When you’re starting a small business, it’s totally normal to spend most of your time thinking about your idea, your brand and where your first customers will come from. The “paperwork” usually comes a distant second.

But behind every solid business is a small set of legal documents that quietly do a lot of heavy lifting. They prove your business exists, set out how you trade, protect your cash flow, and help you stay on the right side of the law.

This article walks through the key legal documents a UK small business is likely to need as it moves from idea to trading.

1. Documents that create your business

The very first question is how you’re going to trade: as a Sole Trader or as a Limited Company. The structure you choose determines which documents you’ll see.

If you’re a Sole Trader

As a Sole Trader, the setup is light on formal documents. You register as self-employed with HMRC and then report your income each year through Self Assessment.

You won’t get a “Certificate of Incorporation”, but you should still keep a paper trail that shows:

• your HMRC registration as self-employed, and
• any registrations or licences specific to your trade.

Even though the legal paperwork is minimal, remember that legally you and the business are the same person, so you’re personally responsible for any debts or claims.

If you form a Limited Company

If you choose to incorporate a company, you’ll create a small bundle of important documents at the start:

• a Certificate of Incorporation from Companies House - proof your company exists.
• Articles of association - the rules that govern how the company is run.
• Share certificates – showing who owns what.
• Sometimes a shareholders’ agreement – especially if there’s more than one owner

Once the company is formed, you’ll also receive Corporation Tax registration details from HMRC. These letters and references are worth keeping safe; banks, investors and advisers will often ask for them.

At this stage, many founders also create branded invoice templates, letterheads and email signatures that include the company name, number and registered office. Small things that make your business look and feel properly set up.
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2. Insurance policies: the contracts that sit behind your safety net

Insurance isn’t just an annual payment; each policy is a contract that can save your business if something goes wrong.

If you employ staff, Employers’ Liability Insurance is usually a legal requirement. The policy document itself sets out your cover, exclusions and obligations, and you’ll often need to show proof of cover.

Depending on what you do, you may also have:

• a Public Liability Insurance policy (if you deal with the public or visit client sites),
• a Professional Indemnity Insurance policy (if you provide professional services or advice),
• Product / stock insurance (if you manufacture or store goods),
• Cyber insurance (if you handle data online or rely heavily on IT systems),
• Buildings insurance (if you own your premises)

Each policy is a legal document. Reading them once, when you take them out, and filing them somewhere obvious is a simple but powerful risk-management step.
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3. Data protection documents

If your business collects or uses personal data - names, email addresses, payment details, staff records - you will almost certainly need some data protection documents.

First, you may need to pay the ICO data protection fee and appear on the ICO’s register. Whether you must pay depends on the type of processing you do, but many small businesses do need to register. Failing to do so when required can lead to a fine.

On top of that, you should have:

• a Privacy Policy - usually on your website, explaining how you use personal data,
• specific Privacy Notices - for example, for employees or clients, setting out how their data is handled,
• Website Terms of Use - covering how visitors may use your site,
• a Cookies notice, if you use cookies or similar tracking technologies.

These documents tick legal boxes, but they also reassure customers and staff that you take their information seriously.
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4. Staff documentation when you start hiring

Once you move beyond being a one-person business, you’ll need paperwork that reflects your new role as an employer.

The core documents are:

• Employment contracts (or written statements of particulars) - setting out pay, hours, holiday, notice, benefits and other key terms.
• Offer letters - formally confirming the role and basic conditions.
• Right to work check records - copies of documents showing the person is allowed to work in the UK.
• Basic HR policies - for example, discipline and grievance procedures, sickness/absence, equal opportunities, and health & safety.

Behind the scenes, you’ll also generate documents linked to payroll and pensions, such as:

• PAYE registration with HMRC and your payroll records,
• workplace pension documentation for auto-enrolment.

You don’t need an entire HR manual from day one, but having at least a clear contract and a couple of key policies in writing will protect both you and your team.
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5. Contracts with your customers or clients

Whatever you sell – whether it’s consulting, design, food, software or something else – you should have written terms and conditions in place with your customers.

Depending on how you work, this might take the form of:

• standard Terms & Conditions on your website or in your proposals,
• engagement letters or statements of work for specific projects,
• order forms or booking terms that customers agree to when they purchase.

Good client documents explain:

• what you will deliver,
• when and how you will be paid,
• what the customer must do,
• what happens if either side wants to cancel, and
• how your liability is limited.
  
  

Without this, every job is based on memory and email chains – and if there’s a disagreement, that’s rarely enough to protect you.
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Pulling it together: your small business “document stack”

When you strip it back, most UK small businesses rely on a core “document stack”:

• something that proves the business exists and who owns it.
• insurance policies that sit behind key risks,
• data protection documents that explain how personal information is handled,
• staff documents that reflect your responsibilities as an employer,
• customer contracts that set out how you trade.

You don’t need to get everything perfect on day one, and you certainly don’t need to do it alone. But getting these documents in place early gives your business a solid legal foundation, reduces the chance of nasty surprises and makes you look more professional to customers, suppliers and investors.

From there, you’re free to focus on what you actually set the business up to do: serving your customers and growing something you’re proud of.

If you’re wondering about legal documents for your small business, Sprintlaw’s expert lawyers can help you navigate your options and stay compliant. As a Crunch business, you’re also eligible for complimentary 12-month access to Sprintlaw’s Plus Membership - including unlimited lawyer consults and other benefits (normally £399/year, now £0 for your first year).

Disclaimer: All content contained in this publication is intended to provide general information in summary form on legal and other topics, current at the time of first publication. The content does not constitute legal (or other) advice and should not be relied upon as such. You should obtain specific legal or other professional advice before relying on any content contained on this website.

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