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What are the legal requirements for starting a business?

Find out in this article what the the legal requirements for starting a business are so that you can stay on the right side of the law.

You will learn

  • The main legalities that you will need to think about
  • Where to go for further support and advice

The legal requirements for starting a business can seem intimidating, but obviously these are things you cannot afford to ignore. As well as damage to the business reputation, there are potential fines if you fail to comply with legislation, even if unintentionally. Ignorance is no excuse in law. A great deal of the regulations involved will depend on the nature of your business and some sectors are more regulated than others.

One important thing to remember is that as well as having to comply with the legislation and regulations, these are also in place to protect your business from illegal acts by employees, competitors, customers (think about terms and conditions including payments) and suppliers.


Depending on the nature of your business, you may need a licence from your local authority. Check their websites for full details in your area, but these will include: taxis, animal businesses, restaurants/food businesses, tattooists, alcohol sales, hairdressers, street traders, environmental licences inc. waste disposal, etc.

Childminding and day care facilities will need to register with OFSTED (in England), and this can take several months.

It is always a good idea to find out which licences are legal requirements for starting a business in your chosen sector.


If you are going to employ staff you will need to ensure you have covered all employment law issues, from terms and conditions, to staff handbooks and written contracts, as well as ensuring the person is entitled to work in the UK. Many businesses employ the services of a HR Consultant to give peace of mind, as employment law is constantly changing and you will need to keep ahead of the game. Have a look at the ACAS website for further information and find out more about what options you have when taking on staff.


Gain an understanding of tax law. VAT registration is not optional once you have reached the revenue threshold, this changes year-on-year so ensure you are up to date. If you are a Limited Company then corporation tax rates need to be checked. If you employ staff, the new PAYE reporting regulations will apply to you. To gain further information on the legal requirements for starting a business in terms of your taxes, have a look at the website in relation to HMRC.


Some insurances for your business are not compulsory, but advisable, and others are compulsory, such as Employer's Liability Insurance. Always seek advice to ensure you have the appropriate insurance for your business. There are many specialist insurance brokers you can talk to; speak to trade associations who often have special member deals.


If you play music that can be heard by members of the public, you may need a licence from the Performing Rights Society, to find out more information look at or take a look at our article for getting your license here.

Intellectual Property

Whilst you may have Intellectual Property for you business, you do need to ensure you are not breaching that of any other business by trade mark, design, copyright infringement (think about your business name), even down to the images you may use on social media. Check out for further information.

Health and Safety

Health and Safety for your business is a must, visit - this site has a wealth of advice and information on it, including how to carry out risk assessments. There is a minimum standard for health and safety no matter what the nature of your business is. If you have five or more employees, it is a legal obligation to have a written risk assessment. Ensure you have a policy in place that considers the health, safety and welfare of staff, customers and suppliers, ensure you have an accident book available and if appropriate a first aid kit. 


Environmental issues must also be considered and there are no ceilings to potential fines. If you use a contractor to remove your waste, it is your responsibility to ensure they are legally permitted to do so. Disposal of electrical goods and equipment must be done so under the WEEE regulations. Have a look at our tips for protecting your business against pollution.

Data Protection

The Data Protection Act gives clear guidance on how customer and employee information should be used, stored and retrieved. Their website gives a lot of guidance and advice which we strongly suggest you look at to ensure you understand the regulations. There is also a self assessment tool so you can see if you need to register with them.

Consider your obligations from the outset, and seek support and advice on your particular venture to avoid problems further down the line. You should get all of the important advice and support now, rather than when things go wrong and your reputation is damaged, or even worse you are in breach of legislation.

Are you thinking about starting a business?

Then download this free start-up guide to help give you a solid place to start

Written by:

Heidi Green

Senior Business Adviser

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