Business Report on Small Businesses - Coursework Example

Business Report on Small Businesses s Table of Contents Table of Contents Table of cases and statutes 3 Executive summary 4 Introduction 5 Discussion 6 Legal information for small businesses 6 Legal form best for your business 6 Buy and sell agreement 6 Naming you business and products 7 Licenses and permits 7 Tax basics for small businesses 7 Raising money for the business 7 Importance of excellent customer relations 8 Consumer protection statutes 8 Potential liability for harm caused by products or services 8 Safety of the business premises 10 Conclusion 12 References 12 Table of cases and statutes i. The employer needs to have an employee’s injury insurance, pursuant to the workers compensation insurance (Employment Rights Act 1996). ii. The employer is required to make arrangements for compulsory pension plan for its workers. The fees differ with the level of coverage and benefits in the pension plan (Employment Rights Act 1996). iii. One needs to acquire liability insurance once he/she starts operating on a rented space. This protects someone who gets hurt or injured at the business premise. The tenant is also responsible for providing reasonable temperature, safe equipment, lighting and ventilation (The Health and Safety at Work etc. Act 1974). iv. If a firm is liable for harm caused by an unsafe product, it can be sued by anyone who is harmed, even if they did not purchase the product themselves (The Product and Safety Law). v. State and local governments go after businesses that violate advertising laws. Under the consumer protection laws the consumers have the right to sue advertisers (Consumer Credit Act). vi. With regard to consumer protection statute, a man sued a department store which ran out of the advertised waffle iron and did not provide him with a rain check. This was a violation of the consumer protection law (Consumer Protection Law). vii. A man sued a department store which ran out of the advertised waffle iron and did not provide him with a rain check (The legal case was under state consumer protection statutes). Executive summary When starting and running a small business it is essential that one looks at the appropriate legal statutes that define the setting-up and operation of the enterprise. Presently, starting a small business seems to be a vague idea considering the record number of new companies being started around the globe. With more legislation directed towards making life easier for small businesses, this ‘golden age’ entrepreneurship seems set to carry on into the future. In starting up and operating a business, there are many legal responsibilities that one needs to be aware of in order to protect their businesses and avoid costly penalties including finding a lawyer to set up the businesses’ legal structure, registering the business, acquiring the licenses and regulations needed to operate a business, filing taxes among many others. Since choosing the legal format of the business is very crucial, general partnership, which is the type of partnership that most small businesses consider. Most small businesses have a public liability insurance which covers against damage to property or injury to people who are visiting the premises. Besides, the main responsibility of product safety usually falls on the manufacturers. Most businesses take product liability so as to protect themselves from legal costs and damages afterwards. Introduction Starting and running a small business is one of the most profitable and emotionally satisfying dreams that you can share with millions of other individuals around the globe. Steingold (2009: 18) asserted that being an entrepreneur provides rewards of many kinds such as the freedom of being your own boss, the opportunity to spread your wings and utilize your natural talents. Law plays a very major role in the successful setting up and operation of a business. Enforcement of rules and regulations, and penalties for breaking them, are essential for a fair, orderly and business environment. Steingold (2009:45) defined a statute as a law enacted by elected representatives of the governments’ legislative branch. Laws regulate social behavior, which leads to a society that runs efficiently. In the business environment laws supply ethical standards and expectations, while offering conduct rules, measures to enforce those rules, and a means for settling disputes. Law encourages economic growth through free competition; protecting the environment; facilitating planning and the realization of reasonable expectations (Mallor, et al., 2012:14). In Britain small business solicitors assist the business in legal matters throughout the business lifecycle. The paper will discuss the legal requirements of starting up and operating small businesses. It will further highlight the potential liability for harm caused by the firm’s products and services, as well as the safety of the business premises with reference to legal obligations and liabilities that they will they have in relation to the visitors and any potential trespassers. Discussion Mallor et al. (2012) argued that it is important to note that without laws to govern the peoples’ and businesses’ actions, society would not the capability to function effectively, and commerce would likely collapse. Legal information for small businesses Steingold (2009:12) argued that small business owners are usually faced with a bewildering wide range of legal questions and problems. Most of the legal information that small businesses owners require include: how to raise the start-up money; choosing between sole proprietorship, partnership or limited liability company; getting licenses and permits; buying and selling of franchise; negotiating a favorable lease; insuring their businesses; comprehending small business tax rules; picking and protecting a good name; resolving legal disputes; adopting to the best customer policies; and finally, coping with financial problems. Legal form best for your business When two or more people want to set-up and operate a business, they need to choose from either establishing a partnership, a limited liability company, or a corporation. Sophie and Jesse can choose a general partnership since it is simple and inexpensive to operate and owners report their share profit or loss on their personal tax returns. Buy and sell agreement