Critical Regulations Your Business Must Follow

As the UK leaves the EU, meeting the myriad of business regulations, new companies must comply with can be time-consuming. However, as Dave Howell reports, this is time well spent to ensure your enterprise is fully compliant.

One of the essential elements of your business plan is to research in detail, which regulations your enterprise must comply with. There are several types of business regulations to be aware of, including:

To gain an insight into which business regulations you may have to comply with, we’ll take each of these general groups of rules in turn.

Statutory Business Regulations

These regulations apply to all businesses and must be fully complied. Most companies will start as sole traders. You must register your business with HMRC within three months of becoming self-employed. You will get fined £100 if you fail to register your business.

Register Your Business Name

If you’re starting a limited company, there are additional regulations you must comply with, as your business is a legal entity in its own right.

Your first step is to register your business with Companies House. You can also search their website to ensure your business name isn’t already taken, as you need a unique business name to differentiate your new company from others in your sector.

There are also strict rules about company names you can and can’t use. Be aware that existing companies are sensitive about their registrations and trademarks. For example, if you try and register your new business as ‘mike-row-soft’, the Seattle tech giant’s lawyers will come calling!

Register for VAT

Your business plan should have your cash flow and profit projections. If your business makes over £85,000 in sales in any given year, you must register for VAT.

If you want to, you can also voluntarily register for VAT before you reach the statutory threshold. This can be an advantage, as you can claim back the VAT on any equipment, for instance, you have bought to start your business. It would help if you spoke to your accountant to get their advice.

Identify and Keep Track of Changes in Law

The difficulty can be not just identifying the business regulations that impact your enterprise, but also keeping track of these regulations as they change.

Richard Fletcher, Business Coach and Founder, Magic Sauce Marketing.

Richard Fletcher, Business Coach and Founder, Magic Sauce Marketing.

“My opinion is that it’s extremely hard for small business owners even to know when regulations change, let alone even follow them,” said Richard Fletcher, business coach and founder of Magic Sauce Marketing. “Personally, I carry on with serving my clients in the best way I can, paying my taxes and trying to run my business as ethically as possible.

In that way, I’m naturally going to stay within most regulations anyway. I feel that’s better than worrying if you’re breaking some obscure rule nobody knows about.”

Employee Regulations Including Minimum Wage

Additional regulations must be adhered to for any business that employs people. The good news is that the government has a handy website that explains, in detail, all the employer regulations. Other regulations include the minimum wage and workplace pensions.

Lastly, with employees, you have a legal responsibility to ensure they have a safe working environment. The Health & Safety Executive detailed advice helps ensure you fully protect your workers.

Comply With Immigration Laws

And you also have a responsibility to check each member of staff has the right to work in the UK. You can check their employment status on the government’s website. If your business fails to comply with the Immigration, Asylum and Nationality Act 2006, the fine can be up to £20,000 for each employee found working for your business illegally.

Lastly, if your business in any way connects with children, you need to carry out a DBS (Disclosure and Barring Service) check (formally known as a CRB check) to ensure each employee can legally work with children.

Get Insurance Cover Required by Law

In addition, your business needs to be protected by the Employer’s Liability insurance. The cover should be a minimum of £5 million and covers your business against employees who may sue your company for injury or illness caused when at work.

If your business offers a service, you will also need Professional Indemnity insurance, which covers any successful legal action against your company if a customer proves negligence, loss or damage to their person.

And if your business manufacturers a product, Product Liability insurance is needed. You may also have to demonstrate your business’s product is safe with recognised safety testing regimes such as the British Standards Institution (BSI) Kitemark.

Many types of Electrical and Electronic Equipment (EEE) are regulated. This includes any products that contain potentially harmful substances. Detailed guidance about RoHs (Regulations: restriction of hazardous substances) is available online.

Comply With Environment Legislation

The environment also has a range of legislation that all businesses need to be aware of. One key area is waste management and recycling. Businesses with commercial waste have strict guidelines to follow. EEE products have unique requirements and can’t be disposed of within your business’s general waste. If you have a company based in Northern Ireland or Scotland, NetRegs has comprehensive help and advice.

Licences and Registrations

Some businesses will need a licence to operate legally. Some examples include taxi companies, hotels, restaurants, mobile food vendors, tattooists and childminding services. Note, this isn’t an exhaustive list.

There is a licence finding tool that the government maintains, which can help you identify any licences you might need before you open your business.

Also, check with your local council, as they may have additional licensing requirements. These additional licences could be for the sale of alcohol, for instance, in your shop, pub or hotel.

Check Specific Licences in Your Industry

Some industries are highly regulated and have their own specific licences. A good example is financial services. The Financial Conduct Authority will vet your new business before a licence to trade is issued. And if you intend to export your business’s goods, check whether you need a specific export licence. The government has also prepared advice for exporters post Brexit.

Hospitality Regulations

If your business manufacturers and sells food and beverage products, there are a number of business regulations your company must comply with. These are detailed on the government’s website. The Food Standards Agency has advice about starting a new food business and, specific information if your food business is based in your home.

