The number of new business start-ups is rising and, according to government statistics, 99% of all businesses in the private sector are regarded as ‘small’ or ‘medium’ sized.
Here are some important matters to consider before commencing a new business venture.

What’s in a name?
• Do check that someone else is not already trading with the same business name in the same sector.
• Don’t forget there are certain restrictions to consider when choosing a company name – check at Companies House.
• Don’t forget the legal requirements for business stationery, emails and websites.
• Don’t forget to think about domain names too.

Structure of the business
• Do spend time deciding on the legal structure of the business, e.g. sole trader, (unlimited) partnership, limited liability partnership or company.
You will need to consider the level of financial risk you are prepared to take and the level of control you want to have in the daily running of the business. The tax treatment is often a decisive factor and do speak to your accountant. You will also need to consider reporting, accounts and records that you need to keep and filing requirements.

Company formation
If you choose to set up a company then:
• Don’t underestimate the importance of a shareholders’ agreement as agreeing specific provisions between the shareholders at the outset can save costly disputes later. Shareholders’ agreements regulate the management of the company and provide a structure in the event of deadlock, or a party wishing to exit, as well as clarifying the position in the event of the demise of a party.
• Don’t overlook your company books and deadlines for Companies House filings – a company secretarial assistant or accountant can help with this.

Shhh!
• Do have a standard non-disclosure agreement setting out how you share sensitive information about your business for dealing with investors, banks, suppliers and customers.

Contracts
• Do ensure that you have written contracts in place with key customers and suppliers.
• Do invest time and money in preparing your standard terms and conditions of trading. These set out the key commercial and legal terms on which you are willing to do business and help to create certainty and minimise legal disputes. Getting your terms and conditions right is also crucial to maintaining a healthy cash flow.
• Do review long term contracts during their lifetime.

Protect your assets
• Don’t forget to protect/register your intellectual property. Make sure that you own it, and consider the terms of any licences that you may grant.
• Don’t forget to organise insurance for your business, e.g.: Employer’s Liability Insurance – if you are employing staff;
Public Liability Insurance – if you are dealing with members of the public on your premises to cover accidents or injuries; and
Professional Indemnity Insurance – to protect against claims made against the company for professional errors.

Data protection
• Don’t forget about data protection. If you handle personal information about individuals, such as name, address, date of birth or other information from which they can be identified, you should register with the Information Commissioner’s Office, unless you are exempt.

Taking on employees
• Do assess the status of your workforce and ensure that you agree contracts based on their correct status, i.e. directors’ service agreements, consultancy agreements or employment contracts.
• Do ensure that you have adequate non-contractual policies in place to minimise liability and maximise company protection, e.g. anti-bribery, data protection, equal opportunities, IT and communications, health and safety and social media.

Above all, take specialist legal or business advice if you are unsure. Taking advice early on should be viewed as an investment in your business to maximise value and minimise risk of issues or disputes arising.

Planning the exit from your business

Once you have developed your business, there are various exit strategies. If you have entered into a Shareholders Agreement, this will often provide a structure which the shareholders have agreed on.

Common strategies include:
• Winding up the business and distributing the assets – although most entrepreneurs will look at continuing the business in some form.
• Seeking entry to a recognised investment exchange (listing).
• Succession planning, by passing the business to family members.
• Selling your business to management or your fellow shareholders.
• An outright sale to a third party.

It is important to have a clear strategy in place many years before exit, in order to ensure a smooth handover with customers, suppliers and employees. This will also be important for your own tax planning.

A clear strategy will also maximise the value of the business, and it is best to speak with your advisers as soon as possible. The most common mistake is lack of preparation or leaving things too late resulting in a rushed (and stressful) sale where a buyer is able to suppress the value of the business.

If you are looking to sell, you should:
• Put yourself in the shoes of a buyer and consider the pros and cons of your business.
• Ensure you have written contracts in place with your key customers and suppliers, so that they are not vulnerable to termination.
• Put into place robust financial management and reporting, including collection of debts.

Business owners often do not have time to deal with some of these matters, but do invest in an adviser to review your business to identify key areas where value can be maximised.

Same sex couples establish the same rights as those in a heterosexual couple when they marry, but it is on the breakdown that the differences are apparent. For instance, due to the definition of ‘adultery’ (sexual intercourse between a man and a woman, one or both of whom are married to another person), proceeding with a divorce or dissolution on that ground is not an option.

Whilst such an extramarital relationship can be cited as an example of ‘unreasonable behaviour’ (a ground on which both heterosexual and same sex couples can rely when pursuing a divorce or dissolution) for many, from a personal perspective, that is difficult to accept. If one party has been unfaithful, and that is why the marriage or civil partnership has broken down, then it is right that that can be relied upon when a divorce or civil partnership is pursued.

Equally, due to the definition of ‘consummation’, same sex couples are not able to pursue an annulment on that basis.

These may be considered to be relatively minor details which should not be too bothersome. However, if you are not affected by such limitations it is easy to take a dismissive view. On the breakdown of a marriage or civil partnership, it is often the detail that is the most important, either from a legal or personal perspective.

Such inequality cannot be right. It is likely that after only three years, the Marriage (Same Sex) Act 2013 already requires reform if it is to properly provide equality to same sex couples wishing to marry.

It is important to recognise that whilst modern families share a lot of features with the more ‘traditional’ family, from a legal perspective, there are some unique features which require careful consideration and expertise.

essence info

Mundays LLP
Cedar House, 78 Portsmouth Road, Cobham KT11 1AN
Telephone: 01932 590500
Website: www.mundays.co.uk

Profile

Alex Young is a Partner in the Corporate Department at Mundays, specialising in all aspects of corporate law. He has acted on numerous sales and purchases of businesses, shareholder arrangements and funding of joint ventures and acquisitions.

Alex has particular experience in advising on shareholder arrangements for start-ups, and has recently acted on multi-million pound transactions, including the sale of a food procurement business and the merger of two accountancy practices, with particular emphasis on owner-managed businesses. He also specialises in transactions involving property joint ventures, financing and sales with offshore companies.

Georgina regularly advises on distributorship and agency agreements, key sale and supply agreements, outsourcing and standard terms and conditions. She has experience as in-house counsel at Ricardo UK Limited.

Alex can be contacted by telephone on 01932 590635 or by email at alex.young@mundays.co.uk.