Working from home is now a familiar feeling for workers in this day and age. But, what if you want to run your business from home entirely?
If you’re thinking of running a business from home, there are a number of legal aspects you need to be ready to consider. We’ve compiled a list of the basics of starting a business from home, which aren’t too different from considerations when working in an office.
- Structuring and registering your business
- Applying for relevant tax concessions
- Intellectual property
Running a business from home has some extra considerations, such as:
- How can I maintain my Workplace Health and Safety obligations at home?
- Do I need a Working From Home policy?
- Can I monitor my employees while they work remotely?
- Do I need additional policies for privacy?
In this article, we’ll break down these aspects and how you can remain compliant with employment and privacy laws from home.
I Want To Run A Business From Home – Where Do I Start?
When you start a business, your first step is to decide on which business structure will work for you. This is important because it will affect the way your business operates and should complement your long-term goals.
The most common business structures include the following:
- Sole Trader: A sole trader is where an individual operates a business under their own name. The business is not separate from its owner, so you may be liable for the business’ debts.
- Partnership: This is where two or more people run a business together as partners. It is also not a separate legal entity, but it needs to be registered with HMRC for tax purposes.
- Company: A company is a separate legal entity and is protected by limited liability. It can either be public or private needs to be registered wa.
Your choice of business structure should be based on your financial capacity as well as your plan. For example, the intended size of your team and how much you’d like to grow in the future.
If you want to keep things small, a sole trader structure is most suitable for you. Otherwise, if you have big plans for your business and you have the money to spend, then a company structure might be a better option.
Register Your Business Name
If you’ve chosen a company structure, your next step is to register your company name. This involves checking the Companies House register and selecting one that isn’t already in use.
If you are a partnership structure or a sole trader, registering your business name isn’t mandatory.
Registering a business name does not mean you own that name. If you believe your business name is unique and would like to consider ownership of it, then you may wish to look into trademarking – we’ll discuss this below.
In the UK, it is legally required for businesses to have Employers’ Liability Insurance. This covers you in the case of an employee suffering sickness or injury due to their employment with you.
To further protect your business, you may also wish to get the following:
- Public liability insurance – this protects your business from claims made by members of the public
- Professional indemnity insurance – this only applies to businesses who offer a professional service or held to a higher standard
The type of insurance you are required to have will depend on your business operations.
What Are My Obligations As An Employer?
Hiring people to help run your business comes with additional obligations. These include fair pay, leave and entitlements under the Employment Rights Act 1996.
All employers in the UK need to ensure they are paying their employees the National Minimum Wage. Employees are also entitled to protection against unlawful discrimination, and protection for whistleblowers. You can read more about this here.
Taking the time to ensure you are meeting all of your employer regulations will keep your employees happy, avoid any disputes and attract more people who want to work for you.
It’s also worth checking whether your staff are considered employees or workers, as your obligations to them will differ.
Businesses must follow a number of consumer guarantees under the Consumer Rights Act 2015. These consumer guarantees essentially protect consumers from unfair business practices such as being ripped off or misled about a product in any way. So, these laws give customers the opportunity to report this conduct or lodge a complaint against a business.
Generally, consumer laws in the UK cover the following areas:
- The condition of products
- Protection from unfair contract terms
- Protection from misleading and deceptive conduct
- A right to be treated and served fairly
If your business intends to sell goods or supply services, it must be compliant with consumer protection laws.
Supply Agreements are important in ensuring business operations run smoothly. If your business requires a supplier to provide any materials or products, having a Supply Agreement in place is a proactive way of protecting your venture.
A Supply Agreement will typically include important information such as:
- The length of the agreement
- Times and dates
- Dispute resolution
This agreement is crucial for your business as it will set out the key responsibilities of each party and ensure you are both clear on how the process will work. So, if something goes wrong, there is a process to follow to sort it out.
A Supply Agreement can be particularly helpful if you’re engaging overseas suppliers.
It’s advisable to have a legal professional draft a Supply Agreement for you. At Sprintlaw, we can tailor a Supply Agreement that is catered to the needs of your business with our Supply Agreement Package.
Intellectual Property (IP) is one of the most valuable assets of a business. Fortunately, the law offers multiple ways to protect your IP. These include:
As a business owner, you are likely to be interested in trademarks or copyright. Trademarking a particular logo, name or symbol is a way for a business to carve out a place for itself in the market by distinguishing its brand. For example, you may want to register a colour, logo, name or even a smell.
