This is suitable time to consider how you may be affected by laws of the land when starting and running your business. Business activities are controlled by a considerable number of Acts of Parliament with which you must comply to stay with the law.

Inland Revenue

You are required to submit a statement of your income to the designated Inspector of Taxes. This is achieved by sending him a copy of your income and expenditure account for the trading year; either with your account tax return or separately after the end of the trading year. The Inspector will asses how much tax you have to pay; and subject to any appeal or correction, you must by law pay the amount required. If you employ people you must deduct a specified amount from their salary under the Pay As You Earn (PAYE) system and pay this to Inland Revenue.

Value Added Tax

As soon as your total aggregated turnover (sales income) reaches, or is expected to reach, a certain level, you must notify the Customs and Excise VAT office of your liability to register for VAT. Once registered, you must then charge VAT on all sales conducted in your name at the current rate, except those good or services which are exempt or zero-rated. At the end of each quarter you must pay all VAT so collected to Customs and Excise after deducing all the VAT you have paid when making business purchases.

National Insurance

Whether you are a sole trader, a partner or the director of a limited company, you must pay National Insurance contributions to the Department of Social Security for yourself and for the employees. There are the exceptions for people over a certain age or earning less than a minimum wage and for certain married women.

Health and Safety

The Health and Safety at Work Act 1974 protects the self-employed, employees and the general public against dangers from adverse working conditions. These and other health and safety laws are enforced by the Health & Safety Executive (HSE) or by local authorities mainly responsible for non-industrial premises like offices and shops. Don't try to avoid this one. If a member of staff gets severely injured or dies, it will be on you conscience for the rest of your life.

Consumer credit

The Consumer Credit Act 1974 imposes a licensing system on businesses which offer credit and hire facilities. There are six license categories:

§         Consumer credit: giving some sort of credit

§         Consumer hire: transactions lasting more then three months

§         Credit brokerage: arranging credit with other people for customers or clients. Accepting credit cards or trading credit cards or trading cheques does not make you a credit broker

§         Debt adjusting and debt counselling

§         Debt collecting

§         Credit reference agency

Consumer protection

The Consumer Protection Act 1987 makes providers of products for private use liable for injury or damage to the consumer by reason of a defect in the product.

Data Protection

The Data Protection Act 1984 requires everyone who uses computers to keep personal information on other people to register the use to which he or she will put information. It also give right of access to people concerned to check the accuracy of the information held on them.

Employment Act

The Employment Department provides detailed information in a range of leaflets. When you come to employing staff you should study these leaflets which are available from Employment Officers or Jobcentres. Many employers take out employer's protection insurance policy for which the premium is usually quite modest.

Describing products

The Trade Description Act 1968/72 makes it illegal to apply a false description to a product or service which is likely to mislead potential customers.

Licenses

Many traders and businesses need licences from local administration officers in order to operate legally.

Bankruptcy

If you are a sole trader and one of your creditors starts proceedings for recovery of his money from you, you may be faced with having to pay all your creditors at once. If you are unable to do that you may be declared bankrupt and it will be difficult to start in business again. If you are a partner, remember you are jointly and severally responsible for debts. If you have the most assets you may have to pay the most if the firm goes bankrupt.

Insolvency

The Insolvency Act 1986 has as its main theme the protection of creditors against a limited company when that company cannot pay its debts. Directors must act in the best interests of the company's creditors. Failure to act responsibly and honestly can put the director at the risk of disqualification and personal liability.