What are the legal requirements when setting up a new business?

This is the age of the entrepreneur. Over recent years, Exeter has seen a steadily growing number of new business start-ups, and our city has regular events and community resources to help those looking to make their entrepreneurial dreams a reality. Right now, most of us have a little more time on our hands than usual, so this could be the ideal time to get to work on your business plan and think about how to bring that germ of an idea from the back of your mind into fruition.

There’s plenty of things to think about when starting a new business, for example funding, staffing, setting up premises, planning your marketing strategy and so on. There are numerous online resources offering advice in these areas. But they often overlook the basics. Here, we cover the legal nitty gritty in what you need to physically start a business.

Register the business

This is the business equivalent of getting a birth certificate for your newborn baby. The exact process for registering a business depends on whether it is a limited company, partnership sole trader business or something else. However, it is not complicated in any of these cases, and if you visit the government’s website, you’ll find a section that will walk you through the process. 

Obtain an LEI Code

This is a relatively new requirement arising from an updated EU Directive called MiFID II, which came into force in 2018. It requires all companies that are involved in financial transactions on the money markets to obtain a special 20-digit identifier called a Legal Entity Identifier. Ostensibly, this is primarily aimed at businesses operating in the finance sector. However, the phrase “undertaking financial transactions” could be construed as applying to almost any business. The good news is that getting an LEI code is quick, straightforward and inexpensive. Visit Leicertificate.org, fill out a form, make the payment and your LEI Code is usually issued the same day. 

Get the essential insurance cover

There are all sorts of different types of insurance you can get for a new business. These range from legal essentials to “nice to haves.” Employer’s liability is a legal requirement if you have any employees, and commercial motor insurance is likewise obligatory if you have vehicles. Beyond that, public liability is not a legal requirement, but is very strongly recommended, as without it, one mishap could destroy your business. Other policies like property insurance, professional indemnity and cyber cover are things you should evaluate on a case by case basis.

Protect data

You’ve probably read about the GDPR and the impact it had on big businesses. Well you need to know that it applies to companies of every size, including startups. When you have a new business, it is far easier to start from scratch with the right procedures than to try to change established practices. Make sure you have a data and privacy policy and that it is part of your business’s DNA from the get-go.