. Many businesses start ups fail because of inadequate market research. Overcrowded sectors, insufficient customer awareness, wrong location - the list of potential pitfalls is almost endless. Setting up and running a business is a time consuming task - you need to be dedicated and focused and able to structure your time in order to be successful. The rewards of starting up your own business can be great, but think carefully if you have the attributes and right sort of personality to cope with going it alone.
We have been helping to establish new businesses for many years, whether from scratch or businesses spun out from other companies or organisations. We have remained supportive of many of the clients we met at the inception of their business and are looked on as part of their extended 'team'. We deliver the legal services required for your business start up with the benefit of a full corporate legal team, and so we offer a comprehensive range of advice and services you will require in these early stages, whether you intend to operate as a sole trader, a partnership, company or LLP. Thousands of people set up their own businesses every year. Some do it because they want to work for themselves, others because they have a great idea and have spotted a gap in the market. There are many issues to think about.
Aside from sole trader status, most small businesses set up as a Private Limited Companies (limited by shares). The term 'limited' derives from the fact that the company's finances are distinct from the personal finances of their owners (unlike the sole trader arrangement). The main advantage is that the liabilities (debts) of the company are completely separated from its directors and owners. Many people starting out, or a little way down the line, decide to register a limited company. In practice they're both the owners and directors, although the two are distinguishable in law.
There's no doubt that starting a limited company is more complicated than partnerships and sole trading, and running it is too. However there are benefits in the form of dividend payments and you could even sell the business for millions. They can be very tax efficient for individuals too, and any good accountant will be able to ensure you get the best advantage (legal of course!) from owning or directing a limited company.
This is our most popular package with UK residents, and includes: The submission of forms detailing your company's executive officers The registration of your £1,000 authorised share capital (a minimum of one share must be issued) Company formation is usually achieved within 6-8 workday hours (Companies House permitting) Payment of UK legal and initiation fees The appointment of your own candidates as directors and secretary (a minimum of two people are required) The following documents will be e-mailed to you (Note: these documents are to be printed and signed): Electronic Certificate of Incorporation (PDF) Electronic Memorandum & Articles of Association (MS Word) Minutes of the First Meeting of Directors (MS Word) Share Certificates and company Register
Economy Package
£ 82.00
Annual Maintenance Fee £50.00
This is our most popular package with EU residents, and includes: The submission of forms detailing your company's executive officers The registration of your £1,000 authorised share capital (a minimum of one share must be issued) Company registration is usually achieved within 6-8 workday hours (Companies House permitting) Payment of UK legal and initiation fees The appointment of your own candidates as directors and secretary (a minimum of two people are required) A registered office address for 12 months, provided by Coddan An application form for the following year's renewal of the Registered Office Address service (£50.00) Annual Return and Annual Account reminder The following documents will be e-mailed to you (Note: these documents are to be printed and signed): Electronic Certificate of Incorporation (PDF) Electronic Memorandum & Articles of Association (MS Word) Minutes of the First Meeting of Directors (MS Word) Share Certificates and company Register
Premier Package
£ 131.95
Annual Maintenance Fee £99.95
This is our most popular package with small business, and includes: The submission of forms detailing your company's executive director The registration of your £1,000 authorised share capital (a minimum of one share must be issued) Company incorporation is usually achieved within 6-8 workday hours (Companies House permitting) Payment of UK legal and initiation fees Applicant appointment of director for company (appointed electronically) A registered office address for 12 months, provided by Coddan An application form for the following year's renewal of the Registered Office Address service (£50.00) Nominee company secretary service for 12 months (next year - £49.95) Annual Return and Annual Account reminder The following documents will be posted to you (these documents will be sent via Royal Mail): The original laminated Certificate of Incorporation A bound copy of the Memorandum and Articles of Association The Minutes of the First Directors' Meeting Two printed share certificates and Company Register
Deluxe Package
£ 256.95
Annual Maintenance Fee £224.95
This is our most popular package with overseas residents, and includes: The filing and registration of your company in England The registration of your £1,000 authorized share capital (a minimum of one share must be issued) Company formation is usually achieved within 6-8 workday hours (Companies House permitting) Payment of UK legal and initiation fees A registered office address for 12 months, provided by Coddan An application form for the following year's renewal of the Registered Office Address service (£50.00) Nominee Company secretarial service for 12 months (next year - £49.95) Coddan provides a company nominee director service for 1 year (next year - £125.00) The name of the nominee director & secretary will appear as a public record Annual Return and Annual Account reminder The following documents will be posted to you (these documents will be sent via Royal Mail): The original laminated Certificate of Incorporation A bound copy of the Memorandum and Articles of Association The Minutes of the First Directors' Meeting Two printed share certificates and Company' Register A pre-signed, undated letter of resignation from the nominee director A General Power of Attorney signed by nominee director An indemnity Letter for General Power of Attorney A nominee service agreement which provides for the indemnification of the nominees
Name Protection
£ 22.00
Annual Maintenance Fee £60.00
The purpose of this package: This package allows you to register a company name with Companies House and thus prevent this name being used to form a company by anyone else This package includes: The registration of a non-trading limited company with your choice of name Payment of UK legal and initiation fees A nominee director A nominee secretary A nominee shareholder A registered office address Management of the company: Coddan will file the annual return and dormant company accounts on your behalf for an annual fee of £60.00 If you do not wish to renew the management option at the end of term, the company will be dissolved
Business Start-Up: Legal Requirements
Company subscribers may be residents outside the UK You must appoint a minimum of ONE Director There is no maximum number of Directors Directors can be corporate bodies or private individuals A Director can be of any nationality Directors need not be formally trained All companies must appoint a company Secretary Secretaries can be corporate bodies or private individuals A Secretary can be of any nationality. If there is only ONE Director he or she CANNOT also be the Secretary A company must have a minimum of one shareholder who may be a corporate body or an individual No minimum paid up share capital A minimum of one share may be issued Capital may be denominated in any currency Shareholders and directors meetings may take place outside Great Britain The company is required to have a registered office in the UK
WHAT YOU SHOULD KNOW BEFORE STARTING A BUSINESS. STARTING UP IN BUSINESS GUIDE
Every year thousands of people, fired with the entrepreneurial spirit, decide to take the plunge and start their own small business. They come from all backgrounds and ages. Their businesses are based on every conceivable idea from gardening and IT to child minding, consultancy and arts and crafts. The buzz of being your own boss has few equals.
