Navigating business regulations – staying compliant

Starting and running a business is exciting, but it comes with responsibilities.

One of the most important is understanding and following relevant business and industry regulations.

These rules help make sure your business operates legally and ethically.

Why compliance matters for your start-up

If your start-up isn’t compliant, it could face serious problems such as:

• fines and penalties ranging from a few hundred to thousands of pounds
• legal fights that cost you time and money
• being forced to stop doing business until you fix the problems
• losing customers who no longer trust your business
• trouble getting money from banks or investors.

Learning about the rules that apply to your business early allows you to focus on growth and innovation rather than worrying about potential legal issues.

Understanding business regulations

To run a successful start-up, you must adhere to several regulations as a business owner and employer.

These regulations could affect many different aspects of your start-up, from operations to finance to hiring staff.

We’ve included a number of applicable regulations here but you should always seek professional advice to be sure of all of the various regulations your business is subject to.

Employment law

If you plan to hire staff, you’ll need to comply with employment regulations covering:

• minimum wage requirements
• working time regulations
• holiday and sick leave entitlements
• anti-discrimination policies
• workplace harassment prevention
• employment contracts.

Employment laws focus on the fair treatment of employees, covering contracts, wages, and workplace rights.

Key regulations include the Equality Act 2010, which protects people from discrimination in the workplace and wider society based on nine protected characteristics, including age, disability, gender reassignment, sex, race, and religion.

Read more about hiring for equality, diversity and inclusion as a start-up.

The National Minimum Wage Act 1998 is also relevant when hiring employees.

As of April 2025, the National Living Wage is £12.21 per hour for workers aged 21 and over.

The Advisory, Conciliation and Arbitration Service (ACAS) provides excellent guidance for employers on these matters.

Read our first-time employer’s guide to hiring staff and learn more about the National Minimum and Living Wage.

Health and safety regulations

The Health and Safety at Work etc Act 1974 requires all businesses to ensure the health, safety, and welfare of employees and visitors.

This includes:

• conducting risk assessments
• providing safe equipment and systems
• offering proper training
• maintaining a safe workplace environment.

This law is designed to protect employees and customers and prevent accidents and injuries in the workplace.

Even home-based businesses with no employees must ensure their activities don’t put others at risk.

Data protection laws

The UK General Data Protection Regulation (UK GDPR) and the Data Protection Act 2018 govern how businesses collect, store, and use personal data about customers and employees.

Compliance requires:

• only collecting necessary data
• keeping information secure
• being transparent about data usage
• respecting individuals’ rights regarding their data
• reporting data breaches.

There is stronger legal protection for more sensitive personal data, such as racial or ethnic origin, political or religious belief, and political opinion.

The Information Commissioner’s Office (ICO) provides guidance tailored to small businesses.

Environmental regulations

Depending on your business activities, you may need to comply with environmental regulations regarding:

• waste disposal
• emissions
• chemical use
• energy usage
• packaging
• product standards.

These regulations ensure businesses minimise their impact on the environment and adhere to legal standards.

Essential legal requirements for start-up businesses

When launching your business, several specific compliance steps are necessary:

Business registration

Depending on your business structure, you’ll need to:

• register as a sole trader with HMRC
• register your limited company with Companies House
• register a partnership with HMRC
• set up as a limited liability partnership (LLP) with Companies House.

Each business structure has different compliance requirements and liability implications.

Learn more about registering your business.

Licences and permits

Many businesses require specific licences or permits to operate legally. 

These might include:

• alcohol licences for hospitality businesses
• FCA authorisation for businesses carrying out regulated consumer credit activities
• waste carrier licences for businesses transporting waste
• food business registration with the local authority for food-related enterprises
• business licences from the Security Industry Authority for businesses in the private security sector.

Licenses might also be needed for activities like public entertainment, keeping animals, or some beauty treatments.

Check with your local authority and relevant regulatory bodies to determine which licences apply to your business.

Insurance requirements

There’s only one insurance policy you’re legally required to have as a small business – you must have employers’ liability insurance if you employ staff. 

You could be fined £2,500 every day you are not properly insured.

However, other forms of business insurance may be required to protect your start-up including:

•    professional indemnity insurance

•    public liability insurance

•    product liability insurance

•    business premises insurance.

Record-keeping and reporting

All businesses, including start-ups, are legally required to keep complete and accurate business records.

These include:

• financial transactions
• tax documentation
• employee records
• health and safety assessments
• customer data depending on the type of business you run (in compliance with GDPR).

Accurate records make it easier to meet tax obligations while also providing valuable insights into your business’s performance. 

