Legal Status
- Sole Trader
A sole trader is a person who works for themselves. They run their own business as an individual and can keep all of the businesses profits once tax has been paid. a sole trader can however hire staff, being a sole trader means that they are responsible for the business, not that they must work alone. This does however also mean that a sole trader is completely responsible for any losses their business encounters.
- Partnership
A partnership is a form of business structure that does not rely on one sole person. You and your business partner are both responsible for the business in its entirety. All of the businesses profits will be shared between you and your partner and both parties will pay tax on their earnings. being part of a partnership means that both you and any other partners are both responsible for any losses the company encounters. A partner however does not necessarily have to be an actual person and a 'Limited Company' could take the place of a partner being considered a 'legal person' by the government. Both of these partners have full control over the business.
Legal Aspects
There are many legal constrictions to consider when starting a small business these include;
- Intellectual property Protection
Intellectual property Protection means that if you have created something original completely of your own design you can protect your work from being stolen by another party who may steal or copy your original idea. original ideas covered by Intellectual property Protection can include:
- The names of any product or brand you have created
- Your original inventions
- The design or aesthetic of your product
- Anything you may write or produce
You own intellectual property if you have created it and it meets the requirements for copyright or a patent, You have bought intellectual property rights form the original creator of said property or purchased in from a previous owner or have a brand that can act as a trade mark, which could include well known product names such as Nike, Adidas, Microsoft etc.
- Data Protection
the Data Protection Act 1998 was enacted by the parliament of the United kingdom And Northern Ireland. It is the main piece of legislation that governs the protection of personal data in the United Kingdom. Being responsible for a small business means you are required to keep the information you hold safe, businesses may hold information on clients, employees and suppliers but in accordance with the Data Protection Act you are legally obligated to keep all of the private information of these people confidential, only collect what information you require for a specific purpose, keep it relevant and up to date, do not collect more information than is necessary and do not hold onto the information longer than is necessary and allow the subject of the information to see what information has been gathered on them upon request.
- Regulatory Bodies
Regulatory bodies are the organisations in charge of the regulating various business sectors and the protection of the public. It is a professional organisation that is established on legally mandated basis. They exercise the right to impose requirements, restrictions and conditions. Setting the standards for any activity and ensuring they receive compliance or enforce those requirements. Regulatory bodies cover a range of professions including medicinal practise. The general Medical Council registers doctors to practice medicine in the United Kingdom. It is the organisations main purpose to meaintain and promote the health and safety of the general public by ensuring proper standards are met in the medicine practice.
- Employment Law
Each and every employee has a contract. An employer is legally bound to provide an employee with a cop of all terms and conditions held within. Changing of these terms and conditions without the employee's agreement is considered a breach of the contract. A range of employee rights must be respected and withheld by the employer.Including alloying emplyees to be members of trade unions, providing pay statements and ensuring the work environment is always in a safe and healthy state for any and all employees.A large business is required to inform and give proper notice to employees before masking any redundancies or drastic changes. Even if your company is not held to this requirement is a good idea to inform eployees of any of these situations regardless as this can promote a healthy work environment and a proper interaction between management and employees.
There are many legal constrictions to consider when starting a small business these include;
- Intellectual property Protection
Intellectual property Protection means that if you have created something original completely of your own design you can protect your work from being stolen by another party who may steal or copy your original idea. original ideas covered by Intellectual property Protection can include:
- The names of any product or brand you have created
- Your original inventions
- The design or aesthetic of your product
- Anything you may write or produce
You own intellectual property if you have created it and it meets the requirements for copyright or a patent, You have bought intellectual property rights form the original creator of said property or purchased in from a previous owner or have a brand that can act as a trade mark, which could include well known product names such as Nike, Adidas, Microsoft etc.
- Data Protection
the Data Protection Act 1998 was enacted by the parliament of the United kingdom And Northern Ireland. It is the main piece of legislation that governs the protection of personal data in the United Kingdom. Being responsible for a small business means you are required to keep the information you hold safe, businesses may hold information on clients, employees and suppliers but in accordance with the Data Protection Act you are legally obligated to keep all of the private information of these people confidential, only collect what information you require for a specific purpose, keep it relevant and up to date, do not collect more information than is necessary and do not hold onto the information longer than is necessary and allow the subject of the information to see what information has been gathered on them upon request.
