UNIT 36: Starting a Business
23rd March 2015
Hand in Deadline
27th April 2015
Date Handed In
Title: Assignment 4 – Financial and Legal Aspects (P4, M3)
This unit is all about starting your own small business. The assignments in this Unit have been structured as series of tasks that build on one another. You will find that these tasks occur logically and will eventually cover P1, P2, P3 and P4; you may work on these in a group (but all P1 tasks must be handed in individually).
P5, which is a written outline proposal, will incorporate all the previous tasks and will be done individually.
Subsequent merit (M1, M2 and M3) and distinction (D1) work will performed individually.
Complete the activities and tasks identified by your tutor:
Assignment 4 – Task 1 (P4) – Financial aspects
Complete the tasks below. You will need to carry out your own research and produce actual evidence of your costs, e.g., through print outs, leaflets, copies of documents.
You will need to:
Find the cost of all the items you need to buy (capital items)
Estimate the costs of expenses (day-to-day running items including stock, if relevant)
Estimate your sales over the next year and describe your pricing policy
Complete your cash flow forecast, profit and loss account and balance sheet
Calculate the break even point for your business
Explain the sources of finance you will use (visit the Business Link website for ideas)
Assignment 4 – Task 2 (P4) – Legal aspects
Answer the following questions in paragraphs. You should research the correct laws that apply to YOUR business.
A. What legal status (ownership structure) have you chosen and why? (e.g., sole trader, partnership, limited company or franchise). You do not need to say the advantages and disadvantages in general you should say why it is best for YOU at this time.
i. What are you allowed to call your business? (See the Business Names Act. Find info at Business Link)
B. What terms and conditions of sale will you have when you start trading? This is useful as it will prevent disputes arising when you start your business. You should state very clearly to your customers the terms on which you are selling.
i. For example: payment terms, cash or credit? If credit, how long will they have to pay? Will there be a discount for early payment? Will there be a penalty for late payment? Will you deliver? Will this be free or will there be a charge? If there is a charge, how much will it be? Will you accept returns (NB if you are selling goods, you have to give refunds if the goods are faulty but you are not required to by law if there is nothing wrong with the goods). C. Are you aware of the trading standards that you need to comply with? Choose which ones are relevant to your business and write about them (see Business Link and Trading Standard Institute for info).
i. Fair Trading Act - correct labelling, how products and services are described and priced
ii. Food Hygiene Regulations - see regulations surrounding the preparation and sale of food http://www.hullcc.gov.uk/portal/page?_pageid=221,278613&_dad=portal&_schema=PORTAL
iii. Licensed Premises Act - review nightclub/cafe bar regulations
iv. Sale of Goods Act - particularly important if you are a retail business
v. Sale of Goods and Services Act - use this is if you are selling a service
vi. Trade Descriptions Act
vii. Sunday Trading Act 1994 - rules concerning operating on a Sunday D. What do you have to do to comply with health and safety laws? (find out about undertaking a risk assessment at Business Link)
i. Health & Safety at Work Act – incorporates numerous regulations to safeguard employees and customers against the risk of injury (e.g. Fire Regulations, Reporting of Accidents and Incidents - RIDDOR, Personal Protective Equipment and First Aid requirements) – some of these will be