While many of these businesses succeed, sadly some fail within a short time of starting, usually due to a lack of proper preparation and planning. If only they had been able to get some quality help and new business advice.
We provide a fast online service for company registration, LTD company formation, and business incorporation in England, Wales and Scotland. When first starting-up a business there are many issues to consider. You need to decide whether or not to incorporate your business, and to choose a structure for your business. There are several types of legal business entities which you can choose to operate as. For more information on these choices, follow the links below. We advise that professional legal and financial advice is obtained before a final choice of business entity is made.
Coddan is a leading service provider in the field of English, Scottish and Irish company formation and company registration. We can help you in starting a business in England & Wales Scotland and Northern Ireland. Over 95% of our companies are incorporated within 6 hours. The electronic submission of information enables a fast company start-up satisfying all of the required legal formalities: a director, a secretary, a registered office and shareholders. Our electronic filing software has been approved by Companies House.
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If you will require further information about your business needs, pre-start stage and continues you can book an appointment with our business consultants in our office. It will be a bespoke service entirely for your benefit. You can discuss anything that concerns you and ask for advice on any aspect of starting and running a new business. At any stage of your business activity, you can ask to speak with our specialists about specific questions which disturb your mind as a head of the business, such as bookkeeping, taxation or marketing for help to start your own business. All business advice meetings are on an appointment basis.
These meetings are usually take between an hour and an hour and a half, but we can spend additional time, if it required for your business needs. We confirm your meetings, both by telephone and in writing and we suggest how you can prepare for the meetings so you can obtain the maximum benefit from them. We also will require to receive from you the list of questions that you intend to discuss with our specialist, so we could be fully prepared for your meeting.
Coddan advise executives, full boards, board committees, non-executive directors, in-house counsel and institutional investors. Our advice covers a wide variety of matters including:
Board level structures and processes; Board composition; Corporate social responsibility; Defamation risk; Directors' fiduciary duties; Due diligence; Governance-related disclosure requirements; Insurance; Internal investigations; Investor relations; IP protection and management; New competition law; Non-executive director recruitment; Remuneration and incentive schemes; Share options; Review of annual report and accounts: directors' report, remuneration report, notice of annual general meeting, accounts, tax returns.
At Coddan, business specialists and consultants also can assist with the following queries and matters:
Banking and finance transactions; Acquisitions and disposals of businesses including management buy-outs and buy-ins; Intellectual property - we advise on exploitation and/or realisation of intellectual property including patents, trade marks, copyright and industrial know how in conjunction with the firm's intellectual property group; we also advise on confidentiality issues, restrictive covenants and computer software and hardware licensing; Commercial agreements including agency, distribution and management agreements; Shareholders agreements - we have the expertise and knowledge of many industries to recognise what our clients require; Internet start-ups. Web site design and development; Financial services regulations; Company incorporations for both local and foreign interests - we offer a fast, efficient and tailored fixed fee service for company incorporations; Apostille Legislation.
If you need any further assistance with the points highlighted above or even if you did not find your question in the above list, please feel free to contact Coddan for more details and information
WHAT KIND OF BUSINESS SHOULD I BE?
There are four principal legal forms that a film production or distribution company might take:
Sole Trader: the simplest structure, but carrying unlimited liability for the owner. Partnership: relatively simple but inflexible. Financial affairs are confidential but limited to 20 partners and again carrying unlimited liability for the partners. Limited Liability Partnership: introduced in 2001, these provide limited personal liability for the partners but tax and operational issues are still being sorted out. Loss of confidentiality as accounts must be filed. Limited partners may not be involved in the management of the partnership. Limited Company.
So, you can be a sole trader, a partnership, as limited partnership, Limited Liability Partnership (LLP), a limited company or a co-operative - the choice is yours. However, before you begin trading, you need to decide which legal form of business is best for you.
The decision will affect the way you are taxed and accounting records you will have to keep. Even if you are going to work on your own from home, think about whether might be advantages in forming a Limited Liability Partnership or a Limited Company.