You must keep records for at least six years.

A separate business bank account is a legal requirement for limited companies. 

It’s strongly recommended but not legally mandated for sole traders.

Discover more small business bookkeeping tips for success.

Industry-specific business compliance

Beyond general regulations, highly regulated industries, such as healthcare, food, finance, and construction, have detailed compliance requirements that reflect their unique challenges and risks.

Businesses in the following sectors:

Financial services – some businesses operating within financial services will be subject to Financial Conduct Authority (FCA) regulations covering consumer protection, anti-money laundering measures, and financial promotions.

Food and hospitality – must comply with food safety regulations, hygiene standards, and allergen information requirements.

Healthcare – some health care businesses may be subject to Care Quality Commission (CQC) standards and medical product regulations. It’s a good idea to seek advice if you are planning to start a healthcare-related business.

Construction – must adhere to building regulations, planning permissions, and specific health and safety requirements.

E-commerce – required to follow distance selling regulations, electronic commerce regulations, and consumer rights directives.

Manufacturing – subject to product safety standards, CE/UKCA marking requirements, and specific industry certifications.

Understanding and complying with these and other industry-specific legal requirements from the outset could help your start-up establish a strong foundation for growth and avoid potential legal problems later.

Check the specific regulations for your industry by consulting trade associations, regulatory bodies, and government resources.

Discover more in our legal guidance articles.

Best practices for staying compliant

Compliance isn’t a one-time task but an ongoing responsibility.

Here are practical strategies for navigating compliance effectively:

Stay informed about regulatory changes

Keep up to date on what’s happening in your industry by:

• subscribing to updates from relevant regulatory bodies
• joining industry associations that provide compliance guidance
• following business news sources that cover regulatory developments
• setting up alerts for key regulatory terms in your industry.

Create a compliance calendar

Develop a calendar marking important compliance deadlines throughout the year, such as:

• tax filing dates
• licence renewal periods
• required inspection dates
• reporting deadlines.

Conduct regular compliance audits

Conducting regular compliance audits could be helpful for identifying and addressing potential compliance issues before they escalate.

Consider reviewing:

• policies and procedures against current regulations
• your documentation to ensure that it is up to date
• staff training to ensure it meets your current requirements
• your physical premises to make sure that they meet the required standards.

Document everything

Maintain thorough records of your compliance efforts, including:

• copies of licences, permits, and certifications
• staff training on compliance matters
• risk assessments and actions taken
• communications with regulatory bodies.

Appointing a compliance officer

As your business grows and your operations become more complex, you might consider hiring a compliance officer or using an external consultant.

This person ensures that your business follows all applicable laws and helps you avoid legal problems.

They can also set up systems that work specifically for your type of business to keep everything on track and train employees on compliance.

By implementing these best practices, your business could maintain compliance, reduce risk, and foster a culture of accountability and continuous improvement.

Remember to act quickly if you spot any compliance gaps; address them promptly to reduce the risk of being penalised.

Tools and resources for staying compliant

Keeping track of regulations and when things need to be done is important for every business.

Digital tools

Fortunately, many online tools and software are available that are designed to streamline this process so you can focus on growing your start-up.

• compliance management software like ComplyAdvantage, iAuditor, or Navex could help track regulatory requirements
• HR platforms like Breathe HR or BrightHR could help with employment compliance
• accounting software such as Xero or QuickBooks simplifies financial compliance
• data protection tools – solutions like OneTrust or TrustArc assist with GDPR compliance.

Government resources

• GOV.UK offers comprehensive guidance on business regulations
• Business Support Helpline offers free advice on regulatory matters
• the Health and Safety Executive (HSE) offers tools such as risk assessment templates and guidance for workplace safety
• the Information Commissioner’s Office (ICO) provides resources for data protection compliance.

Industry support

• trade associations often provide industry-specific compliance guidance
• Local Chambers of Commerce offer support and resources
• the British Business Bank provides guidance for start-ups and small businesses
• the Federation of Small Businesses offers compliance advice to members.

Help your start-up succeed

While navigating business regulations might seem like a burden, viewing compliance as an investment rather than a cost could help change your approach.

Compliance isn’t just about avoiding penalties – it can help you build a reputable business with solid foundations.

Meeting regulatory obligations helps demonstrate professionalism and a commitment to good business practices, which could create trust with customers and confidence among investors.

Compliance requirements will evolve as your business grows, so staying informed and adaptable is essential.

With the right approach, compliance becomes not just a legal necessity but a genuine business advantage that supports long-term success.