Forming a business

Forming your company

There are lots of decisions to make when forming your business. One of the most important choices is what type of business to set up. Many businesses start life as a company, but you could also set up as a sole trader or as a partnership. Rocket Lawyer offer a Company Formation service which can help you set up your company by registering it with Companies House. When doing so you will decide who you want to run the company (the directors) and who will own the company (the shareholders).

After registration

After you have registered your company at Companies House, you should issue share certificates to document who is a shareholder and how many shares each person owns. A shareholders agreement sets out how the shareholders want to run the company including how to issue new shares. Once you have registered your company you should hold a meeting of the directors. A meeting of this type is called a board meeting. Any decisions made in a meeting should be recorded using board minutes.


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Funding a business

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How to acquire funding

All businesses require capital to function. Most businesses will need to raise funding when starting up. Funding can help to pay for equipment, salary, marketing, product development and anything else your business requires. There are lots of different ways to obtain funding. You could obtain a business loan from the bank, but also from family or friends or other businesses (which you can arrange using a loan agreement). You can ask investors such as venture capitalist firms or angel investors to purchase shares in your company (equity) in return for a investment. Creating a polished and professional business plan will help convince both banks and investors that your business is a good investment.

Grants and crowdfunding

If your business is eligible you could receive a grant from the UK government, the European Union, local councils or charities. You can also raise capital using a crowdfunding platform. Crowdfunding involves lots of people investing, lending or contributing to your business to reach a certain target. Finally, invoice financing and a business overdraft can help in the short-term.

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Hiring Employees

The role of director

A director of a company, usually as an employee, performs executive functions in the management and administration of the company. As an employee, each director should have a senior employment contract which sets out the key terms of their employment. As well as executive directors which manage the company, a business may also appoint non-executive directors. A non-executive director (NED) should be employed using a letter of appointment. This sets out what duties the NED is responsible for and expected time commitment. Most NED's are not bound to give continuous attention to one company. A NED will use their skill and expertise to guide the business in its planning and policy making.

Hiring other employees

A business will also have to hire other less senior employees. Using a structured and well thought out job description to advertise the role will help to attract the best talent. A business should offer a candidate a role using a job offer letter and finally secure the employer-employee relationship with an employment contract.

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Selling goods and services

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Terms and conditions of selling

All businesses selling to business and consumers should formalise the agreement with their customers. This includes setting out terms of use for the company website and formalising the terms and conditions of sales. Businesses selling to consumers can use terms and conditions to set out the provisions of transactions between consumers. Businesses selling to businesses can use terms and conditions to set out common terms but can also set out specific transactions in a services agreement or sale of goods contract.

Businesses selling online must comply with certain regulations and ensure that personal electronic data is protected. For more information read Customer contracts.

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Protecting Intellectual Property



Intellectual Property

Intellectual property rights are a core asset of many small businesses. The main types are: trademarks, patents, design rights and copyright. Trademarking your business name and/or logo protects your brand and ensures that another company can't start selling similar products with the same or similar name. For more information read Intellectual property.

Creating a confidentiality agreement

If you are going to share sensitive information with another person or business, any disclosures regarding your product or business should be paused until a confidentiality agreement has been signed. If just one party is giving away information a one-way confidentiality agreement can be used. A confidentiality agreement is an contract between the parties that states any information revealed with remain between both parties and not be disclosed unless for a permitted purpose.

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INTELLECTUAL PROPERTY Legal documents and guides for protecting your IP

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