Starting a new business can be exciting and hard work. There are a lot of things that need to be understood when starting a business, and it is widely accepted that you bring in financial and legal experts to help you achieve your objectives.
The first step is to call in help from a solicitor. You need a clear understanding of what this journey entails, and solicitors have done this many times before.
In this article, we’ll show you how a lawyer may be of essential assistance when buying a business.
Incorporation – Becoming a company
Setting up a new business can be done in various ways, which we’ll explain a little later. Each of these types of business has a different legal status. These include:
- Sole trader
This business structure involves operating as an individual. You’ll be individually taxed and have no specific regulated duties. Legal advice is helpful here when it comes to deciphering what your liabilities are and how to avoid getting into trouble.
Buying a business as a freelancer could include taking over where another freelancer left off by purchasing the rights to their brand and their clients.
- Limited company
This type of company comes with legal liability. The Companies Act 2016 expects this type of business to be run in the correct manner, and as a company, not as an individual. Obligations fall to the company director, and they include registering a trading address, incorporating roles and responsibilities, setting up a business bank account, regulatory compliance, and filing accounts with Companies House.
You will benefit from numerous advantages for setting up a limited company, including tax advantages and advice around accounting.
Setting up a limited company can easily become confusing, and it is highly likely you’ll need a solicitor to help make sure you have everything set up correctly and don’t get into trouble.
A partnership involves going into business with one or more people. In this instance, both assets and debts are owned by those involved in the partnership, which often occurs between two specialist companies who link, for example, a solicitor’s firm and an accountancy firm.
Absolutely everything in partnership is equal unless it states otherwise in a legal agreement. Therefore, it is essential that your paperwork is drafted correctly and by a professional.
- Limited Liability Partnership
A limited liability partnership means that liability won’t extend to personal finances for the partners involved. Some or all the partners will have limited liabilities, which means they will not be responsible for another partner’s misconduct or negligence.
Don’t try this at home
If you’re buying a business and are not a sole trader, you’ll need a Shareholder and Partnership Agreement. These are the governing relationships between shareholders and partners, and make it clear how everyone agrees the company should be run. This agreement gives the answers on some key decisions, determines what happens if a director departs, discusses restrictions, and makes clear what shared values the company needs to uphold.
We strongly advise you to seek legal advice for these agreements. There are often legal issues that need to be addressed before you buy a business and creating this agreement and speaking to a solicitor will help with this.
Terms and Conditions
A contract that depicts terms and conditions helps form a mutual understanding between parties. It’s the foundation for your business if you’re buying a new one, and you need to make sure it’s written correctly and fully understood.
Not having a contract is dangerous. You will have no contractual agreement and may end up in court. That would leave you relying on a court to determine what action should be taken in the event something goes wrong. This is often bad for businesses.
Intellectual property and rights
Intellectual property and rights should be clearly determined and defined in legal documents so that you can prove what belongs to your business and make it sage. There are several legal actions you can take here for protection, including obtaining trademarks, patents, and ensuring contracts stipulate your ownership.
A lawyer will be able to advise you on what you need to do to protect your rights.
Insurance is vital to your business. If anything bad happens, you will want to know you are covered. Financial and legal implications can apply if something happens and you don’t have insurance. In fact, not having insurance if you are a specific kind of business is illegal. Therefore, it is essential to take professional advice.
Licence to trade
Some businesses require a licence to trade. A lawyer will help you determine if that is you. They’ll help you apply for the specific licenses you need, and ensure all regulations are complied with.
We can help you
JMR Solicitors are an award-winning law firm based in Manchester. We provide professional legal services to our clients and offer a range of services for new businesses.
If you need legal advice about starting a new business, call us on 0161 491 3933 or email email@example.com.