Starting your own business (Part 3): If it’s not on paper - it didn’t happen!?

Date: 8th April 2017   |   Author: Adam Phillips

So, you’ve been made redundant, you have a wedge of cash coming through and you decide it’s time to start your own business… or you’ve decided that the management isn’t to your liking and you fancy being your own boss. It’s time to become self-employed. Easy, right!?

A contract is commonplace for most employees – it’s there to protect both you and the business. It’s there to ensure that you work your notice or you do those extra shifts or you get the holiday you deserve, so why would you not want a contract if you are self-employed?

You might want or need a contract between you and your suppliers, you and your new employee, you and your client or between you and that guy that’s just promised ‘x’ months’ worth of work. If you rely on one supplier or the employee wants to leave or the guy that’s promised you work, on day one, has to cancel on you, what kind of implication would that have on your life and business?

 The obvious first question is - Do you need a contract in the first place?

If you work on your own and rely solely on your own skill – like an artist for example, then probably not. If you work as a partnership you may want a partnership agreement in place; this isn’t a legal requirement, but it may well save your business. A Partnership agreement is there for a number of reasons, it will settle any dispute when it comes to who owns what of a business, so in the event of say, a bereavement, the authorities are very clear as to what forms part of one’s estate and what does not. It is also there to ensure that in the event of someone passing away that you don’t suddenly get stuck with Aunty Ethel as a business partner, who was next of kin! It would ensure that whatever you wanted to happen to your share of the business – happens. It’s also there to limit your liability if one of the business partners decide to empty the account – never to be seen again. (This happens more often than you think, in 2.5 years of doing managing businesses, there has been at least 5 occasions that I can recall – in Andover alone). If there is no contract in place to suggest that you are only responsible for 50% of the liabilities – then you could be liable for all, 100% of debts.  

If you employ someone you may well require a contract of some sort, perhaps an employee handbook at the very least. Question is - Would you work for a company that hasn’t got a contract for you to sign? You have very limited rights by not signing one that goes for both employee and employer.

Best advice, go to a reputable solicitor, ideally one who specialises in employment law and ask them directly, do you require a contract of some sort? It might cost some money, but it could well save your livelihood and well earned personal savings.

For any additional help, please contact me on 07718 320510, Adam Phillips, Local Business Manager, Santander, Andover.

 Please note that any views and/or opinions expressed here are solely the views of myself, Adam Phillips and not that of the bank Santander Uk Plc or any of its affiliated companies.

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