UK LTD Companies from only £32.00! All Inclusive Company Registration. Each limited company package includes all statutory paperwork and is fully compliant with company law. All our private UK companies are general trading companies and can be used to conduct any type of business. A Certificate of Incorporation, and the Memorandum and Articles of Association of your company will be sent to you upon formation of your company. You can appoint your own directors and secretary BEFORE company incorporation. This is absolutely FREE. Our 4-8 hour online incorporation service enables you to register your company quickly and effortlessly. All government and filing fees are included in the cost of our E-Quick pack. All certificates and documents will be sent directly to you via email immediately following the formation of your company. It will take just 5 minutes to complete the online registration form, then your company could be up and running within 4-8 working hours.
THE E-QUICK PACKAGE CAN BE UPGRADED WITH ANY OF THE FOLLOWING FEATURES:
1. Company Pliers Seal - £20.00. 2. Laminated Hard-copy of the Certificate of Incorporation - £5.95. 3. Laminated Hard-copy of the Certificate of Incorporation, Bound Copies of the Memorandum & Articles, and Combined Company Register - £12.95. 4. Domain Name Registration for two years - £16.00. 5. Provision of a Registered Office Address for 12 months - £50.00. 6. Provision of a Nominee Company Secretary for 12 months - £49.95. 7. Certificate of Good Standing - £35.00. 8. Notarisation & Apostille of Documents.
Limited Companies: this is generally the best legal form for film companies to use. Limited companies are cheap and easy to set up and they protect the directors by limiting their liability for any debts run up by the company to the amount that they have invested in it. However, this protection is removed if any director acts in any way that is unlawful, negligent or not in the best interests of the company (i.e. in the best interests of the shareholders on an ongoing basis). The directors are also liable if the company continues to trade beyond the point when it can reasonably expect to meet its outstanding liabilities. In this situation, the directors are personally responsible for any additional liabilities incurred after the company has reached this point.
When creating a limited company, directors must be clear about their individual rights and responsibilities; the rights and responsibilities of their fellow directors; the fundamental issues that will need the unanimous agreement of all directors; and the procedures that will be put in place for resolving any disputes. Directors should make sure that they are familiar with the company's internal rules and procedures and that they read all documents (e.g. minutes of board meetings) carefully before signing them.
Being a director of a limited company carries a number of additional responsibilities. Companies are obliged to prepare annual accounts and file a copy with Companies House. Company law requires that certain information appears on all correspondence issued by the company.
Get help from Coddan to understand what type of business entity will be much suitable for you.
WHAT DO I CALL MY BUSINESS?
If you are going to trade on your own, as a limited company or LLP, please read our Companies Formations Guidance & FAQs (FAQs: Company Names), before you will decide on a name. There are certain checks that need to be carried out before a company registers a particular name. Firstly, the name must be available for registration at Companies House.
Company name FAQs tells you how you can name a business, and what words you are not allowed to use without permission or proper entitlement, such as the words 'Royal', 'Authority', 'International' and so on. It also explains the requirements you must meet if you are going to trade under a name which is not name of your company (if you are a company) or your own name if you are sole trader or partnership. You can use the service of Coddan. We will make sure the name you have chosen meets these requirements.
If you decide to use a business name, you must display certain information in a prominent place where you work (even if you are working from a shed in your garden). This information must also be on all business letterheads, invoices, receipts and so on. It is up to what style you use, but it must include your business name and the company name, name of each partner or name of sole trader, whichever is appropriate and your permanent business address. If you have any problems, Coddan will be glad to help you.
COMPANY NAMES AND LIMITED LIABILITY. PARTNERSHIP NAMES (LLPs)
If you decide to form a limited company, you need to know about the rules and regulations which applies to this business entity in according to the Companies Act.
As it was mentioned above, the name may not include any of a list of prohibited words (including "Royal", "British" etc.); and (if the same directors are involved) may not be the same name as a company that has been declared insolvent within the last five years. Furthermore, the name of the company cannot imply that it is part of a larger corporate structure if this is not in fact the case. It is possible to register a name which is similar to an existing name - but this may be subject to challenge by the existing company within twelve months of registration, particularly if there is any suggestion that the new company is attempting to pass itself off to customers as the better known brand. If the company is trading internationally, the checks will also need to ensure that the name will work, and is not already being used, in other countries.
The company name does not have to be the same as the trading name but the company must always make clear when it is trading under a different name than that under which it is registered. The exact company name must appear on all company stationery and correspondence.
If you decide to form a Limited Liability Partnership, you also need to know about the rules and regulations explained in the Limited Liability Partnerships Act.
Restrictions on names and the rules on that information you must give are the some as those individuals and partnerships going into business. However, you mush also be sure that there will be no objection to the name you choose. This could happen if the name you want is the same or similar to a name already being used. This a fairly important point, because if you are told to change your name, it could your business a lot, and not only in money.
PATENTS, COPYRIGHTS AND TRADEMARKS
Copyright, trademark and patent law protects your ideas form being exploited by rival business. They also prevent someone using your 'intellectual property' without your permission.
If you have invented a real money-spinner which could be developed into a product, you might want to apply for a patent. If you do, you will find it a very complicated procedure. We strongly recommend you talk to a patent agent. The Chartered Institute of Patent agents or the Patent Office will be able to help you. You also can apply to Coddan for the required assistance. Remember, even if you have a patent, there could be a long and expensive legal battle trying to stop other people using it.
When you decide on a name for your firm product, or you have designed a logo, you can apply for the trademark to be registered. This will give you a great legal protection. The institute of Trade Mark Agents and Trademark Registry can help you. You also can apply to Coddan for the required assistance.
HOW DO THE TRADING LAWS AFFECT ME?