Also, as takeaway food has expanded, there are specific regulations – especially regarding allergy advice and labelling – all takeaway food businesses must comply with.

Check Differences In Scotland and Wales

Note that when you search the government website for any business regulations that could apply to your company, you also need to consider your business location. The devolved governments of the United Kingdom may have slightly different licensing regimes.

Pay close attention to this aspect of your business’s licences to ensure you are fully compliant in whichever country or countries you are trading from.

Vaping and Tobacco Law Changes

One of the new market sectors to emerge over the last five years is vaping.

Dan Marchant, Director of the retail site Vape Club.

Dan Marchant, Director of the retail site Vape Club.

Dan Marchant, director of the retail site Vape Club, explained: “Since the formation of Vape Club in 2012, we have seen very big changes in the regulatory landscape. As experienced e-commerce professionals, we were aware of all the regulations relating to online retail, data protection, consumer rights and so on.

However, with vaping being in its infancy as an industry back then, there were at the time no specific regulations around the products themselves.”

Has the regulatory regime now changed? Dan continued: “Between 2016 and 2017 the EU brought through the Tobacco Products Directive (TPD) into UK law under the Tobacco and Related Products Regulations (TRPR). These imposed a whole new framework for manufacturers, importers and retailers to operate.

Many of the new regulations set minimum standards for product safety and testing, which were desperately needed for the fledging industry to grow up and recognised as offering safe, quality products.”

Marchant continued: “Some of the other aspects of the regulations have stifled the industry by making the products far less convenient for the consumers and, creating a disparity between European products and those used throughout the rest of the world.

These included a limitation on nicotine-containing e-liquid bottle sizes to 10ml and restricting tank capacities to 2ml. These numbers, however, were pretty much plucked out of the air by the EU, with no real scientific basis. It’s a perfect example of what happens when you rush regulations and do not consult properly with the industry involved.”

Online and Internet Businesses

Having a presence on the internet is now critical for business success. Setting up a website is now fast and easy with point-and-click systems such as Wix. However, the website you create for your business, and the digital presence your company has across the Web and social media, all have business regulations to follow.

Ensure Your Website is Accessible to Everyone

The website you create must comply with the Equality Act, 2010, which states that everyone no matter their disability should be able to access your website. The Web Content Accessibility Guidelines (known as WCAG 2.1) are an internationally recognised set of recommendations for improving web accessibility.

Also, ensuring your online business is accessible to all has a significant commercial component as one in five people in the UK has a disability. These are potentially lost customers if they can’t access your website or other digital channels.

Distance Selling Regulations

The Distance Selling Regulations govern all retailing carried out via online websites, TV, mail order, phone or text message. Note the government website is clear: “If you don’t follow the rules you could be made to provide the goods or services as agreed, pay compensation or be given an unlimited fine or a prison sentence.”

There are also specific rules about accepting returns and giving refunds you must comply. And take extra note of how VAT gets managed if you sell to multiple countries outside of the UK.

General Data Protection Regulation (GDPR)

You must also protect the security of personal data. Here, the central piece of legislation your business must comply with GDPR (General Data Protection Regulation). The Information Commissioner’s Office has full details covering what GDPR is, and how it must be adhered to by all businesses.

If your company maintains a database of customer information, your enterprise needs to comply with the Data Protection Act 2018, which governs how personal data is collected, stored and manipulated.

How To Keep Up-to-Date With New Regulations

With so many regulations, do businesses find complying with the rules that affect their businesses burdensome?

Daniel Cooper, Managing Director,

Daniel Cooper, Managing Director,

Speaking to SmallBusinessPro, Daniel Cooper, Managing Director of technology company Lolly Co explained: “As a technology company creating custom technology for other organisations, the regulations that apply to our own company are slim.

However, when it comes to clients, we spend months researching regulations before launching into any new industry. Making sure that our clients and their technology solutions abide by market regulations is a core focus for the business.”

Keep Brexit Changes Active

Of course, no discussion of business regulations can ignore Brexit. How laws may change after the UK leaves the EU has yet to come into focus. It’s certain that the existing health and safety regime currently in place will continue with little or no change.

However, businesses that import and export from mainland Europe may be the most affected if the UK leaves without a deal.

Use this Compliance Checklist For Your Business

1. Start with mandatory business regulations

All businesses – no matter which sector or industry they are in – will have to comply with specific regulations. Business structure, tax and insurances are good examples. Tackle these first to ensure your business meets all these mandatory requirements.

2. Identify the market sector or industry your business is trading within

This will make it much easier for you to focus your attention on the licences and regulations your business must comply with. As each sector – food, for instance – have a set of specific regulations, all other sectors will also have their group of business regulations to comply with.

3. Don’t forget where your business is based

The regulations your business must comply with could be dependent on your business location. All of the devolved governments have slightly different approaches to licensing in particular.

4. Use your local authority for information

Your council will be the first point of contact for some licences, but also other legal compliance regulations, particularly in the food sector. Your local authority is an excellent source of help and advice.

