Business Law – the Basics

It can be daunting when you start up a new business to understand the laws that apply to you. Although the full range of business law can seem alarming, a grasp of the basic points can help you avoid trouble.

Here’s an overview of the main areas where business law could apply to you.

Employment law

Employment law is extremely broad. You’re advised to get legal advice at an early stage if you’re going to take on employees.

The main rights of employees are:

  • to have a written statement which spells out their terms of employment
  • to not be discriminated against
  • to statutory sick pay (SSP)
  • to a ‘reasonable period of notice’ if they’re dismissed
  • to be dismissed for fair reasons
  • to the national minimum wage (NMW)
  • to a maximum working week of no more than 48 hours on average
  • to 5.6 weeks’ annual leave (pro rata)
  • to maternity or paternity leave
  • to work in a safe environment

Consumer protection law

If you sell goods to consumers, they have key rights known as ‘statutory rights’. These are:

  • the goods should match the description given
  • they should be of ‘satisfactory quality’
  • they should be fit for the purpose they were sold for

This also means your goods need to comply with any relevant safety regulations.

If these conditions aren’t met, the consumer has the right to a full refund as well as compensation for costs (eg the cost of returning the item to you by post).

Consumers also have the right to be treated ‘fairly’ – this means you can’t use aggressive or misleading tactics to make a sale.

If you sell online or by other distance methods, you need to provide extra written information including your business name and address, and let the customer know about their right to cancel their order within 14 days.

Tax law

If you’re self-employed or in a partnership, you need to file an income tax return with HM Revenue & Customs (HMRC). Limited companies need to pay corporation tax. You also need to pay National Insurance Contributions (NICs) for yourself, and pay income tax and NICs on behalf of employees.

You might also be subject to other types of tax such as business rates on your premises, or Capital Gains Tax if you sell a business asset and make a profit.

You’re legally required to:

  • let HMRC know that you’re liable to pay tax
  • pay in full by the right deadline
  • file the right paperwork and keep accurate records

Data protection law

If you hold personal data on employees or customers, you need to make sure it’s kept securely, and only used for the purposes it was originally collected for. The individual has the right to see your records, and correct data if it’s wrong.

You might also need to notify the Information Commissioner if you hold data electronically – if you’re not sure, check with them.

Getting advice

As well as these main areas, your business might need to comply with other laws – for example, environmental regulations. It depends on your type of business.

A trade association should be able to help – visit http://www.taforum.org/members to find one for your sector.

It’s a very good idea to get legal advice. To find a solicitor, visit the Law Society website at http://solicitors.lawsociety.org.uk/.


This article is provided only for general informational and educational purposes. It is not offered as and does not constitute legal or other professional advice on the subject matter in question. You should not act or rely on information contained in this website without first seeking professional advice on the subject matter in question.