12 November 2018
The Office of National Statistics has found that the number of self-employed increased from 3.3 million people (12.0% of the labour force) in 2001 to 4.8 million (15.1% of the labour force) in 2017. If you’re thinking about starting your own business, B P Collins’ range of practices can help. Here’s some key advice.
Victoria Holland, partner, corporate and commercial
It’s important to recognise that if you are a sole trader then everything you own will be at risk should you have a dispute, whereas trading through a limited company should protect personal assets. It’s also important to limit your liability in any contract under which you will provide your services.
Money can be tight when running your own business. Have you set out your payment terms in your contract with clients so you know when you will be paid?
It is also absolutely vital to be aware of the tax implications of being self-employed. You will have to retain money to meet tax, as this may not be deducted from what is paid to you.
Chris Brazier, senior associate, employment and business immigration
When hiring it’s always important to have a signed contract in place for your new employee. It’s tempting to download one from the web but it won’t be tailored to your company; it may have irrelevant clauses; and might not have the right terms and conditions to protect either party. It’s also likely to be more cost effective to create a new contract than have a lawyer review an existing one. Basic policies should also be considered, with the most important being a disciplinary and grievance procedure. Also be mindful of GDPR compliance. For example, there is an obligation on employers to be transparent as to how personal data will be used.
If you’re hiring an employee, you’re obliged to check if they’ve a right to work in the UK. Review their passport and take a copy to keep on file before employment begins. This secures your statutory excuse, which protects you against liability from illegal worker penalties of up to £20,000 and, in the most serious cases, criminal liability.
Naadim Shamji, solicitor, private client
If you’re acting as a sole trader, there is usually no formal business structure in place. So if you become incapacitated, it is unlikely that your business will continue to be able to operate, because the assets of that business will become inaccessible by third parties.
The way around this is to have a lasting power of attorney (LPA) in place. You might wish to appoint your spouse, or if it’s a more complex business, a trusted colleague who is familiar with the business, to take over as your attorney.
If you’re trading through a limited company, you would need to ensure that your Articles of Association contain appropriate provisions to deal with succession to running the company, as the role of director cannot be delegated through the LPA.
If a self-employed person becomes incapacitated, the name on the business bank account will determine how it can be accessed by a family member. If it’s in an individual’s name, acting as a sole trader, an attorney under an LPA can normally have access to the account. If it’s in the company’s name, then a new director would need to be appointed.
If you need advice, call 01753 889995 or email firstname.lastname@example.org