Essay
Unit 36- Starting a small business P4
- Institution
- PEARSON (PEARSON)
P4- Describe the legal and financial aspects that will affect the start-up of the business.
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420691 Benjamin Richardson 2/12/20In this report I will be describing the legal and financial details that will affect the start-up of
our business. This will help assess the viability and sustainability of the business to see if the
business will survive.
We have decided to set up our business as a partnership as we think this would be the best
decision for the business. A partnership is a business that is owned by two or more people.
It is usually for the members to write up a deed of partnership which describes how much
capital each partner has contributed and states how the profits and losses will be shared.
One reason we have decided this is because none of us have experience running a business
this would mean that any decisions that are made are discussed and have multiple people’s
opinions so hopefully, they would be the right decisions.
Another reason why we have chosen a partnership is because it is easy to get started. This is
because we won’t have to register with companies’ house but rather with HMRC which is
generally easier to register with and also complete a self-assessment online.
The final reason that we decided to set up as a partnership is because we will be able to do
a lot of the tasks our self from setting up the cinema screens to filling out tax forms. This
means that we won’t have to spend money on employees or hire people to do these things
for us, as we need all the money we can get at the beginning of our business.
Taxation for a partnership is slightly different than other business types. For a partnership,
each person in the partnership has to add the income they get from the business to their
taxable income and pay tax individually rather than the business itself paying tax on the
profits.
To set up a partnership you will need to follow some registration obligations. This is to make
sure that HMRC know who is in the business and what structure the business is. There are a
few things that the business has to do to register.
These include:
Each member registering with HMRC as self employed
Partners will raise funds for the business out of their own assets or taking out loans
The partnership can choose a business name or trade under the name of its
partners.
Health and safety
Injuries at work are a concern for many businesses, but over the years there has been
significant improvements due to the changes and strictness in regulations; which in turn has
reduced the amount of reported injuries at work.
Although for a small business, health and safety audit and cost up to one thousand pounds,
this would prevent the business getting sued for thousands of pounds if someone got
injured.
, 420691 Benjamin Richardson 2/12/20
Businesses that employ people can get an employer’s liability insurance which will pay for
any incidents at work if the employer is not liable for the injury. However, if the employer is
responsible for the incident then the insurance will help pay towards the costs not the
entire claim.
Public liability insurance is an insurance that our business would need as this protect us
from claims from members of the public relating to harm or damage because of our
business. As we would be having hundreds of people at our event there is a high chance
that someone would get injured even if it is tripping over a chair or fencing.
Under the Management of Health and Safety at Work Regulations 1999 act we have to
make sure that employees and others are protected and safe from harm. This is to make
sure that the workplace and venues are as safe as possible. It is also that the company
doesn’t get sued for injuring someone.
First of all, at our warehouse, where we store our equipment, we will have a write a health
and safety document which states the systems and procedures relating to the health and
safety for all employees, customers and visitors. This can range from lower door frames and
stairs to handling electronics.
Whenever we go to a new location that we want to use as a place to set up and run an
outdoor cinema event, we will have to complete a health and safety inspection.
This includes:
Identifying what could cause injury or illness (hazards)
Rate how likely it is that someone will get harmed and how seriously (the risk)
Try to get rid of the risk and if it’s not possible try to decrease the risk.
Having to carry out assessments every time we want to set up at a location will take a lot of
time from us as a business which could be used better elsewhere to grow our business
faster. However, it is a necessary precaution to take to protect customers and the business.
Licenses
Another legal obligation that will affect our business is licenses. These are needed as we are
using other people’s/ companies’ content and land so we have to buy the rights to use
them.
The first license we will have to purchase is a “Single Title screening License” this allows us
to show a movie to a paying audience. The licence is paid by 40% of our total revenue for
the screening. For our small business this will mean that an average screening will cost us
£2400 in licensing fees to show the film. This is a huge cost to our business as this amount of
money would help the business grow a lot faster if we got to keep this at the end of every
screening.
when we want to run an event, we will need a location to set up the cinema at so people
can attend. For this we will need to obtain a licence/ permission to use their land. We will
have to do this by contacting the owner of the land and negotiating a price. Usually this
pricing starts around £200 pounds for a location that could hold around 100 people. The
price depends on the location and size of the venue. Although this is quite costly, the venues
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