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Legal Aspects to Consider When Setting up an Ebay Business

Essay by review  •  February 6, 2011  •  Research Paper  •  1,472 Words (6 Pages)  •  1,338 Views

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Legal Section

The business will operate as a partnership because the number of people setting up the business will not exceed the permitted twenty. When operating as a partnership it is the partners' responsibility to inform the general public as to who the partners (joint proprietors) are within the business unit. The main advantage that applies to ILM Trading is that a partnership ensures that there is greater scope for raising finance. Another advantage that arises out of a partnership as regards finance is that if the business was to become insolvent then the partners would become jointly liable for any debts incurred. Debts would not fall on just one individual, as they would in the case of a sole trader. When setting up a partnership there is no onus to publish the results of the organisation in contrast to companies which are required by law to publish their results.

In order for a partnership to take place in the eyes of the law, a document known as the partnership agreement must be drafted. This includes such information as the address of the organisation, the division of profits between the respective partners, the identity of the individual partners, the minimum hours per week that each partner is expected to work and the division of debts between the partners. There are many other legal aspects that must be taken into account in the setting up of ILM Trading. These include such legislation as the Sales of Goods Act 1979, the Supply of Goods and Services Act 1982, the Data Protection Act and different types of legislation dealing with advertising and copyright.

Sales of Goods Act 1979

This legislation would apply to ILM Trading because as the name suggests this operation deals with the purchasing and selling of goods. The Sales of Goods Act 1979 stipulates that the goods in question must belong to the seller, correspond with the description given, be of satisfactory quality and be fit for their purpose. Also the customer is given a number of rights within this legal framework. For example, if the product is not of a satisfactory quality or the goods have been misrepresented then the customer is entitled to a full refund or may be able to ask for the product to be repaired or replaced.

Supply of Goods and Services Act 1982

This legislation stipulates that in the event of a customer calling out a contractor then the service must be carried out with reasonable skill and care. Also, the contract must be fulfilled within a reasonable timeframe and for a reasonable charge, unless otherwise previously agreed with the customer. If the requirements are not met then the company will be in breach of the contract, which results in the customer being entitled to some form of compensation. Depending on the nature of the goods or services then the responsibility to the customer can last for up to six years. Also if trauma or death is inflicted as a result of using that product or service supplied by ILM Trading then the business can be sued under liability law.

Data Protection Act (DPA)

This act would apply to ILM Trading due to the company holding records on its employees and suppliers. Also records may be held on customers in due course if the company was to expand. The Data Protection Act states that the organisation must only hold information that is deemed useful to that company and that all irrelevant information must be disposed of in the correct manner. If information is found that is not of use then it must be disposed of promptly. The information held must be correct and up to date. The information must be held securely and the subjects' rights must be observed by the business. In order to hold information the organisation must be registered with the Information Commissioner and a fee is applicable.

ILM Trading will comply with the DPA by making sure that the information gathered and held on suppliers and individuals is actually needed. To ensure this, a quarterly internal audit will take place where the records are checked for any anomalies. Within this internal audit, any information that is of no use to the organisation will be deleted promptly and audit checks will be made to ensure the security of the information held. The rights of the individual will be taken into consideration by ILM Trading; this will take the form of a tick box on all data collecting methods that allows the individual to decide whether or not they wish to receive further marketing information.

Other laws that will apply to ILM Trading are the Control of Misleading Advertisements Regulations 1988 and the Broadcasting Act of 1990. Amendments have been made to the Control of Misleading Advertisements Regulations in both 2000 and 2003. Also, copyright laws must be observed to ensure no infringements occur. ILM's brand logo will be patented to ensure complete control of operations.

Tax and National Insurance implications

According to the Business Link website, partnerships are obliged to register with the Inland Revenue as self employed and must complete the tax return forms for partnerships on an annual basis. Also the partners must complete a tax self- assessment form for the Inland Revenue. Each partner is also obliged to pay Class 2 and Class 4 National Insurance Contributions (NICs). As regards Pay as You Earn (PAYE) and National Insurance deductions, if the company pays over Ј1500

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