Legal admin is the work founders defer most reliably, and the reason is entirely rational: none of it makes the phone ring. Nobody ever won a customer because their shareholders’ agreement was in order. So it waits, and it keeps waiting, until a specific moment arrives when it can no longer wait and is suddenly urgent, expensive and occasionally impossible to fix.
Here is the uncomfortable truth that most startup legal content soft-pedals: almost none of this matters until it matters enormously. The founder who never got round to an intellectual property assignment discovers the problem during investor due diligence, at the point where fixing it requires the goodwill of a former contractor who has no reason to help. The shareholders’ agreement that nobody wrote in year one becomes unwritable in year three, because by then the founders’ interests have diverged and nobody will sign anything.
This checklist covers what needs sorting, roughly when, and which items are genuinely urgent rather than merely sensible.
Sort before you trade
Company structure. Sole trader or limited company is a real decision with tax, liability and credibility consequences, and it is easier to start correctly than to convert later. Our guide to business structures covers the trade-offs.
Incorporation done properly. Registering at Companies House is straightforward. Registering it correctly is less so. Share classes, the allocation between founders, the registered office and the persons with significant control register all need thought rather than defaults. Our guide to registering a limited company covers the mechanics.
Founder equity split agreed and documented. Not discussed. Documented. This is the single most consequential piece of paper in an early-stage business and the one most often postponed on the grounds that everyone trusts each other. Everyone does trust each other, right up until someone leaves.
Intellectual property assigned to the company. If a founder built the product before incorporation, the IP may sit with them personally rather than with the company. The same applies to work by contractors and freelancers, where the default position in UK law does not automatically vest ownership in the client. This is the most common structural problem found during investor due diligence and one of the hardest to fix late.
Sort before you take money from anyone
Shareholders agreement. What happens if a founder leaves, how shares are transferred, what requires unanimous consent, how deadlock is broken, and what protections minority holders have. The company’s articles do not cover most of this adequately. Write it while everyone is optimistic, because the document exists precisely for the period when they are not.
Vesting on founder shares. Uncomfortable to raise and cheap insurance. Without it, a co-founder who leaves in month eight keeps their full holding indefinitely, which is both unfair to those who stay and a serious problem for any future investor.
Advance assurance if you are seeking SEIS or EIS. Not strictly legal, but it belongs on this list because it takes time and its absence slows rounds. SEIS covers companies under three years old with gross assets of £350,000 or less and fewer than 25 employees [1].
Clean, accurate cap table. Investors read it early, and a messy one raises questions about everything else.
Sort before your first customer
Terms and conditions or a services agreement. What you deliver, what you do not, payment terms, liability limits, what happens when things go wrong, and who owns what is produced. Downloading a template is better than nothing and worse than having it reviewed for your actual business.
Data protection compliance. If you handle personal data, UK GDPR applies from your first contact record, not at some later size. Most businesses processing personal data must register with the Information Commissioner’s Office and pay the annual data protection fee. You need a privacy notice, a lawful basis for each processing activity, and a plan for subject access requests before you receive one.
Insurance appropriate to what you do. Professional indemnity if you give advice or produce designs, public liability if the public come to your premises or you go to theirs. Our business insurance guide covers what is legally required versus contractually expected.
Sort before your first employee
Employers’ liability insurance. Legally required from the moment you employ someone, with a £5 million statutory minimum. The penalties for going without are severe, and the cover is inexpensive.
Written statement of employment particulars. Employees are entitled to this from day one, not after a probation period.
PAYE registration and workplace pension. Both must be in place before the first payday. Our payroll guide covers the sequence.
Correct employment status. Employee, worker or genuinely self-employed contractor. HMRC assesses the substance of the relationship rather than the wording of the contract, and getting this wrong produces backdated liabilities assessed years later.
Current employment law position. The Employment Rights Act 2025 introduced new duties from April 2026, and the Fair Work Agency is now operational with proactive inspection powers, which means enforcement is no longer purely complaint-driven [2]. If you are hiring for the first time this year, take current advice rather than relying on what a friend did in 2023.
Sort when the brand starts to matter
Trademark registration. A company name at Companies House is not a trademark and gives you very little protection against someone using a similar name in your market. UK trademark registration costs £205 for the first class from 1 April 2026 following the UKIPO fee increase.
Domain and handles secured across the variations that matter, including the obvious misspellings.
Check you are not infringing someone else before you invest in the brand. A clearance search is far cheaper than a rebrand.
Ongoing, and easy to let slip
Confirmation statement and annual accounts filed on time at Companies House. Late filing is visible to anyone who looks, including lenders, and signals disorganisation to a reader with nothing else to go on.
Statutory registers maintained, including the persons with significant control register.
Director duties under the Companies Act 2006. These are legal obligations rather than guidance, and they matter most when a company is under financial pressure, which is exactly when directors are least likely to be thinking about them.
Contracts reviewed as the business changes. Terms written for your first three customers frequently do not fit your thirtieth.
