The Essential Legal Checklist for Starting a New Business

Starting your own business in the UK requires thorough legal preparation to ensure a solid foundation for future success. Whether you're looking to set up a business as a sole trader, partnership, or limited company, expert assistance can mitigate uncertainty and risk, ensuring your venture is legally compliant and protected.

This guide covers the main considerations for starting a business, helping you to go through the start-up process from developing a strong business plan, choosing a name and structure, to copyrighting your intellectual property and employing staff. It also offers essential advice for growing your business confidently and sustainably over time.

Choose the Right Business Structure 

You may have a great business idea, but what type of legal structure do you choose depends on your business plan and the requirements for starting a business: 

Sole proprietorship: A sole trader is considered to be self-employed, meaning you must register with HMRC from the start of your trading. Sole trading involves being fully responsible for your business, from employing staff and managing its day-to-day running to meeting any legal requirements and managing accrued debts. 

Partnership: You and your business partner share responsibility for your business partnership. The firm’s profits are shared equally, and each partner pays tax on their share. You decide on a ‘nominated partner’ (responsible for record-keeping and managing tax returns) and register with HMRC. All partners are fully responsible for any debts owed. 

Limited liability company (LLC): An LLC, or private limited company, is a business entity that protects its owners from being personally pursued for any repayment of the company's debts or liabilities. They have shareholders and are registered with Companies House, but are legally distinct from their owners, meaning they can be sued in their own right. 

Corporation: A corporation is similar to an LLC but has a more formal structure, with shareholders, directors and officers. Additionally, corporations are separate legal entities for tax purposes, unlike LLCs, which pass profits and losses on to their owners. 

Register your Business Name 

Once you’ve chosen your business name, it’s time to check that it’s available and to ensure it can’t be used by anyone else. Taking these steps early on helps safeguard your business and supports smoother business operations later.

Check name availability 

You can check that your company name hasn’t already been registered in the UK by using the Companies House name availability checker on the Gov.UK website.

Register your business name 

For limited companies and LLPs, registration of the business is made through Companies House. This can be done online or via post. There is a fee for registration.  

For sole traders and limited companies, registration is made through HMRC. Limited companies, once registered with Companies House, must then register for tax purposes with HMRC. 

You can the HMRC website, your unique taxpayer reference, company name and registration number to register for corporation tax. Taking these steps ensures you are fully compliant as you start your business.

Secure a matching domain name 

One you’ve chosen a business name, search domain registrar websites (such as Go Daddy or Shopify) to ensure it isn’t already taken. An exact business name and domain name match is ideal for brand consistency and recognition.  

Select a reliable domain registrar with a good reputation, and enable registrar lock to prevent unauthorised transfers of your domain, another smart step to safeguard your business as it grows.

Obtain Necessary Licenses and Permits 

When setting up a business, it's very important to understand the legal obligations according to your location and industry.

Local permits, obtained through your local authority, may be required for your business. These include food business registrations or pavement licenses, for example.  

Industry specific licenses are required for businesses to conduct certain activities in specific industries. Not every business will need a license, but the penalties for not having one when required can be great. 

Common business licenses relate to construction, food and beverages, liquor, real estate and financial services.  

Health and safety regulations must be followed in the workplace to protect employees and others from harm. For most small, low-risk businesses, the steps you need to take for to be compliant are straightforward: 

• Write a health and safety policy: Having a policy in place lets your workers know you’re committed to health and safety and sets clear rules for employees to follow. 
• Appoint a health and safety representative: As an employer, you need someone with the knowledge and experience to manage health and safety within your workplace.  
• Conduct a risk assessment: Assess the risks for your business by consulting with employees and inspecting all aspects of the workplace, considering what has the potential to cause harm.  

Open a Business Bank Account 

Benefits of separating business and personal finances 

It's an important step in managing your business finances in setting up a business bank account. Dividing your personal and business income allows for clear financial management (e.g. tracking expenses and cashflow, and easier budgeting) as well as simplified accounting and tax filing (e.g. all business transactions together, and straightforward tax returns).  

Financial separation also gives you professional credibility: a business account creates trust in potential clients. For limited companies, financial distinction is a legal requirement that protects personal assets. 

Documents required

To effectively separate your business and personal income, you’ll need separate bank accounts and credit cards, business formation documents and detailed expense records. 

Draft Key Legal Documents 

Operating or partnership agreements: Typically, ownership agreements clarify ownership stakes in the business, whereas operating agreements are designed to protect members in an LLC. Both help companies manage levels of investment and divide profit and loss.  

Terms and conditions: Your company’s standard terms and conditions should include details of the services or products you provide, how much you charge, and when and how you will be paid, as well as information on late payments.  

Privacy policy: This document outlines how your company collects, stores, uses and protects personal information. It helps ensure compliance with data protection laws and builds trust with users. It should be transparent and straightforward.  

