Retail businesses can operate as sole traders or limited companies. Consider your liability exposure and growth plans.
Business structure for retail
Many smaller retailers start as sole traders for simplicity. Limited companies offer liability protection if you're taking on stock credit or premises leases. Consider your risk profile.
Sole trader
Simplest to set up. You keep all profits but are personally liable for debts.
Partnership
Share responsibilities and profits. Partners share liability for business debts.
Limited company
Separate legal entity. Personal liability limited to investment, but more admin.
LLP
Partnership with limited liability. Must file accounts at Companies House.
Business structure affects tax liability, personal liability, and required paperwork. Professional advice is recommended when choosing the right structure.
Quick and simple if you're starting a smaller retail operation.
Better liability protection for larger retail operations with stock, staff, and premises.
Consumer Rights Act 2015 compliance
All retailers must comply with the Consumer Rights Act 2015 . Consumers have a 30-day right to reject faulty goods for full refund, plus repair/replacement rights. Your returns policy cannot reduce these statutory rights.
Applies to: All businesses selling goods to consumers
Official guidance (opens in a new tab)
When you sell to consumers, goods must be of satisfactory quality, fit for purpose and as described, and you cannot contract out of this.
Online selling: 14-day cooling-off period
If you sell online, by phone, or by mail order, consumers have a 14-day cooling-off period to cancel orders for any reason. You cannot charge restocking fees - this is illegal. Refunds must be made within 14 days of receiving returned goods.
Applies to: All distance sellers (online, phone, mail order)
Official guidance (opens in a new tab)
When you sell to consumers online, by phone or at their home, you must give them set information before they buy and let them cancel within 14 days for any reason.
Age-restricted products: Criminal penalties
Selling age-restricted products to underage customers is a criminal offence . Penalties: alcohol unlimited fine (England and Wales), tobacco £2,500, knives unlimited fine. Implement Challenge 25 policy and train staff.
Applies to: Retailers selling alcohol, tobacco, vapes, knives, fireworks, lottery
Official guidance (opens in a new tab)
Understand age verification requirements, Challenge 25 policy, and penalties for underage sales.
Price marking rules
Prices must be clearly displayed before purchase. Unit prices (per kg, per litre) are required for most products. Online prices must follow the same rules as in-store. Breach is a criminal offence enforced by Trading Standards.
Applies to: All retailers
Official guidance (opens in a new tab)
Comply with price display requirements including unit pricing and sale price rules.
Sunday trading (England & Wales)
Large shops (over 280 sq m) in England and Wales can only trade for 6 continuous hours between 10am and 6pm on Sundays. Penalty for breach: an unlimited fine. Small shops have no restrictions.
Applies to: Large shops in England and Wales
Official guidance (opens in a new tab)
Understand Sunday trading restrictions, exemptions, and employee opt-out rights.
You must register for VAT when your taxable turnover passes the registration threshold in any rolling 12 months, or when you expect it to pass the threshold within the next 30 days alone.
Required before hiring your first employee.
Start with the insurance the law requires: if you employ anyone, you must have employers' liability insurance with at least £5 million cover, and business vehicles need motor insurance.
If you collect customer data for marketing or loyalty schemes, understand your GDPR obligations.