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Legal Pitfalls for startups

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by Startacus Admin

legal pitfalls for startups
When starting your own business there are many legal pitfalls startups can fall into. Here's a few common reasons why you could end up in legal hot water.

Starting your own business is the dream for a huge number of Brits, with 54% saying they’d like to do so at some point in their career. Being your own boss or slowly building up your own workforce, certainly has something appealing about it – mainly, not being answerable to anyone else and letting your imagination and ingenuity guide you. But your own business comes with a lot of responsibilities, and as much as we like to dream that it makes you a free agent, there are certain rules you have to abide by.

We’re going to take a look at common areas where startups forget to invest time and money, and why you need to take them seriously or could end up in legal hot water.

Health and safety

Whether you’re sat in a tiny office, out on the road visiting clients or wielding a chainsaw, health and safety still applies to you. When you employ people, you have a duty to take every reasonable precaution to protect them from harm while carrying out their job. In an office, this means correctly set up desks and firelegals and startups safety training, on the road, it will be providing hands-free navigation and calls, and with a chainsaw, it will be PPE (personal protective equipment), safe usage training and a bit less wielding. That doesn’t cover all types of training you’ll need for your business though, as you’ll have to tailor it to suit your needs.

Health and safety matters and can become an unanticipated legal pitfall because every business has to buy insurance which covers them in case of an accident during the course of business operations that you might be liable for. They can also lead to a worker making a claim for injury at work; not something you want as a brand new business.


Let’s address the basics – discrimination is treating someone differently or worse based on a protected characteristic (age, gender, ethnicity, religion, sexuality, disability, marriage or pregnancy). Much like with health and safety, you must follow laws set out by the government or you may find yourself at an employment tribunal. 

Discrimination in any setting is upsetting and demoralising but in the workplace, it somehow seems worse, given how many waking hours you’re there. We all assume that discrimination has to be an active choice; you decide to treat someone a certain way because of something about them, but this isn’t always the case. Discrimination can be more subtle, like not hiring someone whose skills are exactly what you need, but they’re a lot older than the rest of your workers.

You’re not the main person to focus on when it comes to discrimination though; employees can surprise you in the worst of ways, so you need to ensure there is a system in place so any worker, who feels discriminated against or singled-out in any way, can raise their concerns safely and have them addressed.

Data breaches

Yes, it’s that point in the articles when GDPR rears its head. If you’ve been living under a really big rock for the last year or so, GDPR is a big update to the old Data Protection laws that everyone used to abide by. In basic terms, it’s a set of laws that (again) you must abide by or face the nasty legal consequences. legals and startup GDPR is such a big deal because it gives clients and customers much more control over who has their information, what information and how it’s stored. If you’re still in the throes of setting up your business, you’ll want to read up on it, and if you’re already in business and don’t know what we’re going on about then you should definitely read about it – right now.

There are plenty of articles  that address GDPR so we won’t go into details here. Suffice to say, the penalties for breaching GDPR are massive – 20 million Euros or 4% of your annual global turnover. Whatever you do, ensure you comply with these new regulations or your business might be over before you’ve begun.


It’s widely accepted that copyright laws aren’t suitable for the digital age so if you find yourself staring at a competitor who just went viral with something you tweeted, there’s nothing you can do. However, the focus of this article is pitfalls your business may encounter and mistakes you might make rather than those made against you, so let’s look at this differently. Creating original content but not having any original images to use alongside it is a fairly common problem, but what you must not do is Google it and pick the most appropriate image. Why? Copyright!

Image theft is the most common forms of copyright infringement and your first awareness of committing it will be a cease and desist letter. These letters can shake you a bit, but as long as you comply, you’ll be fine. If you forget about it though; prepare for legal action. Worried this will continue to happen? Get a licence for a stock image site and download and use photographs to your heart’s content.

Copyright extends to cover many areas, from images to designs, phrases and even colours. If you’re basing your product on someone else’s design then you’re asking for trouble and you’ll get a cease and desist as well as a demand for reparations or compensation for lost business. These type of cases very often go to court incurring big legal expenses in the process, so whatever you do ensure your products are your own.

What other legal worries do you have about starting a business? How have you managed to keep your business within the legal boundaries?

Author Bio

Abigail Crosbie works for Your legal Friend, part of the 2020 Legal group, as Marketing Executive and Content Writer. She has a First Class degree from Lancaster University and now specialises in providing content of topics for a variety of legal websites and online sources.

Article tips given is relevant at time of publication, but legislation and laws can change and varies between countries. 

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Published on: 8th June 2018

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