The legal requirements can be a headache but failing to plan may mean you have already planned to fail. Moreover, you also can face serious penalties if you don’t follow legislative/licensing requirements and regulations, the financial consequences on your hip pocket should also be a primary consideration especially when starting your own business.
Here are our Top 10 suggested legal essentials when starting a business:
1.What is the right structure for me?
A solid business structure is the backbone of your business. When deciding on a structure, you should consider the set-up costs, tax implications and the cost of ongoing administration and your personal financial liabilities
Sole trader: an individual trading on their own
Partnership: an association of people or entities running a business together, but not as a company
Trust: an entity that holds property or income for the benefit of others
Company: a legal entity separate from its shareholders.
2.Is the structure in writing?
Businesses can get complicated when you work with others. Document the rights and obligations of each party in case of any future complications arise between business owners.
Commonly used document include Partnership Agreements, Shareholder Agreements, Franchisor agreements and Joint Venture agreements. You should seek advice from a lawyer to draft these documents and tailor them to your unique business circumstances.
3.Will you be leasing a space or working from home?
If you are planning to lease a space for your business, it is important to obtain legal advice on your lease as often the leases are quite onerous and lengthy and most importantly (if the space meets the criteria) may be governed by the Retail Leases Act.
Doing due diligence on the lease and ensuring that the terms and condition are appropriate and that you fully understand your obligations is an important task before you sign on the dotted line.
If you operate your home business, you may be subjected to local council’s rules that limit the number of people that can work there. Contact your local council to find out whether you can operate a business from home in the zoning that your property is located.
4.What are your rights and obligations to employees?
If you need to employ staff, you will need to understand your employer obligations.
- Payment and entitlements
- Payroll tax
- Work, health and safety
- Legal obligations when training staff
- Record Keeping
- Trade Union Membership
- Discrimination laws
Employment contracts may be unique to the nature of your business. It is best to have formal employment agreements in place to ensure that the rights and obligations are documented in case of future disputes.
5.Do you need particular licences or permits?
It is important to find out what registrations and license apply to you. This varies at a local, state, territory and federal level.
The Australian Business Licence and information Service will help you find the government licenses,permits approvals,registrations,codes of practice, standards and guidelines you will need to be a compliant business
6.Have you protected your customer’ privacy?
7.Have you made a risk management plan?
Prepare a risk management plan when doing your overall business plan.
It should include
- Identified Risk
- The level of risks
- Your Planned Strategy
- The time frame for implementing your strategy
- Resources Required
- Indicate responsibility for strategy implementation
Identify and understand the potential risks to your business and find ways to minimise their impact. Check out some risk
8.Do you understand your contract’s rights and obligations?
You will be entering various contracts during the life of your business and they can be complex.
Ensure that your solicitor can develop standard agreement for your business that you understand. This will minimise confusion and future costs.
9.Do you have protectable assets?
Protecting your intellectual property will give you legal entitlement in IP law. You should consider whether your business will have intellectual property worth protecting by seeking specialist legal advice.
10.Will you be sharing confidential information with external parties?
If your business will be setting up finance or entering into contracts with external parties, you should consider confidentiality and non-disclosure agreements (NDA).
NDAs can safeguard a business’s confidential information by ensuring that the external party that handles your confidential information does not disclose it to anyone else. They can also direct the terms of how your business will share information.
The more confidential information your business has, the more important NDAs become.
Ensure you are protected by asking a lawyer about using a NDA form or by drafting a specific NDA for your business.
Have you decided whether you want to start, buy or franchise your business? Sign up for our newsletter to receive checklists of the top legal considerations in starting a business, buying a business or buying a franchise.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Please contact Verity Law for further advice.