- Regulatory Bodies
Regulatory bodies are the organisations in charge of the regulating various business sectors and the protection of the public. It is a professional organisation that is established on legally mandated basis. They exercise the right to impose requirements, restrictions and conditions. Setting the standards for any activity and ensuring they receive compliance or enforce those requirements. Regulatory bodies cover a range of professions including medicinal practise. The general Medical Council registers doctors to practice medicine in the United Kingdom. It is the organisations main purpose to meaintain and promote the health and safety of the general public by ensuring proper standards are met in the medicine practice.
- Employment Law
Each and every employee has a contract. An employer is legally bound to provide an employee with a cop of all terms and conditions held within. Changing of these terms and conditions without the employee's agreement is considered a breach of the contract. A range of employee rights must be respected and withheld by the employer.Including alloying emplyees to be members of trade unions, providing pay statements and ensuring the work environment is always in a safe and healthy state for any and all employees.A large business is required to inform and give proper notice to employees before masking any redundancies or drastic changes. Even if your company is not held to this requirement is a good idea to inform eployees of any of these situations regardless as this can promote a healthy work environment and a proper interaction between management and employees.
Tax Liabilities
Everyone who earns over £10,600 a year is required to pay tax to the government. This tax money goes towards funding public institutions such as schools, hospitals and other buildings. VAT can only be charged if you business is registered for VAT. VAT is a tax increase on a product to make up for value changes throughout production and distribution. VAT is charged on a number of things;
- Hiring or loaning goods to another party
- Business goods used for any personal reason
- Business sales
- Items sold to staff in places such as canteens etc.
- commission
- business assets
You may also need to pay national insurance contributions f you are self employed. This however depends on your earnings, you will be responsible for deducting national insurance contributions from your employee's wages.
Everyone who earns over £10,600 a year is required to pay tax to the government. This tax money goes towards funding public institutions such as schools, hospitals and other buildings. VAT can only be charged if you business is registered for VAT. VAT is a tax increase on a product to make up for value changes throughout production and distribution. VAT is charged on a number of things;
- Hiring or loaning goods to another party
- Business goods used for any personal reason
- Business sales
- Items sold to staff in places such as canteens etc.
- commission
- business assets
You may also need to pay national insurance contributions f you are self employed. This however depends on your earnings, you will be responsible for deducting national insurance contributions from your employee's wages.
Sources Of Finance
Loans
A loan is something that you borrow from another party. This is usually a sum of money, this is then required to be paid back at a later date with interest added to the amount. Loans can be provided by companies or individuals. Most commonly people go to banks to get a loan. However there are other companies such as Wonga.com. Accepting a loan can be risky as you are required to pay it back with the interest in whatever timeframe they give you. The interest set is different depending on the company you accept a loan from, some may charge you a lot of interest and some may not charge you any interest at all. Often times organisations will ask you how long you need the loan for and work around that, some companies are even more flexible in regards to time.
Overdraft
An overdraft is a deficit in a bank caused by drawing out more money than is actually present in your account. Banks are the main source of overdrafts and won't charge you interest but won;t allow you to spend any money from your account until you pay back your overdraft.
Grant
A grant is money given by the government or organisation but primarily by the government. Grants are usually provided if you meet a specific requirement and do not have to be payed back.
Credit Card
A credit card is a plastic card not unlike a debit card that is issued to you via a bank. A credit card allows you to make purchases with credit. A credit card is set up with your own money or money that belongs to a business. Banks set an interest rate and the more money you have in your account, the more money you can earn in interest.
Financial Systems For Small Businesses
A financial system is a system that allows the exchange of funds between investors, borrowers and lenders etc. Financial systems are firm operated and operated at global and national levels. Allowing you to exchange funds between investors and leaders within the global economy, this is how you pay people in a business.
