Your SME set sail on that once in a lifetime cruise to something tropical, only to suffer a major collision with the accounts department of a large, non-paying customer.
And so, shipwrecked upon that desert island (OK, we do accept this is a slightly contrived introduction but hey, it’s all about the headline baby …) you start thinking about the things you’ll change when you finally get back to the office.
Funnily enough, one of the few possessions you managed to keep above the waterline was a copy of research undertaken by the Legal Services Board, illustrating that the most common legal issues for SMEs related to business set up, agreements, tax and regulation.
As the sun blazes down on another day of just you, the ocean and some seagulls, you reflect upon the fact that 46% of business owners say unaddressed legal issues adversely impacted the business, at an average financial cost of £13,812 per issue.
Taking advantage of this enforced period of reflection, what are the 5 legal tips you’d most like to address when you get back?
Legal Tip No.1: Double Check Your Legal Obligations
Most legal problems are avoidable and one way to protect yourself is conduct an audit relating to the legal obligations of your business to customers and staff including issues relating to:
- Public and Employer’s Liability
- Tax and National Insurance
- Employment Contracts for Employees
- Regulations Specific To Your Trade or Business Activity
It is essential to ensure best practice if you think your business might be vulnerable, seek advice that helps take an objective perspective.
Legal Tip No.2: Take Control Of Your Legal Documents
Similarly, your business should always ensure you fully understand rights and obligations before signing or agreeing to anything. This is just common sense and applies to:
- Leases/Tenancy Agreements
- Contracts for the supply of goods or services
- Employment contracts
Making sure these documents are in good order and have kept pace with the development of your business i.e. are those contracts still sufficient?
Legal Tip No.3. Get Best Value From Your Professional Advisers
As part of the audit process, it’s also useful to assess the value being delivered by your professional advisors and measure whether you have the right people in place. Is the solicitor or firm you’ve always used able to help your growing business? Is the accountant you started with, capable of helping you make the right decisions as you scale your business?
The modern culture of running a business is much more able to benchmark the performance and value being delivered by their advisors. Make sure you undertake this process before, you find out they’re not longer the right fit for your business.
Legal Tip No.4: Protect Your Intellectual Property Rights
Many businesses do not have the requisite knowledge to make informed decisions about protecting their intellectual property rights. As of October last year, IP laws were amended under the Intellectual Property Act 2014. The Act was intended to simplify UK legislation and bring the national framework in line with European law; strengthening protection for the UK’s innovative businesses and protecting a £15 billion design industry.
Important changes included permission for the UK to join the Unified Patent System, the definition of a design to which unregistered rights may apply, the ownership of design rights and certain exceptions from the infringement of unregistered designs. The Act contains robust sanctions too as infringing design law can now amount to a criminal offence with up to 10 years imprisonment!
The ability to now register designs across multiple countries through a single application will assist businesses obtaining design registrations both quickly and cost effectively.
Legal Tip No.5: Due Diligence For Everyone
Marry in haste; Repent in leisure …. many legal problems emerge from commercial relationships gone wrong and so, you should always be very careful who you get into bed with and make sure you’ve conducted sufficient DD to minimise against the risk of a problem emerging in the future.
With recruitment, no matter how desperate the need … make sure you recruit individuals who will strengthen the team and adopt the maxim, “if there is any doubt, there is no doubt”
With contracts & agreements, check the background of who you’re dealing with and their other commercial relationships. It may sound like a wonderful order but it won’t be if they renege on the terms, and have a track record for doing so.
Final Words: 5 Legal Tips To Take Onto A Desert Island
There you have it! The 5 legal tips we recommend you take onto a desert island if you were an SME. With these 5 legal tips, you’re sure to have a solid legal foundation.
If you’d like to find out more about building a solid legal foundation for your business with free legal advice then book a Startup Legal Session today.