Common legal mistakes by SME’s


Managing business is not simple. Other than the core business activity, there are many additional areas of managing business that can make or break an organisation. Falling foul of the law is one that can cause damage to a SME. Many SME’s are run day to day by the business owner, who must wear many hats in order to build a successful business. However, when it comes to legal issues, not knowing about requirements is no defence; and if you find yourself fighting legal issues it will be a costly and time consuming process. It is much better to get all aspects of your business compliant from the outset, giving you a safety net against any potential claims.

Set up, registration and business records – Every business has legal requirements when it comes to reporting and paperwork. From record keeping, to filing annual reports with Companies House, selling shares, financing your business and paying correct levels of tax and VAT, a business owner is responsible for ensuring they are compliant. Visit for full details of your responsibilities. To help you manage these responsibilities you could choose to employ an external accountancy firm or hire a suitably qualified finance manager who will ensure compliancy.

Put everything in writing – Many SME’s business owners overlook the importance of writing down essential agreements and processes that underpin their business. Taking time to do so, however, can avoid any future conflicts. Establishing roles and responsibilities of each person in the business, provides a reference point should any conflicts over time spent, ownership of equipment or brands, patents or other grievance occur at a later date.

Protect your brand – Make sure that your intellectual property is safe from imitation from others. It may not seem significant at the start of the business journey, but it will be easier to organise sooner rather than later. If an outsider does start to imitate you or your products proving legal ownership can be tricky. It is also advisable to know about any relevant copyrights in the industry to ensure you do not accidentally infringe on any existing copy rights.

Managing employees. As a business you need to make sure you stay on the right side of employment law. From the National Minimum Wage rates, working hours directives, anti-discrimination practices, employee rights and hiring and firing responsibly; a thorough understanding of employment responsibilities is essential.

Management of staff should be a key role within the business, with responsibility given to someone with the relevant skills and experience. You could hire a HR manager or if your need is smaller than a full time role, buy in contractor services to carry out an overview of your current situation and make sure any legal requirements are up to date – such as contracts of employment, correct storage of employee data and up to date training such as manual handling or COSHH.

Looking after customers data – data protection is a critical area of the law that can be easily be overlooked. With more and more business being carried out online, the importance of data security amongst SME’s has never been greater. Whenever you take details from a customer you have a legal responsibility to keep this data safe and ensure it is only used in the way it was intended.

Build IT infrastructure that is adequate for the activities you perform and ensure it is secure from outside threats. Be aware of how the information you hold can and cannot be used, and be open about how you will use it. Ensure any marketing is only sent to customers who have opted in to receive it and make your customers aware of how you will use their details – especially if you are planning to pass them to a third party.

It is never too late to start implementing strategies to make your business more secure. If you feel there are many too loose ends or vague responsibilities within your SME, that leave you vulnerable to threat, now is the time to review and create effective processes. These will make your business more able to withstand any potential threats in the future.


The content in this article is intended to provide a general guide to the subject matter, and does not constitute legal advice. Contact us for specific advice about your circumstances.


If you would like any advice or further information in relation to this topic, please contact us at your convenience, on 02031300772 or on to see how we can help you. Alternatively, you may wish to consider one of our fixed fee packages.