The Legalities of Leadership

See also: Commercial Awareness

Setting up a business can be an exciting time, but without the right legal guidance it can also be a minefield.

Laws surrounding business are often complicated and difficult to understand, especially when you’ve had your head focusing on getting it all going.

Start-ups in particular can be clueless to the minefield that awaits them on the journey to success.

As a business owner it is your responsibility to understand the laws relating to you and your company but, as we all know, law is never simple. And changes can often happen dramatically without any kind of warning.

Hiring a business lawyer is something that many companies forget about until it’s too late. But a good lawyer who understands your business can protect you from risk and save you money, so that you can be left to run your business without any worry.

The legalities of starting a business is often forgotten due to the huge cost and expense it takes to get it started. But there are many laws surrounding businesses that need to be taken into consideration.


A lot of work goes into setting up a business and now you need to protect it.

All businesses need insurance, but the insurance type can differ depending on what your business does or how it runs.

Always check the terms and conditions of any policy, and if you’re really unsure about what the jargon is telling you, consult with a professional.

Even if you cannot afford a lawyer at this stage there are many free legal aid companies available that can simplify the nonsense.

With many variations in insurance, ensure you do your research so that you understand what you need to have covered. Just like with your prized possessions, your business is now your biggest asset and it will need protecting.


To manage particular types of businesses you may need a license to enable you to trade.

Businesses requiring licences include hotels, restaurants, childcare and beauty therapies as well as many more.

The most common license to hold is for the selling of alcohol, but knowing what licences you need is essential to make sure to you’re not committing a crime.

Depending on the licence type you need, you’ll either have to contact your local council or send an application to the government.


Employing people to help you run your business is one of the biggest elements in your business when it comes to abiding by the law.

As an employer you have a responsibility to create a safe environment and also to prevent illegal working.

In the UK, if you are caught employing an illegal worker you can face a fine of up to £20,000 per person, as well as a prison sentence.

With such a strong stance set upon businesses to be more mindful, the immigration enforcement agency now have the right to publish your full business details as a warning to other businesses.

There are basic rules on how to check every employee’s right to work.  Following these suggested steps will help you to employ those with a right to work, and ultimately save your business.

Cash Flow

Money is the most important factor for any company.

If you have debts with suppliers or manufacturers, a solicitor can help you to manage this by checking you have the right contracts before you begin trading.

Taking legal action against a business is the last thing that anyone wants to do, but unfortunately there are circumstances when it is called for.

Managing money is something you cannot hide from as a business owner as it is the bloodline to your business.

If you don’t understand how to manage money or the legalities of contracts, hire an accountant and a lawyer.

The cost of these services will far out way the stress that managing it on your own will incur.


When you sell goods or services you must make sure you are aware of your legal duties.

Having systems in place to ensure that these duties are fulfilled will keep your customers satisfied with your business.

Detailing your refunds policy and having a complaint system in place is not something that you’d like to think of as a business. In an ideal world it would all run smoothly.

But having these processes in place will make you feel more at ease when there is a bump in the road.

At times like these your competence as a business is always tested, and performing efficiently will encourage return custom.


When renting or buying a property for your business you must read the contract carefully so that you fully understand what you can and cannot do with your premises.

  • Can the landlord increase the rent? If so, by how much and will you still be able to afford this?
  • Will you need planning permission to add extra office space or build upon what is already there?
  • If you’re choosing to run your business from home, what are the restrictions?

Business property questions can be overwhelming as this will be the home of your company.

Consider all of your options when starting a business and think about what you can really afford. Stretching your budget too far too quickly could end up being costly later on down the line when business gets slow.

Always think ahead and perhaps consult with a property lawyer about your options.

Further Reading from Skills You Need

The Skills You Need Guide to Leadership

The Skills You Need Guide to Leadership eBooks

Learn more about the skills you need to be an effective leader.

Our eBooks are ideal for new and experienced leaders and are full of easy-to-follow practical information to help you to develop your leadership skills.

When starting a business include the laws and legal requirements that surround your business idea. Taking these elements into consideration before you begin is going to make you feel more confident about the costs involved, and the hoops you’ll have to jump through before you get off the ground.

There are many useful articles online provided by the government and other recognised websites that can help explain laws, licences and duties. Don’t be afraid to ask for professional help as in the long run it can save your business.

As a future employer and business owner take the responsibility to do your homework before setting up shop.

About the Author

After over 10 years in the business and marketing industry David Walker has now developed a career as a business consultant for Startups.

As well as having a passion for all things entrepreneurial, David shares his knowledge for business with informative and useful business articles.