There is a wide range of laws to protect consumers, employees, the general public and business themselves. So that is important that you have at least a basic understanding of the laws and how it affects you and your business. Coddan can tell you more about the existing trading laws, applicable to your activity, but the following Acts of the Parliament are important to all businesses:
Consumer Protection Act 1978 Trade Description Acts 1968 Sale of Goods Act 1979 Health and Safety at Work Act, etc 1974 Unfair Contact Terms Act 1977
Whatever your business, as far as consumers are concerned, there are 3 trading standards which are almost bound to affect you:
If goods are faulty, consumer can have a full refund or part of a refund. Or you can agree to repair or replace the goods. A notice which says 'No Refunds' is not legal. In some cases, displaying of such a notice can be a criminal offence.
Goods must always live up to the claims you make for them. Fashion boots described as waterproof must keep out rain and protect people's feet against puddles. If you label goods falsely, you could be prosecuted and buyers would be entitled to their money back.
Goods must meet certain safety standards. If a child in injured or poisoned by a toy, or there is an accident with a faulty kettle, you could be prosecuted and a large claim could be made against you for damage. Although these safety standards are not all part of the law, if you are in the kind of business where this could happen, it would wise to get the insurance cover.
INSURANCE
Insurance is essential from the start for almost all kinds of business. The purpose of the insurance is to provide cover against risks. All small firms are particularly vulnerable to one-off disasters; an important management issue will be choosing appropriate insurance policies to reduce the effect of bad luck. Some types of small business insurance you may wish to take out for peace of mind (such as contents insurance), others are required by law. You should seek professional advice and make sure you take out the appropriate cover for your business needs.
INSURANCE YOU MUST HAVE BY LAW
Companies (and their Directors - i.e. you!) must obey hundreds of pages of rules and regulations - for example, tax law and company law. Some of these rules are obscure and pointless - but unfortunately being unaware of, or disagreeing with a law is no defence. The best advice is to talk to an accountant to make sure you stay on the right side of the law.
Employers' Liability By law, any business that employs people, even a part-time basic, must have this insurance. This will provide protection against your liability or accidental injury, death or disease to employees.
This insurance is arranged to protect employers against claims for injury or illness brought by employees. Employers' Liability (Compulsory Insurance) Act 1998 requires that employers maintain cover to a minimum of £5,000,000 in respect of such claims. Many contractors don't take out this type of policy (since they will be claiming against their own Limited Companies!) - but it is a statutory requirement all the same.
Pensions One of the drawbacks of being your own boss is that nobody else is making any plans for your retirement. Therefore, if you want a comfortable retirement you will have to make your own plans - and for most people this means setting up their own pension scheme. Fortunately, the government makes this a little bit easier by allowing you to claim tax relief on your pension contributions.
As pension scheme, contributions are a tax allowable deduction for IR35 purposes it is very important for freelancers caught by IR35 to carefully review this subject.
Life Insurance What happens if you are ill or injured? What if you die? How will your bills be paid, and who will look after your family? When you are employed in a regular job, the answer to some of these questions may be "my employer will make sure we are alright". Unfortunately when you are your own boss, you are your own employer - so if you do not make plans for illness, injury or death, nobody else will do it for you!
Recommended Insurance. Public Liability This type of insurance is designed to cover businesses from the threat that they will be sued from a member of the public. The basic concept of public liability is, it will cover your business in the event that it causes injury or death to a third party, it will also cover you in the event that you damage a third parties property. Public liability is an essential cover that all businesses need; cover is relatively cheap and will cover you in the event that you are pursued by a third party.
The definition for public liability insurance is as follows: The insurance of liability for accidental bodily injury or damage to the property of third parties.
Public liability insurance applies to all businesses as it is the most basic essential cover, although it will not stop your company being sued it will provide the financial backing in the event that there is a claim awarded against you.
If you do not have public liability insurance and you get pursued for compensation you will be liable to pay the full amount of the claim, if you are not able to pay the compensation you will lose your business, home and any other assets that you have.
Last year over £5 billion was paid out alone in public liability insurance claims. A lack of public liability insurance puts thousands of businesses out of business every year, and with cover starting from as little as £60 a year why take the risk.
Property You need property insurance, including cover for fire, and theft, to protect your business assets.
OTHER TYPES OF BUSINESS INSURANCE
Professional Indemnity Insurance This covers your business if it acts in a professional capacity in the course of business. In some professions, such as accountancy, taking out PI cover is a legal requirement. In other professions, most notably IT consultancy of any type, it is often recommended and even insisted upon by third party clients if you are working on IT projects on their behalf.
Provides financial protection for your company and is designed to meet the cost of defending claims made against you, including damages that may become payable. Claims can occur where a client suffers a financial loss as a result of alleged mistakes or omissions on your part. You may even be sued by a client who is merely dissatisfied, but has no valid claim, leading to substantial legal costs and time away from contracts. Of course, such claims are rare.
Director's Insurance Even though the nature of running a limited company 'limits' claims against its directors, in some cases (e.g. negligence), directors of limited companies can be sued. This type of insurance protects directors from this eventuality.
Equipment Insurance Particularly important if you have PC equipment at home (or on your premises) - if you knock your cappuccino down the back of the base unit, you would be liable to fork out several thousand pounds for a new one, unless you have the correct insurance type in place. This type of insurance will protect your business equipment of whatever nature, subject to the terms of cover.
