Legal Basics for New Business Owners

An introductory guide to the key areas of law you need to be aware of when running a business

Legal Basics for New Business Owners

Terms and conditions

To ensure you have effective means of debt control, you need to spell out your terms and conditions of trade (T&Cs), and get your customers to agree to, and ideally sign them, when placing an order.

You may be able to adapt some T&Cs from other companies in your industry – but don’t copy them verbatim – and be sure to have them checked by a solicitor first.

Essential things to include in your T&Cs are:

  • Retention of Title clause: under this, you retain ownership until payment – if your customer becomes insolvent before paying up, you may not be able to reclaim your goods without it
  • Payment terms: make it clear to your customers when you expect payment for goods or services

Working from home

If you work from home you must inform:

  • Your landlord: check there is no restriction on working from home (as there is with many council properties, for instance).
  • Your building society or other mortgage provider.
  • Your insurance companies: you must tell your domestic insurer that you are working from home or you could invalidate the whole of your domestic cover.
  • Your local council, regarding planning permission, licences, health & safety, and business rates.

For more information, see our guide to Working from home

Planning permission

Planning permission is not normally needed to run a business from home if the character and use of the building remain essentially residential and the business activity is incidental to such residential use. If this is the case:

  • You can use a room as your personal office.
  • You can run a business from home doing anything from hairdressing to dressmaking, music teaching to consultancy.
  • You can use the garage to repair cars or store goods connected with a business.
  • You can provide accommodation for a childminding service or playgroup.
  • You can use part of the house for bed and breakfast accommodation.

All these uses must be kept on a small scale so you do not cause nuisance or inconvenience to your neighbours.

You may, however, need to apply for planning permission if you answer yes to any of the following questions, as you will be changing the character or use of your home:

  • Will my home no longer be used substantially as a private residence?
  • Will my business result in a marked increase in traffic or people calling?
  • Will the business involve activities unusual in a residential area?
  • Will my business disturb the neighbours at unreasonable hours, or be particularly noisy or smelly?


It is a criminal offence to continue to trade when you know your business is insolvent. If this happens in a limited company, directors can become personally liable.

If the company gets into financial difficulties, seek professional advice immediately. You may be able to reschedule debts using a Voluntary Arrangement. The alternative may be to call in a liquidator or a receiver if your bank has a debenture, but this can be a costly option. Be careful not to give particular creditors preferential treatment.


Some trades, such as the food industry and financial services providers, require specific licences to operate. Your local Business Link or national equivalent will be able to advise you.

Environmental issues

Many businesses must also comply with certain environmental obligations, for example, regarding the control and disposal of hazardous substances. Find out more from the Environment Agency’s Netregs site:

This business advice article published in association with Lloyds TSB.

Whether you are looking to start-up a business account or want to move your existing business account Lloyds TSB can offer you all the Business Banking support you need

While all reasonable care has been taken to ensure that the information in this website is accurate, no liability is accepted by Lloyds TSB for any loss or damage caused to any person relying on any statement or omission in the content of this website. The content of this website is provided for information only and should not be relied on as offering advice for any set of circumstances and specific advice should always be sought in each instance

Legal Basics for New Business Owners

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