The agreement regulates who can purchase the departing owners interests and at what price. The buy and sell agreement assists you and your co-owners not to be forced to work with someone you do not get along with. Essentially, this eliminates the likelihood of owners being obliged to share profits with an inactive owner. Naming you business and products Naming of the products and business needs to be done in compliance with legal procedures mandated by state law. In order to avoid a claim of unfair competition conduct a local name search to ensure that no local business in hand-made crafts uses a similar name (Steingold, 2009:121). Before you start doing business such as a partnership, one needs to file an assumed name or fictitious name certificate with the designated public office, usually at the county level (Pakroo, 2012). Licenses and permits Every business requires a basic license. The purpose of licenses and permits is raise money and ensuring public health and safety. In some cases, you could be barred from operating your planned business at a certain location, even though you will be obliged to pay rent. For example, if Sophie and Jesse sign a four-year lease for business space and then establish that the location is not zoned properly for their business. With regard to licensing agreements, it is usually not compulsory to record these in the official patent office in Britain. Zahorsky (2014) suggested that additional paperwork comprises of zoning permits and sales tax licenses. Tax basics for small businesses Being aware of the finer details of tax law often on a legal perspective saves a lot of money. In England, just like in America if the business has no employees, the owner needs to obtain an Employer Identification Number (Steingold, 2009:149). Raising money for the business Before you commence looking for money, it is helpful to write a business plan. A business plan consists of the following: profit and loss forecast, sales revenue forecast, cash flow forecast, business description, and capital spending plan (Nicholas, 2007). The two sources of outside financing include loans and equity investments. Besides, the common sources of money include: salary, personal savings, credit cards, leasing, venture capitalists, banks, commercial lenders, retirement savings (Steingold, 2009:169). Importance of excellent customer relations In order to build a loyal following of customers, the business enterprise needs to do more than just giving people what the law requires. The business needs to keep the customers happy and send others to the business. Sophie and Jesse need to come up with customer satisfaction policy, whereby the clients know their rights and responsibilities from the beginning. Consumer protection statutes Black (1990:1410) pointed out that in some nations before a statute becomes a law it needs to be agreed upon by the highest executive in the government. There are laws that protect the consumers. For instance, a man sued a department store which ran out of the advertised waffle iron and did not provide him with a rain check. This was a violation of the consumer protection law. Potential liability for harm caused by products or services Majority of the UK’s trade with European Union countries is conducted on a duty-free basis. Therefore, any potential liability that is caused by hand made crafts needs to be highlighted comprehensively. The firm is exposed to product liability lawsuits by virtue of being selling hand-made crafts. The firm needs to consult with an insurance agent with regard to getting liability insurance to protect the firm’s products. Anyone in the chain distribution business can be sued for injuries that have been caused by the product. As a result, they need to have a public liability insurance which will cover against damage to property or injury to people who are visiting the premises. Considering that the products could injure the employee or the customer, the firm needs to conduct extensive product testing to make sure that the products are safe for distribution (Palmer, 2011). The firm also needs to ensure that the buyer is responsible for paying all the agreed costs that are associated with the purchased items. However, there are legal requirements for dealing with customers (Kochan & Goodyear, 2011:56). With regard to advertising, it is unlawful if the ad deceives. The UK has an agency that deals with unlawful advertising. Local governments also look for businesses that violate advertising laws. Under the consumer protection laws the consumers have the right to sue advertisers. In addition, the product harm can be as a result of warranties. This means that the law holds the retailer or manufacturer responsible for certain warranties even though they have said nothing on the subject. Failing to meet the product and safety law could lead to serious criminal offense. Products that are sold to the consumers need to be safe. Since Sophie and Jesse’s business involved in production and importation, according to the Trading Standards Institute they would be responsible for warning consumers about potential risks, offering information to assist clients understand the risks, monitoring the product’s safety, and taking action when a safety problem is established (Richardson, 2009:89-90). Employees are the greatest assets of any firm which the firm needs to ensure their safety. Sophie and Jesse’s enterprise was a hand-made craft business that has probable injury concerns to the staff. This means that the firm needs to adhere to contracts of employment, tribunal decisions, and employment act. The employer needs to have an employee’s injury insurance, pursuant to the workers compensation insurance. In the UK, in 2006 a new law was adopted which required the employer to make arrangements for compulsory pension plan for its workers (World Bank, 2014). Although employee acquire rights immediately after being employed, in the UK right for fair dismissal is now available after only two years of employment. Safety of the business premises Generally, the doctrine of premises liability usually revolves around the individual in possession or control of property to maintain its premises in a reasonably safe condition or warn those who may come upon the property about hazardous state of which they might otherwise not be aware (Jones, 2011:56). The knowledge of premises liability