Business & Legal FAQ's

We answer the most common business and legal questions from freelancers. Can't find the answer? We also provide all members with a free consultation. Just click on Business Advice, fill out the form and our partners will get in touch.

As a freelancer, be it a make-up artists, photographer, designer etc one of your main priorities is having a contract for your services. They could be delivered personally or through a limited company.

You will also need a contract for when you are receiving services from someone else e.g. a fellow contractor. On top of this, the documentation you need will depend on how you operate your business. If you are taking on staff, you might need a contractor agreement or even an employment contract. If you are renting a space, you will need a lease. If you have a website, you'll need to have Terms and Conditions, a Cookies policy etc.

We recommend you fill out the form to speak to a solicitor about your working arrangement to make sure you don't miss out on any important documentation that could harm you down the line.

Yes. If you want to protect your interests and ensure a smooth trading relationship you should use a different contact for every new client. But fear not! This doesn't mean writing a new contract every time you take on a new client. The most sensible option would be to have a plain-English template you fully understand that you can amend with each new set of trading terms i.e. the nitty gritty like how much you will be paid and when. The extra commercial terms that vary from client to client can be in a schedule at the back.

If you don't have a contract and a dispute arises it's far more difficult to resolve. Sure you may have email correspondence or that elusive phone call where that specific piece of information was mentioned, but this is so much more difficult to draw upon and prove than a piece of paper which states it clearly.

Although contacts can be made by email or even verbally, they normally lack specifics in relation to rights, responsibilities, risks and rewards. Even if you do not have a dispute, it's a handy reminder of each of your obligations throughout the relationship, which will ensure a smooth process from start to finish. It may even help to prevent any disputes before they arise.

Yes, you should because it clarifies who owns what and which services each party had to provide and how the output from the collaboration may be used by one or another of the contributors. Freelancer Club members can download this document to keep yourself safe and sound throughout. Visit our DOWNLOAD CENTRE to download.
From the outset you need to decide what type of legal structure (company) to adopt for your business as this will determine what you need to do straightaway. This short guide will give you a snap shot of the two most common options and how they affect your tax, legal and financial responsibilities.

Sole Trader

The clue is in the name! You are legally operating as an individual and are responsible for all liabilities that come with the business. If the business makes a loss then you do. By way of an example, if you owe Joe Bloggs money for supplies and are left short it is you who is liable and not the business name. Alternatively if the business makes money then you do personally!

Simplest and less stringent of options but not without obligations! As soon as you start your business there are legal obligations to be fulfilled with HMRC. Make sure you tick off the following: • Register as self employed

• Complete your tax return each year and pay your taxes by the 31 January deadline

• Get up to date with your NI contributions

• Register for VAT if your VAT taxable turnover is over £82k in a 12 month period

• Keep all your receipts and get up to date with all your financial records

Limited Company

You are a separate legal entity owned by shareholders and run according to a Memorandum and Articles of Association which is a either a template document from companies house or one drafted by you or your lawyers. It is a set of rules by which you run your company. Shareholders appoint directors who run the company on their behalf. In most small businesses the Shareholder is the Director and vice versa. Remember money cannot be simply drawn from a limited company but paid through salaries, dividends or loans.

Again the clue is in the title. Your liability unlike a sole trader is limited so debts can be limited to the company and not you as an individual. You can benefit from tax perks if you turnover a specific amount and enjoy a lower tax rate when employing those under the PAYE scheme. Again there are a number of legal obligations to be fulfilled so please tick off the following:

• File all your documents with Companies House namely your accounts and annual return. There are fiscal penalties if you don’t do this!

• Pay your taxes! Are you eligible for Corporation Tax?

• Make sure your company name, registered address and place of registration (England and Wales) are marked on your website.

And Finally…

Whatever structure you use make sure it suits you:

• Are you happy from a tax perspective?

• Is your paperwork in order?

• Are you happy with the way your peers view your business structure?

• And last but not least… is your business thriving profitably under the structure?
Aside from complying with the contract itself if you have questions about whether particular statutes apply to you or your supplier the best thing to do would be to use your free consultation.
What is IR35?

IR35 or intermediaries legislation was introduced in April 2000 the aim being to tax individuals who provide services through their own limited companies and partnerships. Essentially it targets contractors who might be avoiding paying the tax they should be paying by presenting themselves as self-employed. Contractors are technically self-employed and as such are not taxed in the same way as general employees; they take dividends from their company and pay less in NI contributions. The HMRC sees these people instead as disguised employees who should be taxed in the same way as a general employee. The legislation looks here to stay and it is vital for contractors to be aware of it and stay compliant to avoid financial penalties. Contractors need to stay within the all- important definition of ‘self-employed’ to beat the IR35 rules but this is not always as easy as it sounds. So first of all, consider whether IR35 applies to you.

