Describe the legal and financial aspects that will affect your business start-up.

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Ewelina Kazanowska

Unit 10

A4 P4

Describe the legal and financial aspect that will affect your business start-up

 Legal aspects – Introduction

There are many laws and regulations surrounding the conduct of a new business. All businesses will have similar legal responsibilities.

For my business I choose the legal status to be sole-trader, because is the simplest and the cheapest form of business to set up.

Advantages of being sole-trader:

  • The business can be easy to set up
  • Independence in decision making
  • Minimum of paper work
  • The sole trader may have flexible working hours
  • Knowing customers helps to avoid bad debts

Disadvantages of being sole-trader

  • Unlimited liability means the owner is responsible for all debts
  • Long working hours
  • In case of illness the business is closed and makes no money
  • Difficult to rise capital for start up or to expand business

The key legal aspect is liability, which means I as the owner of the business will have legal responsibility for the actions and the finance of the business itself. Because I choose to be sole-trader I will be fully responsible for the debts of the business and its actions.

Trading terms and conditions

Because I going to sell product I have to set clear terms on which the product will be sold to avoid future disputes arising. The terms and conditions of selling will also protect my business unreasonable claims from customers. The terms of sales should include price details, payment terms and arrangements.

Trading standards

Trading standards protect consumers from unscrupulous traders. The Supply of Goods and Services Act (1982 ) state that goods must be of satisfactory quality and fit for the purpose for which they are sold. A buyer who has a genuine complaint about faulty goods can ask for money to be refunded by the seller.

For my business it will be important to be aware at early stage what my responsibilities to customers are and also what rights do I have if buying from suppliers. The Trades Description Act states that goods must be as described, including quantity and size, quality, specification, ingredients, features, dates and place of manufacture.


Certain trades require a licence from the local authority. These include businesses dealing with food, alcoholic drinks, gaming etc. Licences are regulated by local authority. The business will provide customers with the service which is selling fresh coffee and fresh made cakes, so it must obtain a licence from local authority in order to provide the service legally.

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Fire regulations

Under the regulatory reform ( fire and safety ) order 2005, the business owner is responsible for removing the risk of fire as far as possible and draw up emergency plans for dealing with the fire if it happens.  All those who use the premises must be able to escape and is very important that all fire equipment is in working order. The law is enforced by the local fire authority.

Health and Safety

The Health and Safety at Work Act makes the business owner responsible for the health and safety of everyone ...

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