How to avoid common legal pitfallsThis Guide covers the most common legal pitfalls and how you can you avoid them. As a business owner, the onus is on you to make sure you're fully compliant with latest legislation, have notified all the relevant authorities where required and don't do anything in your day-to-day operations that can leave you liable to litigation. The article will help you identify areas where you need to meet your legislative obligations and help ensure you are compliant. In this article you will find some of the most common legal mistakes that businesses make and some advice on how to avoid them: Partners' rights and responsibilities If you are forming a partnership with two or more people, it is easy for it to become confused as to who is responsible for what. Yet that can be a big mistake, especially if you think that you are in charge of day-to-day operations and your partner thinks the same thing. Therefore, founding shareholders or partners should have a written agreement that addresses the following questions:
The law An old legal maxim is, "Ignorance of the law is no excuse". Not knowing your legal rights and responsibilities because you didn't bother to find out will not give you any legal protection in a court. So, here are some areas you need to have some knowledge of:
Written agreements All of your important business agreements should be in writing. Verbal agreements are difficult to prove and putting them in writing can help avoid potential problems. So make sure you have a properly drawn up contract with your partner(s), suppliers and so on. A contract is made up of four main components:
Working in partnership It is important when starting out to establish how you intend to structure your business. If you set up a partnership - or set up as a sole trader - you can find yourself personally liable for debts and obligations if the business fails. If instead of a sole proprietorship or partnership you start the business as a corporation, Limited Liability Corporation or limited partnership, you avoid that pitfall and thereby greatly reduce your risk. Companies House can provide information on company formation. Employment law Litigation fees have the potential to actually
bankrupt a company. If you don't know the law around areas such as
contracts you must get expert legal advice. The same goes if you are
unsure of any legal responsibilities - consult your lawyer, paying for
legal advice at an early stage may save you money in the long run. Health and safety Once you are an employer you have a duty of care to
ensure the health and safety of your employees while they are at work.
From badly-designed workstations to stress; from malfunctioning
machinery to avoidable accidents, it is your responsibility to make sure
that their job doesn't affect their health in any way. If your business is a shop, office, hotel, restaurant, wholesale warehouse, car tyre or exhaust fitters, launderette or residential home you must contact your local authority’s environmental health department and notify them that you are trading. If your business involves manufacturing or processing, providing a service such as dry cleaning, motor or television repairs or is a nursing home you have to register with the Health and Safety Executive. Depending on the nature of your business, there may be other relevant health and safety regulations too. Employers' liability insurance Employers also have to take out adequate employers'
liability insurance. Limited companies must also take out this
insurance, even if they don't employ anyone. The Health and Safety Executive can provide more information on the rules and regulations governing liability insurance. |
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