“I’ll See You In Court!” Keeping Your IT Business Legal
Charlie Cowan, 31/08/2010, posted in "Analysis"
Charlie Cowan inspires and enables partners at NewVoiceMedia, a Salesforce Appexchange partner routing inbound calls based on CRM data. Unusually for someone in the IT industry, Charlie holds a ...more info
Charlie Cowan inspires and enables partners at NewVoiceMedia, a Salesforce Appexchange partner routing inbound calls based on CRM data. Unusually for someone in the IT industry, Charlie holds a degree in Rural Land Management from The Royal Agricultural College. He lives and works in Cirencester, Gloucestershire, with his wife and three children. ...less info
Every year it is important to Spring Clean Your Business and make sure every area of your business is running smoothly and is up to date.
Today I want to look in a bit more detail at one of those items – your Legal position.
For most small businesses the Law can be a scary and confusing beast. It is likely that you are not large enough to warrant an internal Legal resource, and so you are reliant on external lawyers and solicitors.
To me at least this is synonymous with costing a lot of money, and using language that can be hard to understand. “My hourly rate is £200 and I can’t tell you how long it will take.”
Yikes.
For this reason many small businesses can tend to adopt the avoidance approach and decide to use the law as and when absolutely necessary. The problem here is that when that time comes, it can cost many times over what an initial consultation might have cost.
Dependent on the type of business you are, and whether you have employees or not, there are a range of issues that you should get legal support on. I am no lawyer, so please don’t take any of the below as legal advice, or assume that it is a full and comprehensive list of requirements.
Your Legal Entity
When you started trading, you might have been a one man consultant, and traded under your own name as a sole trader. As you grow your business you might want to investigate the benefits or otherwise of forming a Limited Company. There are potential benefits around your tax position, and of course limiting your liability for claims against the business. A Lawyer (and an Accountant) will be able to help you with this.
Employment Contracts
Employment Law is heavily stacked in favour of employees and it is often advised to hire slowly and ensure you get the right people rather than any people. You need to ensure that you have an appropriate Employment contract that states accurately the job description, the place of work, holidays and sick pay entitlement. Too often I have seen vague job descriptions because either it is seen as a laborious task, or more likely, that the business owner is so ingrained in their business that the assume someone reading it (an employee, or a court…) would understand what was meant. Read your terms to a family member not associated with the Company and ask them to tell you what they think you are asking for.
Insurance
Whatever walk of life Insurance features in it can cause dread – an unnecessary expense. But actually I find insurance a very relaxing experience. Knowing my family are covered if something should happen to me gives me a feeling of well-being, even if when I purchased the policy I was thinking of what else I would have to give up. The insurance you require will depend on the type of business you run:
Employers Liability Compulsory Insurance
If you employ people then you need to be covered for injury against your employees in the course of their business.
Motor Vehicle Insurance
Company vehicles will need insurance, probably Comprehensive.
Key Person Insurance
If you or other members of the team are instrumental to the success of the business (perhaps a key developer) then you can insure against their injury or death.
Premises Insurance
Dependent on whether you own/lease property or are in Serviced Premises then you will likely require Premises Insurance in the same way as you have Home Insurance to cover the cost of rebuilding.
Contents Cover
If you store large amounts of customer stock – servers, networking kit etc then you will want this covered in case of theft or damage.
Public Liability Insurance
If you have members of your team out of the office engaging with the public then you might want to cover yourself against any accidental injury that might lead to a claim against the business.
Professional Indemnity Insurance
Depending on the type of business you run you might also require Professional Indemnity Insurance if you would expect a claim against the professional services you have offered. Perhaps a recommendation to change a network or supplier has the wrong result.
This is a sample of Insurance available – for a good guide for your business the Business Link website offers an online questionnaire that then provides you with a list of recommendations.
Customer Contracts
The Contracts that you sign with your clients are critical. It lays down in writing who is expected to do what, so that in a dispute everyone knows where they stand. My experience here is that whilst a small business might invest in a contract when they start up, these documents are rarely updated. New services come into the portfolio. A new price list is released. New Service Levels are introduced. Contracts are living breathing documents and you need to ensure that all your clients are on the most up to date agreements. If anything it can be a perfect opportunity to re-sign and extend your relationship with them. “We have upgraded SLA’s – you can benefit from them by re-signing.”
Save money with contracts by finding ones you like – there are plenty online, and drafting yours to the best of your ability. You know your business better than a lawyer does. You can then take your draft to your lawyer and they can tidy up for you. This will cost you a lot less than giving them a blank sheet of paper.
Lawyers for your Business
To help you get started I would recommend you look at Lawyers for your Business – a network of 1000 firms across the UK that are members of the Law Society and offer specialist advice to small and medium sized businesses.
They offer a free half-hour consultation with a member of the network in your area and can cover any of the topics above, or any other legal issues you might have. At no cost it makes sense to arrange a meeting, even if you are confident of your legal position. At least you will have it confirmed.
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