Legal and financial aspects will affect the start-up of a business in many ways. These can aid the start-up of a business, or they can make the business struggle. Financial aspects that will make your affect the start-up of your business negatively would be things like an increase in costs for things such as expenses e.g Electricity, resources for product, wages. If you have just started your business, and you are already losing money, there is not really any point in continuing the business. If you can’t cover your expenses you will not make any profit, so you will need to pay attention to the Break Even Point, to see if with the combined cost of expenses and costs, and the amount of money you are making from sales, that you are actually making profit, not making a profit, or you are just losing money.
Someone starting up a business will need to plan a budget, this is essential if you don’t want to get into a worst case scenario and not have any idea what to do in that situation, to create a budget you should pay attention the current economic status, then how much your fixed and variable costs will cost. Someone starting up a business should also make a reserve of money so that if the economy makes a turn for the worse, they will be able to fund the losses and keep the business going. Legal aspects of a start-up business are needed to be known by the person starting up the business, if you do not know these you will lots of trouble understanding the legal requirements and responsibilities of managing and running a business. Legal aspects that would affect the start-up of a business would be things like licences; you may need a minimum of a business licence and tax registration to start up a business, but it depends on what sector you are operating in.
To start up a business you need to categorise yourself into one of these ownerships, a sole proprietorship (A business owned and managed by a single person), a partnership (A business owned by two or more people) or a corporation (A business owned by a large varied group of people), then you register that information to the Inland Revenue, providing this information early also lets them receive money back. When you start up a business it is essential to remember to charge clients and employees VAT (Value Added Tax), the profit from the VAT is then sent to the Inland Revenue.
Privately owned companies need to pay Corporation tax which again goes to the Inland Revenue. When you are starting a business and hiring employees, Health and Safety Responsibilities should be remembered, since you need to make sure that your employees are working in a safe environment, you will need to carry out a risk assessment to identify the risks for employees, customers etc.
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