Buildings & Contents Cover Standard insurance to protect your business property and fixtures/fittings. If you are working from home, you may need to inform your household insurer to ensure that this extends to your home business needs.
Motor Insurance Standard insurance for business transport. If you use your personal vehicle for business use, make sure your car insurer is updated of your change in circumstances.
Legal Expenses Insurance This will protect you in the eventuality of legal action being taken against your business, including court costs and legal fees.
Tax & VAT Investigation Insurance Protects you in the event of an investigation by the tax authorites - more and more contractors are investing in this type of policy in light of IR35 and the complications it may bring from 2001 onwards. Would typically include protection against VAT disputes with HM Customs & Excise and employer compliance investigations (PAYE, NIC, P11D). This type of cover should not cost too much, although some financial advisors resell packages at a premium, so it is best to shop around.
HOW MUCH DO THESE POLICIES COST?
Policies of this type are far less expensive than you may think, although the final cost will depend on your individual circumstances. The cost of individual polices tend to depend on the following factors:
The annual turnover of a freelancer's company; The nature of your business operation.
Whether the freelancer works through an agency, or direct with the client. Rates for freelancers working through agencies tend to be lower, but not in all cases.
Insurance and IR35. Should you wish to take out Public and Employers Liability insurance, this should be claimed as part of the IR35 '5% general allowance'.
Professional Indemnity insurance, on the other hand, can be claimed as a 'Schedule E' expense - in addition to the 5% allowance, so this will be an attractive scheme for many. Professional Indemnity insurance is the most popular scheme for freelancers.
DO I NEED LICENSE?
The following businesses are just some of these which need special licenses to trade.
Auction sale rooms, betting offices, billiard halls, bingo halls, cafes and restaurants, caravan sites, children nurseries, cinemas, theatres, employment agencies, food manufacturers, fruit machine owners, hairdressers (not always), ice-cream sellers, market stall owners, mobile food shops, nursing agencies, nursing homes, pawnbrokers, petshops, kennels, selling petrol, riding schools, selling fireworks, selling alcohol, selling tobacco, scrap metal dealers and theatrical employers.
ARE YOU BUSINESS AT THE LAW?
Have you got professional advise from solicitor and an accountant? Have you chosen a legal form for your business - sole trader, partnership, limited liability partnership, limited company or a co-operative? Have you met with business or company names regulations? Have you met with the laws affecting business premises and trading? Have you thought about getting patents, or copyright or trademark registration? Have you asserted copyright on creative artwork or writing? Have you told Inland Revenue and the Contribution Agency Office about your business? Do you know whether and how to register for VAT? Have you met the Data Protection requirements?
KEEPING RECORDS
You will need to keep records for your own sake, but you must also keep them by law to support your VAT, other tax and National Insurance contribution payments and claims. If you are limited company or LLP, there are further conditions to do with your annual reports and accounts. In the case of companies, there are also condition concerning records of board meeting and transactions in your company's shares.
In you are sole trader or a partner, the tax rules are different but you still need to produce completed financial records. Please do not hesitate to use Coddan's accounting department to help you with your accountancy and tax questions.
If you plan to keep any information about people electronically, for example on a personal computer, you must notify The Information Commissioner under the Data Protection Act 1998. Under this Act, computer users must follow 8 Data Protection Principles for using computers.
The Data Protection Act has also been extended to certain manual records. The data Protection Act will affect many aspects of your business and you should obtain professional advise on this implications in your precise business circumstances.
COMPLYING WITH DATA PROTECTION LEGISLATION
Getting Started The 1998 Data Protection Act significantly changed the use of customer data. Paper records must now comply, as well as computerised records. Companies must be open about how they use data and must follow sound information-handling practice. The Act gives every individual access to information held about themselves. All data users must register with the Data Protection Registrar and comply with the principles of the Act. Companies should use customer data to benefit customers. Many simply hold data without using it. The issue of regulation for the Internet is a difficult one.
Companies must ensure the data they hold is accurate and up to date. Get customers' permission before passing data or continuing to contact them. Reassure customers that you treat their data with the highest levels of confidentiality. Use data, within the spirit of the Act, to contact customers with information that you believe may be of interest to them. Make it easy for customers to respond or change their details.
UNDERSTANDING DATA PROTECTION
Data protection is a legal requirement for all employers. But do you really understand what it means? Data held on computers is governed by the Data Protection Act 1998. The Act puts in place eight principles to make sure that your information is handled properly. These principles require that data must be:
fairly and lawfully processed; processed for limited purposes; adequate, relevant and not excessive; accurate; not kept for longer than is necessary; processed in line with your rights; secure; and, not transferred to countries without adequate protection.
By law data controllers (the person nominated by a business to manage data on its behalf) have to keep to these principles. These principles put a significant obligation onto business. They require that information stored on computerised records (this includes databases, email records, electronic documents and other electronic communications and may cover personnel records, minutes and other sensitive information) must be accurate, kept only for a specific purpose and for a specific period of time, and importantly, that information be kept secure.
DATA PROTECTION ACT FAQs
How do I know if my data has to comply with the Act? - Even if you only hold a small number of customer names and addresses, they constitute data under the terms of the Act. If in doubt, check.
My company is part of a larger group. Can I pass customer data to other companies in the group? - You should ask the customer's permission before passing data to any other parties, even internal ones.