Does it apply to me?

You need to consider whether the HMRC would consider you employed or self-employed which is not as straightforward as it sounds due to the ambiguity of HMRC’s terms. The HMRC will need to consider that you are genuinely in business under your own account. The Revenue will consider the relationship between you and your clients for each contract and assess whether your actual working practices reflect the contractual position. They are not swayed by job titles or descriptions but by the actual facts of each engagement. Even IR compliant contracts might not on their own save you from an IR35 inquiry – if the HMRC deem that you are in reality being treated like an employee then your contract could be worthless. The worst case scenario would be that you are required to make a deemed payment which basically comprises of all the tax and NI you would have paid, not to mention any interest and a possible penalty.

How do I make sure I am IR35 compliant?

The key is to ensure you have evidence, and continue to compile evidence, that you are outside the IR35 remit. Here's how:

Your Contracts

Review all your contracts to ensure that they demonstrate you are a genuine, independent business contracting for each individual company. Consider drafting a ‘confirmation of arrangements document’ which will act to back up your contract and show compliant working practices that tally up.

Right of Substitution

If you provide exclusive services for a business this may be harder to demonstrate by contract alone so consider your right of substitution. The thinking behind this is that to demonstrate your independence, you could send a suitable replacement for a day because as a contractor you provide a service. An employee by contrast provides his services personally. The right of substitution is a very strong test of self-employment.

Provision of Equipment

As a contractor you would be expected to have your own equipment. You are more likely to be deemed an employee if you are being provided with it by those you are working for.

How are you paid

As a contractor you would negotiate a rate for a service and invoice for your work. If the company is paying you weekly for example and bearing the cost of overheads you are slipping into employee territory.

Responsibility and Control

How much autonomy do you have? A genuine contractor will not be supervised or controlled by another business like an employee would be, for example with regard to set working hours or being moved from job to job.

Stand alone factors

Do you have your own company stationery? Do you advertise independently and observe your own policies and training requirements? Do you have your own professional indemnity, employer and public liability insurances? Are you separately VAT registered? All of these are good indicators that you are an independent contractor and not a disguised employee.
Once you have built your website, there are certain legal requirements you must abide by as well which should be stated explicitly on your website, usually in the footer of the page or in an ‘About’ section. There are four main documents you should be aware of which cover these obligations, though not all will necessarily apply:

1. Terms and Conditions of Website Use (T’s and C’s): This document gives details about you which you are legally required to provide (eg trading name, registered office, trading address, and VAT number), grants a licence to users to use your site subject to compliance with the T’s and C’s, sets out the limits of your responsibilities when people use your website, and clarifies that you own the website.

2. Acceptable Use: This document sets some rules for the users in the way that they are allowed to use your website – eg not introducing worms or viruses, not uploading illegal content, not breaching relevant laws, not breaching copyright.

3. Privacy Policy: You will need this if you are collecting personal data at any point, for example if you wanted to send out a newsletter and you had to collect the user’s email address to receive it. This will state what you collect, what you intend to do with the data, whether you are going to supply it to third parties (in which case consent is required), whether you consolidate it in anonymised aggregated data, how it is stored, how users can find out what information is held about them and object to its use etc.

4. Cookies: You will need this if you are utilising software which places a cookie on a user’s computer, so that you can identify them when they return to your site. A lot of websites will bundle these together in one or two documents, e.g. you will often find Website Terms and Conditions with the Acceptable Use Policy or the Cookies and Privacy Policy together.
Currently under the Data Protection Act 1998 (DPA) you have to comply with these 8 principles if you are collecting and using customer data. You must ensure it is:

• used fairly and lawfully

• used for limited, specifically stated purposes

• used in a way that is adequate, relevant and not excessive

• accurate

• kept for no longer than is absolutely necessary

• handled according to people’s data protection rights

• kept safe and secure

• not transferred outside the European Economic Area without adequate protection

For more information, we would recommend you visit the Government website

'Trade Marks' A trade mark is a sign that is represented graphically or via words or even via the shape of goods or packaging that distinguishes goods or a service. Registering a trade mark means you can:

Take appropriate legal action against people using your brand without prior consent

Sell and license your brand

Use the famous ® symbol next to images of your brand which will act as a deterrent for those wishing to use it without your knowledge


You do not have to apply for copyright to be granted, as you would with a trademark. It is a protection that is automatically given to original creative works which gives the author exclusive right (unless granted otherwise) to use or distribute such work.