Employment contracts: These are legally binding agreements that outline the terms and conditions of a person’s work relationship with a company. It defines job titles and duties, working hours, pay, and the rights and obligations of both the employer and employee.  

Understand Your Tax Obligations 

Registering for taxes 

The specific registration process depends on the company structure. Sole traders are required to register if their earnings are expected to exceed £1,000 per tax year, and registration can be made through the Government Gateway website.  

Partnerships are required to register for self-assessment individually. Limited companies must register with Companies House before commencing operations, and then register with HMRC for tax purposes. 

Common business taxes 

There are key taxes that businesses pay, depending on their structure. 

Sole Traders pay income tax, national insurance, VAT (if threshold exceeded), business rates and capital gains tax. 

Partnerships pay national insurance, VAT (if threshold exceeded), business rates and capital gains tax. 

Limited Liability Partnerships pay national insurance, VAT (if threshold exceeded), business rates and capital gains tax. 

Limited Companies pay corporation tax, national insurance, VAT and business rates. 

Filing deadlines 

Self-assessment tax returns must be submitted before the deadline to avoid a late filing penalty. This can done by post or online, and there are different deadlines for each. 

Private limited companies must prepare annual accounts and a company tax return. You can file with Companies House and HMRC together or separately, and there are penalties if the deadlines are missed. 

Obtain Business Insurance 

Types of business insurance 

If you have a small business and hire employees, subcontractors or anyone for work experience, employers’ liability insurance is the only type of compulsory insurance you pay. This covers employee illness and injury, as well as legal and compensation costs for defending a case.  

Depending on the structure of business you have, other business insurance types include public liability, product liability, professional indemnity, personal accident, equipment and office contents, self-employed and sole trader, equipment hire, medical malpractice, commercial building, and cyber and data.  

Why insurance is essential 

If you don’t have employers’ liability insurance, you can be fined up to £2,500 for every day you go unprotected, so having insurance is essential. It also protects you as an employer against any unforeseen risks and other financial losses. Essentially, the more insurance types you take out, the better protected you are. 

Comply with Employment Laws 

Hiring legally: As an employer, you must ensure that you advertise the role with a full job description, adhere to non-discrimination laws when hiring, check a person’s right to work in the UK, draw up an employment contract and check whether a DBS check is required for the type of work you offer.  

Employee rights and protections: Employee are entitled to a range of legal rights and protections. These cover areas such as pay (minimum wage, unlawful deductions protection and payslip rights) working hours (maximum working week and rest breaks), holiday (paid annual leave entitlement) sick pay, and protection from discrimination under the Equality Act (based on gender, age, race, disability and sexual orientation).  

Workplace regulations: The primary legislation covering the various aspects of employee health, safety and welfare is the Health and Safety at Work Act 1974, outlining the various duties required of an employer. Specific regulations, such as the Workplace Regulations 1992 details requirements for things such as lighting, heating, ventilation and workspace. 

Protect your Intellectual Property 

Trademark your business name and logo 

Apply to the Intellectual Property Office (IPO) to get your business name and logo trademarked. The IPO will publish your request, allowing for any objections. If there are no objections, your trademark will be valid for 10 years, renewable every 10 years. You can apply online or by post and must identify the relevant classes for your goods and services. The fee is £170 for the first class, and £50 for each class thereafter. 

Register copyrights or patents 

Copyright protects your work and prevents others from using it without your permission. There is no register of copyright works in the UK: protection is obtained automatically on creation – you don’t need to apply or pay a fee.  

Copyright covers film and television recordings, music creation, photography, illustrations, broadcasts, and other original works. How long the copyright lasts for depends on the type of work being protected.  

Patents are registered with the Intellectual Property Office. Applications can be complex and costly, so it is advisable that you seek legal assistance. Patents cover inventions that are new, inventive and can be used or made, a technical process or method of doing something.  

Patents lasts 5 years, and then must be renewed every year, up to a maximum of 20 years.  

Final Tips for New Business Owners 

Consult a business solicitor 

Specialist solicitors are primed to give you the best chance of entrepreneurial success. Business solicitors are experienced in the intricacies and risks of starting a company and can help you navigate the process smoothly and efficiently, giving you peace of mind throughout.  

Keep accurate records 

If you’re self-employed, you should keep records of all business expenses, sales and income, VAT records (if applicable), PAYE details (if applicable), personal income and grants. Your records can be used to work out your profit or loss for your tax return, or to submit to HMRC if requested.  

Stay updated on legal changes 

Adapting your business practices when legal changes are made means you remain compliant and avoid penalties. In 2025 alone there have been numerous changes, related to identity verification of company officers, enhanced transparency for limited partnerships, and adjustments to national minimum wage and national insurance contributions.  

GOV.UK and Legislation.gov.uk are the best websites to stay updated on legal business changes, as well as organisations such as the Federation of Small Businesses. Be sure to gain your information from official sources to prevent non-compliance and mitigate risk, giving you the best chance of business success.