legal obligations small business

4 Legal Obligations Every Small Business Owner Should Be Aware Of

Business legislation is ever changing, meaning that alongside the day to day operations of running a small business, all sole traders and small firms must also keep on top of learning about the new legal matters affecting small businesses.

To prevent getting in trouble with the authorities, it’s worth setting some time aside to undertake these legal obligations for your business on a regular basis, so here’s the lesser obvious ones you should consider applying to your small business.

Business Licensing

It’s pretty well known that businesses which operate in the hospitality sector and serve food or alcohol require a specific license. The same can also be said for trades people, such as gas engineers or electricians, who are to be registered by law to prove they are accredited and trained in their sector.

However, did you know that businesses using specific software require licensed versions? This can be often overlooked by small business owners who have plenty of other tasks to get on with. However, failing to use licensed software means your business is breaking the law and can be susceptible to cyber attacks!

Therefore, it’s worth purchasing licensed software for your business, because even though it can be quite expensive, it will save a lot of hassle further down the line and can help meet legal obligations.

Business Insurance

Business insurance is a vast area as there are many forms, such as public liability and professional indemnity to tools insurance and business contents insurance. The combination of insurance a small business requires depends on the sector it operates in, and members of professional organisatons may require a certain type of insurance. For example, individuals registered with the ICAEW must maintain professional indemnity insurance, however registering with the ICPA can provide a whole host of benefits including an insightful knowledge hub, supportive network, discounted software as well as an insurance package.

However, most small businesses are not legally obliged to take out all of the relevant insurance options available (however it would be a good idea to do so if things go wrong in the future!) That being said, Employer’s Liability Insurance is the exception.

Many business owners believe Employer’s Liability Insurance is exclusively for businesses where employees are working on the premises. Contrary to popular belief, it can also guard businesses from unexpected compensation claims, such as if someone become ill or injured whilst working for a business or injures a third party or a third party’s property whilst working for a business.

It’s worth noting that if a business owner does not have Employer’s Liability Insurance when they’re legally supposed to have it, they can be fined up to £2,500 for each employee each day they are without the insurance!

Property Law

When pondering over Property Law, the first that may spring to mind is business premises, tools, stock and supplies. However, what many business owners forget is that intellectual property needs protecting too; this can be relating to a product and its design, brand name or trademarks.

Not only can acquiring Property Law prevent and protect a business owner from trademark infringement, but it can also stop another business from using an existing trademark to prevent affecting a business negatively.

Health and Safety

All businesses are required by law to assess and manage the risks in their workplace and to take reasonable steps to prevent harm to members of the public, employees and additional contractors on site. The good news for small business owners (with 5 or less employees) is that a documented risk assessment does not have to be carried out.

Nevertheless, it is worth identifying hazards, evaluating risks and deciding on precautions as well as recording significant findings and reviewing as or when necessary.

On a final note

It’s incredibly important for business owners to stay up to date with the relevant legislation which may affect their business. Whilst large businesses may have specific employees to deal with this area, small business owners may often be left scratching their heads. Therefore, it’s important to work with an experienced accountant who can advise and support on the everchanging legal requirements.

Until next time.

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