Sometimes when starting out on your first business venture you may feel you do not know what you are doing. There are however, a number of legal points you should consider and take very close attention to.
Firstly, you should draft a shareholder agreement. It is not compulsory to have one however it is very important to lay out the responsibilities, ability to make decisions and who’s right it is to do so. It will assist should a dispute arise and whilst you may hope this will not happen the great thing means that you have a document in black and white to help resolve things quickly.
Secondly, is a data protection breach? The protection provided by the Data Protection Act 1998 means that you are required by law to use and process personal data using the 8 principles laid down in this legislation.
You have to be registered with the Information Commissioner’s Office and nominate a data controller. Failure to do this is a criminal offence, so this should be one of your first jobs once you have started trading, or even before if you can.
Another mistake that small businesses make is to try to cut costs when putting together employment contracts, supplier contracts or in fact any of the legal work that supports a business. Cutting costs at this stage may seem like a stroke of genius, but in the long term this could end up costing you more than you bargained for, particularly if a dispute arises with an employee or even a customer. Good legal advice may seem expensive, but it could save you a fortune in the long run.
Lastly, check that you have insurance cover in place. There are some statistics to suggest that about 230,000 business have no insurance at all and if you are one of them that could be disastrous. Just one accident at the office or a break in could mean that you are unable to operate and therefore, the end of your business.
There are many more small business blunders than these to factor into your business plan, but hopefully by avoiding these, you will stay afloat in the all-important first year.
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