How long can I hold data on a customer? - The Act does not specify a time limit, but recommends that it should not be held longer than necessary. It is in the spirit of the Act that you should not just hold data, but should use it to benefit the customer, for example, by providing them with information that you believe is useful.
What happens if data is inaccurate? - According to the Act, data must be accurate and up to date. That puts the onus on you to maintain it properly and check with customers that it is accurate.
MAKING IT HAPPEN
Check All Your Records The use of customer data changed significantly when the 1998 Data Protection Act came into force. The 1994 Act only covered data held electronically which could be processed on a computer. However, the 1998 version included paper records.
Paper Records Must Comply In theory, this means that if you have a box of file cards with names and addresses, you should register that information with the Data Protection Registrar (DPR). Many sales and customer service teams still use this type of filing, even in relatively large companies.
Use Data Properly The basic premise behind the Data Protection Act is: if you have data, use it properly. The Act works in two ways.
Firstly, it places obligations on data users. They must be open about how they use data and must follow sound information-handling practice which is specified in the Act. Secondly, the Act gives every individual access to information held about themselves. It also allows them to have the information corrected or deleted where appropriate if it is wrong, and gives the right to seek compensation for damage and associated distress through the courts.
Register Your Data Under the Data Protection Act, all data users must register with the DPR. Once registered, users must comply with the principles contained in the Act. They must:
obtain and process personal data fairly and lawfully; hold the data only for the purposes specified in the register entry; only hold accurate data which is relevant and not excessive for the purpose for which it is held; ensure personal data is accurate and, where necessary, kept up to date; not hold data for longer than necessary.
Use Customer Data to Benefit Customers Not all companies comply with the spirit of the Act. According to research, some of the organisations holding most data, particularly in financial services, don't seem to use it at all, resulting in poor communications with customers. Many companies have simply been collecting data and not really putting it to good effect. The data is itself very valuable, but customers may feel that they have handed over a great deal of information on their lives without seeing any benefit. The issue of data collection becomes even more complicated with the growth of the Internet. Not only will data collection be faster; consumers will expect higher levels of service than ever.
Be Aware of Internet Data The issue of regulation for the Internet is a difficult one. The World Wide Web is based on principles of freely available information on a worldwide scale. However, consumers need to be protected so that they can use the Internet with confidence.
Check Data Accuracy Recent changes to the Data Protection Act mean that companies must ensure the data they hold is accurate and up to date. As part of your commitment to customer service, you should aim to offer customers useful and timely information that meets their individual requirements. To do this you might hold contact details, together with information on customers' personal interests which they have provided in the past. Because circumstances change, make sure that you have your customers' correct details and check that they are happy for the company to continue to contact them.
Customers have a right under the Data Protection Act to ask for a copy of the information you hold on them and to have any inaccuracies corrected.
Get the Customer's Permission Ask customers to let you know if they do not wish you to give this information to other parties. Tell them that you would like to continue contacting them. However, if the customer prefers you not to, ask them to let you know. If they do not reply within a specified time frame, tell them that you will assume that it is okay to continue contacting them.
Reassure Customers About Data Customers should be assured that you treat their data with the highest levels of confidentiality. You should not disclose their information, without their consent, to third parties, any party within your own organisation, dealers or other organisations acting on your behalf.
Use the Information to Maintain Contact If you have data, you can use it-within the spirit of the Act-to contact customers with information about products and services that you believe may be of interest to them. You can also use the information for marketing, research or sales tracking purposes. Customer names and addresses may also be used to process orders and maintain accounts with the company or its dealers.
Make it Easy for Customers to Respond Allow customers to respond to requests for permission or change of details by post, fax or e-mail. Let them know that they should reply if they would like you to stop contacting them, or if they want to change contact details. Provide a helpline that customers can call if they need any further information on your data policy or on the data you hold.
COMMON MISTAKES
Storing data and not using it. The Act says that you should not hold data for longer than necessary. Consumer attitudes say that they should see some recognisable benefit for providing the information.
Using inaccurate data. The onus is on the company to ensure that data is accurate. This means contacting customers to ensure that information is up to date and accurate.
Failing to register data. The 1998 version of the Act widened the scope of data protection to include paper records. Even small organisations with apparently simple customer records must comply.
Making it difficult for customers to respond. The Act says that you must give customers access to any data you hold on them. That means you must make it easy for customers to contact you.
PREMISES
Before you choose a property for your business, talk to your solicitor and check with the local council. Make sure you are on the right side if the sometimes complicated regulations, like environmental health rules, which govern how premises can be used for trade. For example, if you are planning to start food business, you must register the premises you intend to use at least 28 days before you open, You must take these rules into account even if you are trading from home, where, for instance, you might need planning permission.
You need to look closely at business leases. Remember, they are not as easy to get out if as the to get info.
WHAT ABOUT MY TAX LIABILITIES?
The amount of tax you need to pay will depend on a number of things, but you will generally pay less tax if you put down business expenses against your profit (this is another good reason why your business records are so important).
If you will require any assistance with the account, bookkeeping or tax planning questions, please do not hesitate to ask Coddan for help.
Tax and Profit and Income If you are a sole trader, in a partnership or a member of an LLP, you must pay income tax. If you are limited company, you must pay corporation tax on the profits your company makes. You must also pay income tax on your wages. These will be paid by PAYE (Pay As You Earn) if you are an employee of the company.
