sole
trader is you work for yourself and there is less 'official' paperwork.
The disadvantage is that you are wholy liable for any debts you might
incur and as you are working in the business to business environment,
more companies will not engage with 'individuals'.
Limited liability companies are a legal entity in themselves, set up via
Companies House (and all the legal stuff that entails) with shareholders
(owners) and directors. You would be a director of a company and the
company would pay you; you are an employee of the company. The main
advantage of this set up is often perceptual; you are seen as more
legitimate. The other advantage is that if something goes wrong; debt or
sanction, it is the company that is liable and that liability is
limited.
In both of the sole trader or company model you will need to register
with Her Majesties Revenue and Customs. If you are expecting to earn
c£60,000 or more then you will need to register with the VAT office. And
if you are not a natural book keeper, find someone who is, you can save
a whole lot of hassle by keeping your books up to date and tidy. You do
not need an accountant but I would recommend that you use one. General
rule of thumb is that a good one will save you in tax and liabilities,
more than they cost you.
Some considerations closer to home. Are there any restrictions on you
running a business from home; presuming you are going to do this in the
short term. If you have a residential land line (BT telephone) you are
not permitted under the terms to use this for business purposes. And as
for your current bank account; you will probably find in the terms that
the account cannot be used for 'trading' purposes.
The above are just some of the legal requirement necessary when setting
up. I strongly advise that you seek your own advice on specifics
relating to your intended activities (are there some special requirement
within your industry).
Staying legal
From day 2 onwards a different set of legal requirement will kick in and
will occupy your mind from time to time. Biggest of all is your book
keeping and your end of year tax returns. If you are VAT registered then
there will be the quarterly returns. If you are a limited liability
company there will be the payroll returns.
What about insurance. In order to trade legally you will need Public
Liability Insurance, and if a limited liability company, Employers
Liability Insurance. Given the field that you are in you should take out
Professional Indemnity Insurance. This last insurance is a contentious
one in that it is not deemed a requirement. That said; any client has
the right to sue you regardless of culpability. Get PI insurance; is is
not expensive and is tax deductible.
Health and Safety will be an issue you will need to consider when
training; doing risk assessments should be part of your modus operandi.
Do you intend to play music during your courses and programmes? You
probably need a licence to do this.
Do you have any electrical equipment; laptop, projector etc. These will
need testing on an annual basis for electrical compliance requirements.
On the presumption you drive to jobs; check your car insurance for
business use. Again it is not expensive and will save on any
embarrassment if you are involved in an accident; even if you are not at
fault.
And just to round off, not to scare but to raise awareness, the
following legal frameworks could impact on your operations on a daily
basis:
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Equality and Diversity
-
Discrimination
-
Employment regulations
-
Health and Safety
-
Sales of goods and services
-
Computer misuse
-
Protection of children and vulnerable adults
-
Tax regulations
-
Financial services regulations
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Data protection
-
Freedom of information
-
Intellectual property and copyright
-
Performing rights
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Contract law
-
Privacy
-
Distance selling
-
And undoubtedly there are more.
Seeking council
With all of the above in mind, where should you go to seek advice and
council. An accountant and solicitor will be a good start. Is there a
Business Link office near you or perhaps a local Chamber of Commerce?
Are you a member of an Institute with a legal help line; the Learning
Practitioners' Association has this in place as part of our member
benefits. And then there is the Internet.
As I said this is not to scare you but bring to your attention 'before
the fact', being in business is a serious business and it is better fore
warned and fore armed.
If there is anything else you would like to know about what the
Association is doing to benefit its members please feel free to contact us.
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