FAQs about Start-Up/Small Business Advice

SMALL BUSINESS FAQS GREENWICH

Should I set-up a sole tradership, a partnership, a limited company or a limited liability partnership?

The answer is not a simple one – it entirely depends on the type of business you want to set-up, the extent of resources and your attitude towards risk.  Sole tradership and partnerships are the most risky ways of structuring a business as you will be personally liable for the liabilities of the business, which puts your own personal assets and property at risk.  However, with a partnership, you can modify the extent of your own liability through a partnership agreement.  Limited companies and limited liability partnerships involve a separation between your own personal liabilities and liabilities of the company, so long as you do not trade in a reckless way.  However, running a business of these types is more burdensome in terms of regulation.  They are strict accounting requirements (for example, you will have to file annual returns) and from a general administration point of view, they are more time-consuming and costly to run. There can also be important tax considerations for each type of entity, so accountancy advice is recommended at the outset.

Why do I need terms and conditions and trading ?

It is a very good idea to have separate terms and conditions of trading – one set for your customers and one set for your suppliers.  Drafting your own terms and conditions will allow you to limit your liability, state your position on refunds and quality control and manage when ownership of your goods passes to the seller.  With aretention of title clause, for example, you can retain title of goods you sell until you receive payment.  Ordinary principles of contract law states that ownership passes at the point of sale or when the goods are delivered.

You should also bear in mind that you cannot opt out of certain statutory standards.  For example, the Sale of Goods Act states that good supplied must be “of satisfactory quality” and you cannot use any terms which contradict this standard.

How does the Equality Act 2010 affect my business ?

The Equality Act 2010 is an extremely important new piece of legislation.  Employers cannot discriminate, either directly or indirectly, harass or victimise employees on the basis of age, race, nationality, gender, sexual orientation, gender reassignment or disabilities (called “protected characteristics in the Act).  For example, you cannot:

  • Victimise employees for bringing claims under the Act.
  • Apply conditions which are either indirectly or directly discriminatory or unfavourable towards certain employees with certain protected characteristics.
  • Discriminate against someone on the basis of having a “protected characteristic” (gender, race, age etc.) when they do not in fact have that characteristic.
  • Do nothing about discrimination of staff by customers and other third parties.  You are expected to take positive steps to eliminate the discrimination.