The legal checklist every founder needs.
You have a name, a logo, maybe a website mock-up, and a plan. What you do not have is a clear picture of what needs to be in place from a legal point of view before you start trading. Most first-time founders only find out about half of this once something has already gone wrong. A contract that should have been signed. A registration that should have been filed. A piece of paperwork that should not have been thrown away.
This checklist covers the legal essentials you should have in place when you start a business in the UK, whether you are a sole trader, a limited company, or a partnership. It is not exhaustive (every business has its own quirks) but it is what we walk our clients through at the start.
Sole trader, partnership, limited company, limited liability partnership, or community interest company. Each has different tax, liability, and reporting consequences. Choosing the wrong structure for what you actually want to do is one of the most common, and most expensive, mistakes founders make in their first two years.
If you are not sure, this is the first conversation to have. It is also one of the cheapest legal questions to get right at the start, and one of the most expensive to fix later.
If you are forming a limited company, that is done at Companies House. If you are operating as a sole trader, you need to register with HMRC for Self Assessment. If you are bringing in a business partner, you may need a partnership agreement. If you are hiring staff straight away, you also need to register as an employer with HMRC. There is no single “register a business” button, and getting it wrong, or doing it in the wrong order, creates complications that compound.
If you are setting up a limited company with more than one shareholder, you almost certainly need a Shareholders’ Agreement. The standard Articles of Association you get when you incorporate are a template, not a strategy.
A proper Shareholders’ Agreement covers what happens if a founder leaves, if someone wants to sell their shares, if there is a deadlock, if you bring in investment. Sorting this out at the start, while everyone is still friendly, is significantly easier than sorting it out at the end, when often they are not.
You need clear, written terms with your customers, even if your business is small or service-based. Terms and Conditions, Service Agreements, NDAs where relevant, Privacy Policies if you collect data (which you almost certainly do). Generic templates pulled off the internet usually work, until they really do not.
If you are paying anyone for services (developers, marketing agencies, freelancers, suppliers), you need a written agreement that covers what they are doing, what they are being paid, who owns the work product (this matters more than most founders realise), and what happens if something goes wrong.
The day you take on your first employee, a whole layer of legal obligations kicks in: contracts of employment, statutory rights, payroll, pension auto-enrolment, holiday and sick leave policies, employer’s liability insurance. Even if you are hiring contractors rather than employees, you need to be careful about classification. HMRC and the courts both look beyond the label to the substance of the working relationship.
VAT, Corporation Tax, PAYE, Self Assessment, Making Tax Digital. Different obligations apply depending on your turnover, your structure, and what you do. Get this right from day one and the rest of the year is easier. Get it wrong and you spend the rest of the year fixing it. (For the tax side specifically, our sister firm Lexarox Accounts is the right team to speak to.)
Companies House filings, HMRC submissions, statutory registers, contracts archive. This is administrative, but it is also legal. A business that has its records in order has options when something difficult comes up. A business that does not, has problems.
Your brand, your name, your logo, your website content, your domain, your inventions, your code. These are assets. They need to be owned by the right entity (usually the company, not the founder personally) and protected appropriately. Trademark registration is cheap and quick at the start, and very expensive once someone else has used the gap to register it first.
Every business gets at least one legal surprise in its first three years. A customer who refuses to pay. A supplier who delivers something other than what was agreed. A staff issue. A regulatory letter. The businesses that handle those surprises well are the ones that already have the basic legal infrastructure in place. The ones that struggle are the ones who were too busy starting to deal with the underlying paperwork.
At Lexarox Legal, we sit alongside founders through exactly this kind of work. Setting up the right structure, drafting the contracts, sorting the registrations, and making sure you have someone to call when the inevitable letter arrives. For anything that needs a regulated solicitor or barrister, we bring in someone trusted from our network. For everything else, you deal with us.
If you are starting a business, or have recently started one and want a clear picture of where you are legally, the first 20 minutes are on us. Book a free consultation at www.lexaroxlegal.co.uk and we will walk through your situation and tell you what needs to happen next.