Trademarks and other forms of intellectual property are handled by the Intellectual Property Office (IPO). The process of registering a trademark can take around 3-4 months and is rather complex, so we recommend seeking the help of a legal professional.
Our Trademark Initial Consultation package will have one of our lP experts talk you through your options.
If I’m An Ecommerce Business, What Else Should I Know?
If you’re an eCommerce business, there are a number of additional legal considerations. Since you’re primarily online, you’ll need to think about the best way to protect your business from online risks, data breaches and the way you engage with users across the globe.
Terms & Conditions
Every eCommerce website is required to have Terms and Conditions. These terms should be easy to understand, not too complicated and easily accessible. Put simply, you want users to be able to read them and quickly understand what their role and responsibility is when they engage with your business.
Having terms and conditions in place will not only protect your businesses should any relevant complaints arise, but it is also a great way of being transparent with your customers.
What Is Considered ‘Personal Information’?
Personal data could include details like users’ names, phone numbers or email addresses.
Personal data generally involves any information that can identify a natural person. While this may seems straightforward, the GDPR provides that even things such as records of water or electricity usage can be considered personal data.
Considering the broad approach of the GDPR, it’s important for all businesses to be aware of how it might affect their business activities and what they should do to ensure compliance.
No matter what kind of business you are, you cannot rule out the possibility of a cyber security breach. Thus, a strong cyber security system will not only protect your business, but also your customers.
As you are processing and storing private information, a data leak could jeopardise the reputation of your business. Preparing an appropriate Data Breach Response Plan is an effective way to combat this. This essentially sets out a process to follow if such a breach occurs, and will let staff know the relevant steps to take to prevent any further damage or loss.
We’ve written more about how your business can best prepare for any cyber security threats.
Selling internationally requires different considerations. These can include:
- Export and import regulations
- Having an internationally registered trademark
- Different or additional shipping costs
- Website security policies for different regions
- Social or cultural sensitivity
- Employee obligations
When you do business overseas, you’ll also need to draft your contracts a little differently. For example, if something goes wrong, whose jurisdiction will it fall under? Which country’s laws apply to your dispute?
Depending on your business and its goals, it’s always best to consult a legal professional in that local jurisdiction and have them advise you through some of these potential concerns.
Most eCommerce businesses will consider a dropshipping model. This basically means that instead of keeping stock in your inventory, you have an arrangement in place that allows your suppliers to send products directly to customers when they order from you.
This saves you the time and resources required to hold inventory and worry about selling it all. Instead, you only ship the products that have actually been ordered.
However, it’s important to understand how dropshipping works and comply with your legal obligations under the arrangement. For example, it’s crucial that you have a strong Supply Agreement in case your customers aren’t happy with certain products from your suppliers.as you are likely to be liable for it.
How Will I Fulfil My Obligations To Employees Remotely?
It is important to ensure you are still fulfilling obligations to employees even if they work from home. Being proactive regarding potential issues and having systems in place can combat any obstacles that are created from a virtual workplace. This can look like:
- Clearly communicating internal policies and professionalism in conduct
- Using communication mediums that can be tracked
- A dispute resolution process
- Work from home policies
Additionally, Workplace Health and Safety obligations are still applicable for remote workers. As an employer, you are still responsible for ensuring your employees are reasonably safe. Identify any hazards and take reasonable steps to minimise those hazards.
For example, you may have a process in place where you call employees on Zoom and ask them to scan their Work From Home space, and you can assess whether it is a safe environment with minimal hazards or risks.
A business owner hires an IT expert for their software company. It’s a remote job that requires sitting in front of a screen for extended periods of time. To minimise the health hazards, the employer sends their employee a standing desk to use from time to time and schedules appropriate breaks throughout the day so they can stretch.
Setting up a business from home requires a multitude of legal considerations, such as:
- Registering the right kind of business structure
- Ownership of Intellectual Property
- Applying for insurance and tax deductions
- Ensuring all online policies are compliant
- Having strong contracts in place
- Providing the right reimbursements for any employees
Getting these matters in order is important for the success of your business. A legal professional can ensure everything is done correctly so you can focus on maximising your business’ performance.
If you would like to discuss the legalities of setting up a business from home, you can reach us at 08081347754 or [email protected].uk for a free, no-obligations chat with our friendly consultants.
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