In limited circumstances, an LLP may also become liable to Corporation Tax, e.g. on ceasing to trade.
Once again, Coddan can help you!
VAT (Value Added Tax) Each year, the Government sets the level of turnover, and if your business goes over this level, you must compulsory VAT registration apply for VAT registration. In some case, it might be best to register even if you are below this level. If you have any questions about the VAT, please ask Coddan for assistance. Our team of the experienced accountants and business consultants will be glad to help you further. VAT is simple enough if you pay VAT on all your supplies.
This is what happens:
You charge VAT on certain goods and service, and send the VAT you collect to Customs and Excise every month or quarter (3 month). In turn, you may be charged for VAT on goods and services you need to run your business, such as materials, legal fees, telephone bills and so on. If so, you can claim some or even all of it back. In practice, you simply take second 'outgoing' total from the first 'incoming' total. Then you pay or claim the difference. This is not apply to VAT on imports, which you must pay as soon as the goods enter the country. If this is the part of your business, you maybe able to arrange a special bond through your bank which would help you put off such payments. The VAT regulations change constantly, so you need to keep up to date with developments.
Remember, VAT office take a firm line with the businesses that pay late or do not register when they should.
EMPLOYING PEOPLE
At first you may be able to run your business by yourself, if not, or as your business expands, you may need to employ people. If you do need recruit employees, you should know you responsibilities as an employer.
What are My Responsibilities as an Employer? Every employee, whose employment continues for one month or more, has the rights to receive written statement setting out certain details of the employment. This should be provided no later than two month after their employment starts.
This statement must include the following details:
Name of the employer and the employee as well as their job and title description. Their place of work. The date of employee's employment and period of continuous employment began. The terms and conditions relation to hours of work, holiday entitlement and pay )including public holidays). The scale and rate of pay, pay intervals and method od calculation. Grievance procedures. Sickness procedures, including sick pay. Pension schemes. Length of notice needed to end employment. Any collective agreements. Disciplinary rules including the process and process and any appeal arrangements. (As employer with fewer than 20 employees does not have to give these rules).
Employee Contracts All employees are entitled to receive a statement of their terms and conditions of employment, whether or not that is in the form of a formal contract, a letter of appointment or any other written form. If the employer only uses a letter of appointment, rather than a formal contract, however, the courts may imply contractual terms. It is always better, therefore, to issue a formal contract to all employees.
The content of the statement of employment must include:
the employer and employee names the date on which employment commences the date on which the period of continuous employment began (where an employee has moved jobs within the same employer) the scale, rate or method of calculating remuneration the intervals at which remuneration will be paid any terms and conditions regarding hours of work any terms and conditions relating to holidays, holiday pay, sick pay, pensions etc the notice period entitlements for employer and employee the job title and/or a brief description the place of work if employment is not intended to be permanent, the period for which it is expected to continue or the end date of any fixed term details of any collective agreements details of any applicable disciplinary or grievance procedures
Discrimination and the Law Generally, when recruiting an employee, it is a illegal to discriminate on the ground of race, sex, disability and marital status, however there are certain limited exceptions. The anti-discrimination law continue to apply to all other parts of an employee's job, including wages and holiday entitlement after the recruitment process, Your business could be held liable for any discrimination of if you are trading as an individual you are trading as individual you could be personally liable foe discriminatory actions.
Tax and National Insurance Contributions If you employ anybody, either full time or part time, you are responsible for deducting income tax and National Insurance Contributions (NICs) from their wages, and you must also pay the employer's share of the NICs. If you are not sure about the NICs, always consult with the Inland Revenue. There are different tax and National Insurance rules depending on you circumstances.
When you take on someone you need to tell your local tax office. They will send you documents which show you how much you need to take out of each employee's wages earning and where to send the money. You must record each employee's earning and tax and National Insurance Contributions and tell your local tax office about these amounts every year.
In the case of National Insurance, the contributions for your employee will be in two parts. You must pay one part and your employee must pay the other. These contributions depends on how much you pay your employee. The Inland Revenue will collect them at same time as they collect any tax. Inland Revenue office or Coddan Accounting team will be able to give you more advise on the National Insurance. Please feel free to ask.
Your own National Insurance depends on your circumstances. If you are company director you will be treated in a similar way to your employees. You will be classed as an employee of your company and will pay contributions in the same way as your employees but, there is a special way to access director's National Insurance. You can get assistance in the local Inland Revenue office, or ask Coddan for help.
If you are sole trader, partner or member of an LLP you will need to contact Inland Revenue to get more information about your tax liability. You choose wherever to pay your National Insurance contributions every month by direct debit from your bank account, or every three month when you will receive a bill. Your contributions will be charged at the same rate each week. You may also have to pay an extra contribution or any profit your business makes. This is assessed and collected along with your income tax.
Health and Safety You must make sure that, as far as is reasonably, the health, safety and welfare of your employees is a not at risk whilst they are at work. You may contact your local health and Safety Executive for advise and information which will help you set up important safe legal working conditions for employees.
Trade Unions It is illegal to refuse a person employment because he or she is or is not a member of a trade union. You should know various law which protect employee's rights to choose whether to join a trade union.
Dismissing an Employee We hope you will never have to take such a drastic step, but if you do, you must have a valid reason for dismissal and you must act reasonably and follow procedures. Unless the dismissal is for gloss misconduct, you must give employee notice of dismissal as set out in their contract. Failure to give proper notice may lead to a wrongful dismissal claim.
