Written by Fraz Butt, Senior Director · SRA-regulated · Last reviewed 8 September 2026
This startup legal guide covers the decisions that matter most as you build a business in the UK: choosing the right company structure, agreeing ownership with any co-founders, putting proper contracts in place, hiring your first employees, raising investment, and protecting what you create. Get these right early and they quietly support the business for years. Get them wrong, or skip them, and they tend to surface at the worst possible moment, usually during a dispute, a funding round, or a sale. This guide brings the key decisions together in one place, with links to a more detailed article on each below.
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Getting the Legal Foundations Right From Day One
Many founders put off thinking about the legal side of the business until something goes wrong, usually a disagreement with a co-founder, a supplier who will not honour a verbal promise, or an investor asking for terms the founder does not fully understand. By that point, fixing the problem costs far more than getting it right at the start would have.
Getting the foundations right early is not really about paperwork for its own sake. It means thinking through ownership, control, risk and exit before those questions become urgent, while the answers are still easy to agree fairly. A well thought through set of founding documents, contracts and policies can save a business a great deal of money in avoided disputes, and it also makes the company far more attractive to future investors and buyers, who look closely at these foundations during due diligence.
Choosing the Right Structure for Your Business
One of the first decisions any founder faces is whether to operate as a sole trader, a partnership or a limited company. Each option carries different consequences for tax, personal liability and the ability to raise investment or bring in co-founders.
We cover this decision in detail, including the pros and cons of each structure and when it makes sense to convert from one to another, in our guide on choosing a business structure.
Related reading: choosing a business structure.
Getting Company Formation Right
Incorporating a company at Companies House takes minutes online, but getting the underlying structure right takes more care. This includes deciding on share classes, appointing directors, agreeing voting rights and putting in place articles of association that reflect how the founders actually want to run the business, rather than just the default template.
Founders who skip this step often find, a year or two later, that the standard articles do not deal properly with what happens if a director wants to leave, if new investment comes in, or if the founders disagree about the direction of the company. Fixing this once relationships have soured is far harder than getting it right at formation.
Agreeing Ownership With Shareholders and Founders Agreements
If you are starting a business with anyone else, a shareholders agreement and, where appropriate, a founders agreement, are two of the most important documents you will ever sign. They set out who owns what, who decides what, what happens if someone wants to leave, and how disagreements are resolved without the business grinding to a halt.
We explain the difference between these documents, and what each should cover, in our guides on shareholders agreements and founders agreements.
Related reading: shareholders agreements, founders agreements.
Commercial Contracts Every Business Needs
As soon as your business starts trading, you will need contracts, with suppliers, customers, contractors and platforms. Relying on a template downloaded from the internet, or on email exchanges, leaves the business exposed if something goes wrong.
Our guides on the clauses that actually matter in commercial contracts, on why generic terms and conditions carry real risk, and on negotiating contracts with confidence, cover this in detail.
Related reading: commercial contract clauses, business terms and conditions, negotiating commercial contracts.
Raising Investment as Your Business Grows
Many startups will, at some point, look to raise investment from angel investors, venture capital funds or through schemes such as SEIS and EIS. Each route involves legal documents, including term sheets, subscription agreements and updated shareholder arrangements, that materially affects who controls the company going forward.
We set out what founders need to understand before agreeing terms with an investor in our guide to raising startup investment.
Related reading: raising startup investment.
Hiring Your First Employees
Bringing on your first employees is an exciting milestone, and it also brings legal obligations, from contracts of employment to workplace policies and pension duties. Getting this right protects the business and helps you attract and keep good people.
Our guide on employment contracts for first hires walks through what a founder needs in place before making an offer.
Related reading: employment contracts for first hires.
Protecting What You Create
Your brand name, logo and any original product, software or creative work are business assets, and they need protecting like any other. This means registering trademarks where appropriate, making sure contracts properly assign copyright to the business, and knowing what to do if a competitor copies your work.
Our guide on protecting your intellectual property covers trademark registration, copyright and what to do about infringement.
Related reading: protecting your intellectual property.
When to Bring in Legal Advice
There is no single right moment, but there are clear trigger points, incorporating with more than one founder, signing your first significant supplier or customer contract, taking on your first employee, or having a conversation with an investor. Bringing in advice at these stages, rather than after a problem arises, is consistently the more cost effective route.
Saracens Solicitors advises founders and growing businesses across all of these stages, working alongside our corporate, employment and dispute resolution teams so your business has joined up advice as it grows.
Have a question about your specific situation? Call us on +44 (0)20 3588 3500 or press Enquire at the top of this page, our team responds quickly.
Frequently Asked Questions / Questions & Answers
What legal steps should a startup take first?
Most founders should start by choosing the right structure, whether sole trader, partnership or limited company, then, if there is more than one founder, agree ownership and decision making through a shareholders or founders agreement before any real value has been created to argue over.
How much does it cost to get proper legal advice as a startup?
Costs vary depending on the work involved, from a fixed fee for a shareholders agreement or set of terms and conditions, to hourly rates for ongoing advice as the business grows. Saracens Solicitors agrees scope and fees with clients before work begins, so there are no surprises.
Do I need legal advice if I am starting a business on my own?
Even a sole founder benefits from advice on company structure, contracts with customers and suppliers, and protecting intellectual property. The risks increase significantly once you take on a co-founder, employee or investor.
What is the difference between a shareholders agreement and articles of association?
Articles of association are a public document filed at Companies House that set out the basic rules of the company. A shareholders agreement is a private, more detailed contract between the shareholders that covers matters such as decision making, transfer of shares and what happens if a founder leaves.
When should a contract be reviewed before signing?
Before you sign anything of significant value or duration, particularly contracts that lock you into long terms, exclusivity, or personal guarantees. A short review at this stage is far cheaper than a dispute later.
Can Saracens Solicitors help with international commercial matters?
Yes. Saracens Solicitors advises a national and international client base, including founders and businesses with cross border operations, contracts and investors.
Further Reading for Business Startups
How to Start a Business in the UK: A Founder’s Legal Checklist
Choosing a Business Structure: Sole Trader, Partnership or Limited Company
Shareholders Agreements Explained: A Guide for Founders & Investors
Founders Agreements: What Co-Founders Should Agree Before They Start
Commercial Contracts: The Clauses That Actually Matter
Business Terms and Conditions: Why Generic Templates Put You at Risk
Negotiating Commercial Contracts: A Practical Guide for Business Owners
Raising Startup Investment: Term Sheets, SEIS & EIS Explained
Employment Contracts for Your First Hires: Getting It Right From Day One
Trademarks, Copyright & IP: A Founder’s Guide to Protecting Your Business
Speak to Saracens Solicitors
If you are building or growing a business and want advice that actually reflects how founders work, speak to our Corporate Law team.
Visit our Corporate Law service page or call us on +44 (0)20 3588 3500 to arrange a consultation.
Saracens Solicitors, Thanet House, 231 to 232 Strand, London, WC2R 1DA.