Patents are much trickier to obtain and far more expensive. You could potentially protect a method your service uses by filing for a patent but only if you have created a new method of manufacturing or preparing a product which is unique. To make sure you do not infringe any patented manufacturing methods, make sure to undertake a patent search on the government's intellectual property office website.

'Trade Secrets'

Similar to copyright, 'trade secrets' do not require registration and so will be automatically granted. In general terms, commercial information that is deemed 'confidential' because it gives you a competitive edge may be considered a trade secret. You should be covered with anyone you speak to about your trade secrets with a confidentiality agreement (NDA).

You don't need to file for a 'copyright' or 'trade secret' protection as these are automatically granted to you. See question 'What are the different types of Intellectual Property (IP)?' for a description of each type.

However, if you would like to file for a trademark e.g. your name or logo then your first port of call would be to check it hasn’t been registered already as a trademark. You can check here using the Intellectual Property Office (IPO) ‘Search for a Trademark’ page. It costs £170 to register a trademark in one class, which refers to the type of product or service the trademark refers to. Each additional class you need costs £50. These are the ‘official’ government fees though you might be interested in seeking professional help as the forms are quite complicated to fill out.

If you wanted to file for a patent, we would advise you speaking to a solicitor prior to this to see if it's something that is really patentable. Fees for this are high and you will require a professional service to see you through the process.

The government website gives a good overview in table format of how long an application will take.

If they are using it on social media there may well be provision in the Terms and Conditions of that social media site which enable you to request a take-down of infringing material. If that doesn't work or the infringement takes place on a site which has no such policies then you or your lawyer can send a 'Cease and Desist' letter directly the infringer and often this will be enough to achieve your objective/stop the infringement.

If you're an innocent user you shouldn't have anything to worry about. if you've received the Cease and Desist notice from a social media site because someone else has complained about you then you should demonstrate to the social media site your proof of ownership. If you're approached directly by them you can provide that information directly. If you have infringed then it's best to stop infringing immediately so as to avoid the risk of escalating damages and costs in a legal dispute.

If you've already reminded your client to pay and they're simply refusing, don't worry there are legal steps you can take to recover the money you are owed.

Settling payment disputes with the help of a solicitor

If the client has ignored your overdue invoice emails, the fear of legal action can sometimes be enough for the client to finally pay the outstanding amount. A solicitor will be able to send a formal letter to the client on your behalf. However, make sure you get an up-front fixed-fee price to send the letter or this could end up costing you more than the claim is worth.

Small claims track in England and Wales

Depending on how much is owed to you as well as where you live, will determine which court to submit your claim to. As long as the value of the claim is less than £10,000, you may be able to submit a small claim yourself which will be allocated to the small claims track. The small claims track is a simplified system for dealing with lower value claims designed to be less formal and more accessible to litigants in person.

Making a claim online

As an alternative to issuing proceedings in court, claims for specified sums can be issued completely online at Money Claim Online (MCOL) - HM Courts & Tribunals Service’s internet-based service for claimants and defendants. This can work for debts of up to £100,000. After submitting a claim and paying a fee you can review the progress of your claim online. Defendants are given the opportunity to respond.

Using a debt collection agency

You could also choose to refer the matter to a debt collection agency to recover the money. These agencies will work with you to find flexible ways to resolve your outstanding balances; they usually charge a percentage of what you recover as a commission. Debt recovery agencies are also limited in what they can do unless you have a statutory demand or a court judgment in your favour.

Issuing a Statutory Demand

If a debt is undisputed and is for more than £750 (for a company debt) you can issue a Statutory Demand. This is another good way of inducing late payers to cough-up. If a Statutory Demand is undisputed and not paid within 21 days of its receipt you can start insolvency proceedings against the late payer to wind up their company.

If you run a Limited company together it may be that you have a shareholders' agreement which regulates disputes between you. If not, the company will have some Articles which provide its constitution and may give you some clues as to how a disagreement should be managed. If, instead of running a Limited company, you run a legal partnership together then either a partnership agreement will exist or a statutory partnership agreement will be deemed to apply to the partnership. In either case, disputes with a business partner are very stressful and can be quite complicated so it's worth getting some legal advice at the outset.

If it's a written contract, the document may specify circumstances in which you are entitled to terminate, and these might include a performance failure by the other side. If there is no specific term allowing you to terminate the agreement early then the risk you run is that you yourself might be in breach if you terminate early. If that happens you could incur financial consequences such as damages and costs. It is worth getting some advice before you take a hasty step.

If you are threatened with court action it is definitely worth having a lawyer represent you. It may be that the allegations made have no legal basis or that you have a defence, or that you have a counter-claim, or that the threatening correspondence you've received does not comply with the pre-action procedures which the courts require. A lawyer should be able to spot any inadequacies in the claim against you and advise accordingly.

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