Sub-Contracting One alternative to employing directly is to sub-contract some work. This may be more cost effective in ironing out short-term trading highs and laws, night alternative some of the responsibilities of an employer. However legal responsibilities can arise in this respect, for example under the Transfer of Undertakings (Protection of Employment) regulations 1981.
Contracts Contracts do not have to be written down to be legally binding - but it is always better for both parties to have something in writing and signed. Under English law, there is no duty of good faith in a contract - the terms have to be clearly agreed to be binding on both parties. A contract should clearly establish your rights, the other parties rights and the consideration to be made by both parties. (Consideration must be present for a contract to exist but it does not have to be commensurate or equivalent on both sides.)
There are a number of different types of quasi-contractual agreement including:
Heads of Agreement - this records the salient points agreed between the parties but may not be intended to be legally binding Letter of Intent - describing an intention to act in a certain way but which, again, may not be intended to be binding Comfort Letter - which can be agreed in place of a formal guarantee but is, again, not usually intended to be binding Memorandum of Understanding - recording the broad parameters reached between parties but, again, more often than not, not intended to be binding
Any of these agreements can carry the force of a full contract if the parties agree, or may provide that specific terms are legally binding. Conversely, the parties can make everything "subject to contract" to make absolutely clear that none of the terms is intended to carry contractual force. Whatever their intentions, all parties should make absolutely clear what legal force they intend any of these documents to have.
An important point to remember is that lack of documentation does not equate to lack of contractual obligations. As mentioned above, the contract does not have to be in writing and lack of signature on a document does not necessarily mean that the terms are not binding. It just becomes more difficult to prove what was intended by both parties if documents are not properly signed off and agreed
The Law and You as an Employer As an employer, it is essential you know about the following issues and how the law deals with them:
Terms of Employment Redundancy - Payments Insolvency Pregnant women: Maternity Care, Parental leave, Time off for dependants Sick leave Health and Safety Union Membership Itemised pay statements Continuous employment Time off for public duties Unfair dismissal Rights on ending employment Dismissal Sub-contracting Industrial action ballots Discrimination: Sex, Racial, Disability Equal pay Picketing - Code of Practice
You can get leaflets on the issues above from the Department of Trade and Industry, Advisory Conciliation and Arbitration Service of the Department of Social Security. The law in these areas change frequently and, you should know about the following current employment laws:
Disability Discrimination Act 1995 Employments Rights Act 1996 Data Protection Act 1998 Trade Union and Labour Relations (Consolidation Act 1992) Trade Union Reform and Employment Rights Act 1993 Transfer of Undertakings (Protection of Employment) Regulations 1981 Equal Pay Act 1970 Sex Discrimination Act 1975 and 1986 Race Relations Act 1976 Race Relations (Amendment) Act 2000 Health and Safety at Work etc. Act 1999 Equal Pay (Amendment) Regulations 1983 Asylum and Immigration Act 1999
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Starting Up in Business Guide
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This is our most popular package with UK residents, and includes:
The submission of forms detailing your company's executive officers
These meetings are usually take between an hour and an hour and a half, but we can spend additional time, if it required for your business needs. We confirm your meetings, both by telephone and in writing and we suggest how you can prepare for the meetings so you can obtain the maximum benefit from them. We also will require to receive from you the list of questions that you intend to discuss with our specialist, so we could be fully prepared for your meeting. 
Board level structures and processes; 
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When creating a limited company, directors must be clear about their individual rights and responsibilities; the rights and responsibilities of their fellow directors; the fundamental issues that will need the unanimous agreement of all directors; and the procedures that will be put in place for resolving any disputes. Directors should make sure that they are familiar with the company's internal rules and procedures and that they read all documents (e.g. minutes of board meetings) carefully before signing them.
If you have invented a real money-spinner which could be developed into a product, you might want to apply for a patent. If you do, you will find it a very complicated procedure. We strongly recommend you talk to a patent agent. The Chartered Institute of Patent agents or the Patent Office will be able to help you. You also can apply to Coddan for the required assistance. Remember, even if you have a patent, there could be a long and expensive legal battle trying to stop other people using it. 
Companies (and their Directors - i.e. you!) must obey hundreds of pages of rules and regulations - for example, tax law and company law. Some of these rules are obscure and pointless - but unfortunately being unaware of, or disagreeing with a law is no defence. The best advice is to talk to an accountant to make sure you stay on the right side of the law. 
This covers your business if it acts in a professional capacity in the course of business. In some professions, such as accountancy, taking out PI cover is a legal requirement. In other professions, most notably IT consultancy of any type, it is often recommended and even insisted upon by third party clients if you are working on IT projects on their behalf.
You will need to keep records for your own sake, but you must also keep them by law to support your VAT, other tax and National Insurance contribution payments and claims. If you are limited company or LLP, there are further conditions to do with your annual reports and accounts. In the case of companies, there are also condition concerning records of board meeting and transactions in your company's shares. 
The 1998 Data Protection Act significantly changed the use of customer data. Paper records must now comply, as well as computerised records. Companies must be open about how they use data and must follow sound information-handling practice. The Act gives every individual access to information held about themselves. All data users must register with the Data Protection Registrar and comply with the principles of the Act. Companies should use customer data to benefit customers. Many simply hold data without using it. The issue of regulation for the Internet is a difficult one.
