Legal Consideration For Tech Start-Ups – Navigating The Legal Minefield

Setting up any kind of business requires careful navigation through a legal minefield! Yes, that sounds kind of scary, doesn’t it? And it should because setting up a business isn’t easy, and it isn’t for everyone.

The term minefield is very apt as well because one false step could end up in a big mess of legal problems. Of course, that is the worse case scenario some mistakes are easy to correct, and you shouldn’t let the fear of making a mistake stop you from setting up your business.

However, we can help you navigate the minefield there is a lot of red tape entrepreneurs need to cross in order to set-up their business and it’s in these first few steps where many entrepreneurs struggle. But getting through these legal hurdles is easier than you think and there is help and support available as well.

According to Jones Whyte a Glasgow solicitors there are many important legal obligations that entrepreneurs need to know about but let’s get straight down to the fundamentals. One area where many entrepreneurs struggle is that they don’t know what legal responsibilities they have to fulfill. 

When it comes to setting up your business you have many options, for tech start-ups, things like non-disclosure agreements are going to be very important but they aren’t legal requirements for setting up your business. Likewise, many businesses will want to trademark their business name and domain but again this isn’t something you need to do either.

So, to help make your first steps as an entrepreneur easier we are just focusing on the legal requirements you have to meet before you set-up your business. This can be broken down into four main categories and these are the main legal considerations all tech entrepreneurs will need to meet before they can set-up their business.

The Business Structure

The first legal concern of any entrepreneur is how they are going to set-up their business. Depending on the structure you choose you will have different legal considerations you’ll need to meet. You will have three main options when setting up your business namely a limited company, sole trader or an established partnership.

Sole traders require no formal registration but there is a lot more personal risk involved, a limited company will need a share agreement set up and a partnership will need a written partnership agreement. Each business structure has its benefits and disadvantages so you’ll need to think very carefully before deciding which structure is best for your tech start-up.

A Business Licence

The second legal concern will you need to deal with is the matter of a licence, so do you need a licence to set-up your business? Thankfully tech start-up businesses will likely not need to bother with this step as it’s unlikely they will need a licence.

Licences are usually only required for businesses in industries like catering or hospitality. However, if you are dealing with some form of hazardous materials then you may need to apply for a licence as well.

This is uncommon for tech start-ups but in some cases, you may be working with potentially harmful materials so in some cases a licence may be needed. 

The Importance of Health and Safety

For our third legal consideration, it’s the always important health and safety! Health and safety as an unusual reputation in the UK but despite its reputation with many people, it’s a very important part of setting up your business.

And while the tech industry might not seem like the most dangerous industry at first glance it usually will require working with electronics and sometimes even potentially harmful materials. It is also very important when setting up your business that you are aware of your health and safety responsibilities.

Business owners have a responsibility for ensuring the proper care of anyone who might be affected by their business. This isn’t limited to just your employees either but also to members of the public and any visitors. So, what must you do to ensure you are legally covered for health and safety?

First of all, you must carry out risk assessments in your business premises to identify any potential risks that could develop during the course of your business. Hazards can take many forms and as an employer, you are responsible for ensuring these risks are managed.

There is a wide range of ways this can be accomplished, and you will need to set-up a health and safety code of practice as well. Health and safety also require constant vigilance especially in an industry like technology which is forever evolving. 

Insurance Requirements

Insurance is notoriously tricky especially since it isn’t always something that you actually need, sometimes it can be optional. So, what does your business need when it comes to insurance then? Well first of all if you are going to employ people (and most tech companies will need to at some point) then you will need employer’s liability insurance.

If you are uninsured and have employees, then you will be fined for each day your business operated without insurance. This can add up very quickly, and you may also be liable to compensation claims from employees if they have suffered harm while you have been uninsured.

Other covers like public liability are valuable but they are not mandatory however that doesn’t mean your business shouldn’t invest in them. While it isn’t technically insurance another area you need to consider is the VAT.

If your business turnover is greater than the current registration threshold (remember this changes) then you will be legally required to register for VAT. If you fail to do so then you will face penalty charges and if you want to you can also voluntarily register for VAT even if you don’t meet the current threshold.

So, that’s an outline of the four main legal considerations all tech start-up businesses will be responsible for. By ensuring you tackle these four considerations first you’ll make the rest of the process of setting up your business much easier and simpler.

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