5. Take legal advice when you need it

Most of the business regulations your firm has to comply with are self-explanatory. However, if your business falls into a grey area of the law, always double-check your business is fully compliant. Never guess. Always confirm your legal status with a qualified legal advisor. Failure could result in high fines. Remember, ignorance is no defence.

If you are planning your new business now, or are already trading, the advice is that as far as business regulations are concerned, you must identify and then comply with all the regulations that affect your goods, services and business structure.

Once these are all in place, ensuring you have systems that can track any changes that occur with the particular set of regulations that impact your business, will ensure you can see and react to any changes, particularly post-Brexit.

Commercial and Legal Regulations Questions and Answers

Jann Larner

Jaan is a corporate and commercial lawyer with a particular interest in entrepreneurial activity. He advises clients on their corporate structures as well as their ongoing day to day commercial activity.

Is there a low-level of understanding of the business regulations that new small business owners will need to comply?

“There is a surprisingly high level of knowledge of the types of regulations that small business owners need to consider. In my experience, small business owners tend to be very aware of the environment in which they operate and are quick to pick up on things that might affect them either positively or negatively.”

“The issue they usually face is that regulatory compliance can appear both burdensome in terms of money and time and take time and, takes capital away from profitable opportunities.

An understandable rationale is that without a profitable business, there is no business to comply with the regulations, so profits tend to come first and compliance somewhat lower on the priority list.

While businesses are usually aware of the areas they need to address, it is a question of time and priorities, especially when economic conditions are tight as they are now.”

Are there costs associated with complying with some regulations new business owners overlook when developing their business plan and the initial costing for their new enterprise?

“Initial costs for things like Data Protection registration with the Information Commissioner (ICO) are relatively low, but it is the ongoing costs that usually get overlooked.

For instance, with Data Protection, while you don’t have to report all Data Protection breaches, you must report a notifiable breach to the ICO without undue delay, but no later than 72 hours after becoming aware of it.

If you take longer than this, you must give reasons for the delay. Consequently, you need resources available to deal with a breach or a complaint and ongoing compliance.”

“Similarly, under the Bribery Act having set up the anti-bribery regime, which requires top-down commitment, in order to benefit from the exemption from prosecution in the event that an employee or associated person commits a beach, the business needs to demonstrate an ongoing process of assessment and training.”

What are the essential resources to help new small business owners ensure they have full compliance with the business regulations that impact their enterprises?

“It very much depends on the sector in which they operate, so new businesses should first check their own professional bodies and trade associations, e.g., ABTA, the Road Haulier Association, the National Association of Estate Agents or, in my case, the Solicitors Regulation Authority.”

“They exist to keep their members up to date on the regulations that govern their industry and can be an invaluable source of information on both specific regulations on their sector and on more general regulations which can affect all businesses. There is a useful website listing UK professional bodies and trade associations.”

Can the penalties be high for non-compliance to specific business regulations?

“The penalties can be extremely high for non-compliance with certain regulations. While the likelihood of a breach and prosecution can seem low and the costs can seem initially prohibitive, it can only take one breach to cost a business a great deal of money.”

“An offence under the Bribery Act can lead to a fine that is technically unlimited, a Serious Crime Prevention Order, the return of funds and the potential disqualification of the directors – any one of which could cause a business to fail.”

“A breach of GDPR can have a range of consequences, from a simple warning and restrictions up to the greater of a 20 million Euro or 4% of global turnover fine.”

“Therefore, failure of compliance can be extremely expensive, if not fatal to a business. Luckily there are plenty of resources out there to help businesses comply, and there is often a lot you can do to mitigate both your risk and the damage of a breach.”

What is your critical advice to anyone planning a new business regarding regulations and government legislation?

“Use the free and cheap resources available online and invest time in putting systems and procedures in place to manage your compliance.”

“It is a common complaint that small businesses do not have the resources to comply with a regulation that larger business do and, therefore, they are put at a disadvantage. There is certainly some truth to that, but bear in mind that:

  • larger businesses are held to higher standard and level of penalties,
  • commitment to compliance need not be expensive or time-consuming, and,
  • given some larger businesses and government bodies insist on compliance as a condition of entering into contracts, it can differentiate you from your competitors and qualify you for larger contracts.”

How do you think business regulations might change post Brexit?

“That is the Million Dollar/Euro/Pound question – the simple answer is that we still don’t know and that is incredibly frustrating for everyone. The prevailing political view is that Brexit allows for a so-called “Bonfire of the Regulations” making it easier to do business in the UK. That may well be the case internally, and if so, would represent a significant boost to small businesses.”

“Any business that deals with mainland Europe will still have to comply with local and EU-wide regulation as they do now, so little will change there. This includes outsourced IT contracts such as data storage and processing so businesses should check their exposure.”

“In the meantime, businesses should operate as usual and ensure compliance with the law as it stands now. If regulations are relaxed, then this will allow greater freedom to operate and benefit businesses. However, I would also say that most business regulations serve a purpose. While they may be onerous, they usually represent best practice and make your business more attractive to do business with.”