Legal Guide - Insurance, Licences, Health & Safety, Data Protection and more

Aug 14, 2010
In this guide I will attempt to set out some of the basic legal regulations that can affect your business. Obviously staying with the law is a must and it can be a bit of a minefield.

Business Insurance
Do I need it? Simple answer is yes. All business should have some kind of insurance and there are lots of different types of business insurance. Some are voluntary and some are required by law and should be set up before you begin trading. I will outline some of the basics below –

Buildings & Contents – This covers your premises and goods against things like fire, weather damage and theft. It can also cover goods in transit.
If you run your business from home then it can cover your office contents and computer equipment, limits for cover vary but normally range from about 7K up to 100k depending on the value of your business and which insurance company you use. Portable items like laptops and smart phones can be insured for a maximum of around 1.5k

Public Liability Insurance – This covers you for claims against injury or damage, for example is someone slips on a wet floor in your shop. If you run your home business and you do not have suppliers or customers visiting your premises then it is probably not necessary to have this.

Product Liability Insurance – This is an important one, especially in my sector – toys. If you sell a product that causes a customer injury or damage then you can be held liable for any costs incurred. It is especially important to obtain this insurance if you import the product from outside the EU or manufacture it. If you are a retailer sell on a product bought inside the EU then it is less likely that you will be held responsible as the liability defers to the importer or manufacturer. You will, however have to prove certain things, for instance that the product was supplied to you faulty.

When you do apply for a policy there are certain things you should check for –
  • There may be stipulations as to quality control of products. You must adhere to these in order to be covered.
  • Check the exclusions on your policy to make sure you have the cover that best fits your business.
  • Some products invite more risk than others. Make sure you get the level of cover that is right for your products.
Motor insurance – If you run a vehicle for your business this covers you for damage, injury etc

Employers Liability Insurance – This is obviously only necessary if you employ staff. It covers you against claims made by staff if they are injured as a result of working for you.

Front of premises insurance – covers the cost of repairing damage to the front of your business premises, including items such as windows, signage, canopies etc.

Business interruption insurance - This can help protect your business if you are forced to temporarily stop trading due to damage to your business premises or equipment. Revenue protection can offset your lost income, while additional trading expenses cover can give you the financial help you need to get your business back on its feet.

Profession Indemnity Insurance – If you provide advice, or are in the business of selling your knowledge for a fee much like a solicitor or consultant would then it is worth taking this out. It covers you against claims for loss or damage made by a client or third party if you make mistakes or are found to have been negligent in some or all of the services you provided.
If you are in any way unsure of the kinds of insurance you will need then I would suggest you talk to a broker. Suitable ones can be found through the FSA –

Some business require you to apply to your local authority before you start trading but the rules are different depending on the type of business you run –
  • Food Businesses – Restaurants, sandwich shops, mobile catering units and pretty much anything revolving around food need a licence from the environmental health department and it must be applied for 28 before the commencement of trading.
  • Anyone selling alcohol – to do this you need 2 different types of licence, personal and premises licences
  • Businesses dealing with children – You must obtain an annual licence to do anything that revolves around children, for example teacher or child minder. You also need all the relevant Police checks.
  • Selling branded products – Many people ask if they need a licence for this and the simple answer is no. To distribute a brand you may the permission from the brand owner (but his is rare) but you certainly wont need a licence. If, however you intend to manufacture or reproduce a brand then you MUST have the permission of the brand owner.
Your local authority will be able to guide you through any licence application but remember to allow plenty of time for them to be processed as in many case you wont be allowed to start trading until your application is complete.

Health & Safety
Health and safety law is there to make sure that your place of work is a safe environment and as much as some of us mock it you will have to comply with some or all of it depending on your type of business. The law covers things like – computer monitors, lighting, heating, first aid and it also assesses the risks linked to your particular business.

If you use your home as your business workplace, you must carry out a health and safety risk assessment to identify any possible hazards to yourself, workers, visitors and other members of your household. Possible hazards include – using equipment at home including electrical appliances, handling loads, hazardous substance, stress or loneliness, fire, excessive noise or vibration. An easy way to record your findings is to use the risk assessment template provided by the Health and Safety Executive. This template also includes a section for your health and safety policy so you can record everything in one place - risk assessment and policy template.

Data Protection
It doesn’t matter how small your business is or what type it is , the data protection act of 1998 will affect you if you store customers information. Whether it be in a filing cabinet or on your computer, if you break the law you could end up with a fine and court costs.

According to the law –
  • You must store all information securely and responsibly by ensuring your computers have password and your filing cabinets have locks.
  • You musnt keep information longer than is necessary.
  • You cant share the information without permission
  • You must explain what the information will be used for. For example, if you’re making a list of your customers so that you can send them mailshots, you must first ask if they’re happy for you to do this.
  • You can only keep information for a specified reason.
  • People can request to see any information held on them and you must provide it within 40 days although you may charge them an admin fee of £10 for the privilidge!
Some businesses will need to register with the Information Commissioner depending on the reason for storing information. For more info you can look here -

Intellectual Property
Put simply this refers to anything that your business creates that can be protected by law. For instance – music, articles, books, inventions, computer programmes, photographs etc.

There are 4 main types of intellectual property –
  • Designs for products
  • Trademarks for brand identity
  • Patents for inventions
  • Copywrite for written materials or artistic works
Some property rights apply automatically, like copyright, for example and others like patents and trademarks need to be applied for.

To be honest this is a vast and complicated subject and I could write an entire guide just about this but for more detailed information you can go to

Employment Law
If you employ staff then you have to comply with a number of legal requirements which are put in place to protect the rights of the people who work for you. The most important of these are -
  • Working hours and holidays
  • Pensions
  • Discrimination
  • Wages and conditions
  • Tax and National Insurance
  • employment contracts
  • Job descriptions
  • Maternity and parental leave
  • Employers’ liability insurance
I would strongly recommend that anyone thinking of taking on employees for the first time get in touch with the Department of Trade & Industry for guidance –

I hope you have found this guide useful and can show your appreciation by hitting the thanks button. Manners cost nothing ;)

Written by Vicky Walmsley owner of Risus Wholesale, Event Smiles and Archie’s Toy Box
You are welcome to repost this article but please back link it back to me and DO NOT pass it off as your own.
Dec 28, 2008
Another excellent thread. This forum will be quiet when business picks up Vicky.;)