The items founders most often skip, and regret
Intellectual property assignment from contractors. The default position in UK law is not what most founders assume, and the discovery usually happens during due diligence.
Shareholders agreement between friends. The relationship is the reason it feels unnecessary and the reason it is essential.
Founder share vesting. Nobody wants to raise it. Everybody wishes it had been raised.
Data protection basics. Treated as a large-company concern until a subject access request arrives from a disgruntled former customer.
Employment status. The most expensive item on this list when it goes wrong, and the one most often decided on cost grounds rather than legal ones.
How to work through it without spending a fortune
- Triage by trigger, not by importance. Work out which items are triggered by something you are about to do: take on a co-founder, hire, take money, sign a customer. Do those. Defer the rest deliberately rather than by accident.
- Do the founder documents first. Equity split, shareholders’ agreement, vesting and IP assignment. These are the ones that become harder rather than easier with time.
- Use templates for low-risk items and a solicitor for high-risk ones. Terms and conditions from a reputable template are a reasonable starting point. A shareholders’ agreement between three founders is not.
- Bundle the solicitor time. One session covering several documents costs considerably less than four separate instructions across two years.
- Diarise the recurring items. Confirmation statement, accounts, insurance renewals, trademark renewals.
- Do a due diligence dry run before you need one. Ask what an investor would ask for and see what you cannot produce. That list is your actual priority order.
The principle underneath all of this
Legal admin follows an unusual cost curve. Almost every item on this list is cheap and simple at the point it should be done, and expensive or impossible at the point you discover you needed it. The cost is not the solicitor’s fee. It is the deal that slowed, the co-founder dispute with no agreed answer, or the contractor who owns part of your product and knows it.
You do not need all of it now. You need to know which parts are triggered by what you are about to do next, and to stop deferring those.
Preparing for a funding round and unsure what will surface in due diligence? Every SGI funding engagement opens with an Investment Readiness Assessment, and structural problems are consistently the ones that kill deals late. Since 2014, we have advised more than 2,000 businesses across 47 industries and facilitated over £250M in client funding. Book a conversation or read about the Business Funding Service.
SGI is not a firm of solicitors and does not provide legal advice. This checklist is general information. Take advice from a qualified solicitor on your specific circumstances, particularly on founder agreements, employment status and intellectual property.
Frequently Asked Questions
What legal documents does a UK startup actually need on day one?
Very few. Correct incorporation, a documented founder equity split and intellectual property assigned to the company. Everything else is triggered by an event: taking money, hiring, signing a customer. The day-one list is short, and the items on it are the hardest to fix later.
Do I need a shareholders’ agreement if it is just me?
No. A sole shareholder has nobody to agree with. The moment a second shareholder joins, however small their holding, it becomes one of the most important documents in the business, and it is far easier to write before there is anything to disagree about.
Does registering a company name protect it?
No, and this is a common and expensive misunderstanding. A Companies House registration stops someone registering an identical company name. It does not stop them trading under a similar name in your market. Only trademark registration gives that protection, at £205 for the first class from 1 April 2026.
When does UK GDPR start applying to my business?
From your first piece of personal data, which for most businesses means the first contact record. There is no size threshold. Most organisations processing personal data must register with the Information Commissioner’s Office and pay the annual fee.
Can I use online templates instead of a solicitor?
For low-risk, standard documents such as basic terms and conditions, a reputable template is a reasonable starting point. For founder agreements, share arrangements and anything involving intellectual property, the cost of getting it wrong substantially exceeds the cost of advice.
What do investors check first?
Cap table, share arrangements, intellectual property ownership and any material contracts. Structural problems in those areas are the most common cause of a deal dying late, which is the most expensive time for a deal to die.
References
- HM Revenue and Customs, Seed Enterprise Investment Scheme, GOV.UK. https://www.gov.uk/guidance/venture-capital-schemes-apply-for-the-seed-enterprise-investment-scheme
- IRIS, The definitive guide to UK payroll and HR compliance 2026/27, June 2026. https://www.iris.co.uk/blog/hr/payroll/uk-payroll-workforce-compliance-guide/
- Intellectual Property Office, Trade mark fees, GOV.UK. https://www.gov.uk/government/organisations/intellectual-property-office
- Companies House, Running a limited company: directors’ responsibilities, GOV.UK. https://www.gov.uk/running-a-limited-company
- Information Commissioner’s Office, Data protection fee. https://ico.org.uk/for-organisations/data-protection-fee/
- Health and Safety Executive, Employers’ liability insurance. https://www.hse.gov.uk/pubns/hse40.htm
Related Posts
Kurt Graver is the founder and CEO of SGI Consultants, a business consultancy that has helped over 2,000 entrepreneurs establish successful startups using systematic business development methodologies. An accountant with an MBA and 25 years of commerce and consultancy experience, Kurt specialises in strategic planning, market analysis, and sustainable business growth