laws enables one to know the difference between being financially liable for an injury that will be sustained on the premises or avoiding liability altogether. Under the premises liability law, Lucas (2012:34) found out that there are three categories of visitors: licensee, trespasser and business invitee. With specific reference to trespassers, when the owner has knowledge of the probability of trespassers entering the property, he/she might be charged with a duty to give reasonable warning to prevent injury. This is a requirement that is applicable only to artificial conditions which the owner has created or maintains, and knows that it may cause serious damage or injury (Lucas, 2012). Getting a suitable commercial premise is one of the most important steps for businesses. This comes with requirement for sound legal advice. For instance, the firm needs to have a public liability insurance which will cover against damage to property or injury to people who are visiting the premises (Government of United Kingdom, 2012). One needs to acquire liability insurance once he/she starts operating on a rented space. This protects someone who gets hurt or injured at the business premise. The tenant is also responsible for providing reasonable temperature, safe equipment, enough space, lighting and ventilation. The Health and Safety at Work Act 1974 is the main law that covers health and safety at the work in Britain (Oliver & Drewey, 1998). The local councils and Health and Safety Executives only ensure that you follow the law (Stranks, 2007:197). It is crucial for business operators to do everything possible to protect its employees, premises and from the numerous risks such as fire and injury faced by the business on a daily basis. For instance, a fire safety management system greatly minimises these risks and reduces the potential impacts of fire. Salmon (2011) pointed out that engaging in small business activities brings about general happiness and contentment. This is because proper and effective management of health and safety in the business premise reduces the risk of accidents to the workers, occupational ill health of the staff, and associated costs that usually go with the above. In law, the tort liability for premises outlines that land owners have no liability to other people would be accidently hurt or injured while passing in, through or over their premises. It is very crucial for a business organisation to take into consideration the tort liability for premises especially for business premises that are often visited by a large number of people daily (Jones, 2011:113-114). Conclusion Every nation recognises the importance of law in day to day business and individual business life. Enforcement of rules and regulations, and penalties for breaking them, are essential to ensure a fair, orderly and successful business environment. In starting up a business, some of the legal obligations include: finding a lawyer to set up the businesses’ legal structure and handling other transactions that involve huge sums of money; choosing the legal structure of the business; registering the business; acquiring the licenses and regulations needed to operate a business; writing contacts; filing taxes; applying for trademarks, copyrights or patents. In summary, any distribution business can be sued for injuries that have been caused by the product or services offered. Sophie’s and Jesse’s firm needs to have a public liability insurance which will cover against damage to property or injury to people who are visiting the premises. A tenant of a commercial premise needs to be aware of the responsibilities of maintaining the premises and for the safety and health and safety of the occupants, especially in areas such as gas and fire safety. Some of the responsibilities are usually lay down by statute while others have the force of law since they are set out in a lease. To sum up, so as to establish the suitable duty that the possessor of property has to the visitor, it should be identified whether the visitor is a business invitee, a trespasser or a licensee (Lucas, 2012). References Black, Henry Campbell (1990). Blacks Law Dictionary, Sixth Edition. West Publishing, p. 1410 Government of United Kingdom. (2012, October 9). Retrieved February 28, 2014, from Product liability and safety law: https://www.gov.uk/product-liability-and-safety-law Jones, L. (2011). Introduction to Business Law. New York: John Wiley and Sons. Kochan, N., & Goodyear, R. (2011). Corruption: The New Corporate Challenge. New York: Pagrave Macmillan . Lucas, M. (2012). Understanding Business: Environments. London : Psychology Press. Mallor, J., Barnes, A., Bowers, T., Langvardt, A. 2012. "Business Law: The Ethical, Global and E-Commerce Environment." 12th ed. Burr Ridge: Irwin/McGraw-Hill. Nicholas, H. (2007, December 9). Retrieved February 28, 2014, from Checklist: starting a small business from scratch: http://finance.ninemsn.com.au/smallbusiness/planning/8124625/checklist-starting-a-small-business-from-scratch Oliver, D., & -, ‎. D. (1998). The Law and the Parliament. Cambridge: Cambridge University Press. Pakroo, P. J. (2012). The Small Business Start-Up Kit: A Step-by-Step Legal Guide (7th ed.). London: NOLO. Palmer, K. (2011, November 15). Retrieved December 28, 2014, from Do You Need Liability Insurance? Even small-time entrepreneurs might want to consider protecting themselves from potential lawsuits. : http://money.usnews.com/money/blogs/alpha-consumer/2011/11/15/do-you-need-liability-insurance- Richardson, B. (2009). Environmental Regulation Through Financial Organisations: Comparative Perspectives on the Industrialised Nations. London: Kluwer Law International. Salmon, F. (2011, January 20). Retrieved February 28, 2014, from Norway, entrepreneurial paradise: http://blogs.reuters.com/felix-salmon/2011/01/20/norway-entrepreneurial-paradise/ Steingold, F. (2009). Legal Guide for Starting & Running a Small Business. London: NOLO. Stranks, J. (2007). Health and Safety Pocket Book. New York: Routledge. World Bank. (2014). Retrieved February 28, 2014, from Starting a Business in Norway: http://www.doingbusiness.org/data/exploreeconomies/norway/starting-a-business Zahorsky, D. (2014). Retrieved February 28, 2014, from Starting a Small Business 101: The Essential Steps: http://sbinformation.about.com/od/bizopportunities/a/startup101.htm Read More