Many challenges faced by business owners could have been avoided had proper advice been sought from the beginning or on an on-going basis, taking account of the changing circumstances of a business during its lifetime.
As a bare minimum, you should consult an accountant and lawyer to ensure that you are meeting all of your legal responsibilities, and that you understand the consequences when things change.
Due to the high regulation surrounding businesses, it is essential to be aware of the legal issues when starting a business, some of which will be outlined below:
• Plan, plan, plan– this cannot be emphasised enough. It is essential that you develop a business and marketing plan and seek advice from an expert in the field to ensure that you hit the ground running (more on this later in the article);
• Select the business structure – taking into account the people involved, the protection required from personal liability, and the tax implications. You need to consider whether you should:
- Be a sole trader – an individual who is responsible for the business' profits and losses;
- Form a partnership – a structure of two or more people to share the profits and losses together; or
- Create a Company – a separate legal entity having its own legal and financial obligations.
Note: if the business is a Family Business, you need to consider how the family model fits with any of the above structures, taking into account the potential for inclusion of any family members and their partners, and the implications associated with their inclusion within those business structures.
• The Business Name – you should check the ASIC register to ensure the business name is not currently being used and if not, register the name and then seek an Australian Business Number (ABN) or Australian Company Number (ACN);
• Consider if any licences or permits are required and make the necessary arrangements to obtain them. You should ensure you are registered for GST;
• Arrange a shareholders agreement or partnership agreement to be drafted, as necessary;
• Ensure that a lease is in place for the business premises, place all staff on employment contracts, and consider making formal arrangements with any third parties (i.e. suppliers);
• Secure the appropriate web site and email addresses to match your business name and then build distinctive desktop and mobile web site for the business;
• Protect your intellectual property including any logo or any unique system;
• Develop policies, procedures and an operational plan for the business. Whilst your employees may be family members, your business will run more effectively if you create such elements; and
Establish a succession plan and exit strategy. This may be the last thought in your mind when commencing a business, but too often businesses are left in a state of complete chaos when a family member decides to leave or dies. Pre-planning is essential.
The best tip when commencing a business is to be properly informed and advised. Protect yourself and your business and ensure you are aware of the laws which apply to your business, including but not limited to, employee entitlements/work place relationships laws, work health laws, safety obligations, zoning, and privacy.
As important, is the need to review your legal position on a regular basis. Why? Because the context within which a business operates changes, as does the life stage of the owners or leaders which, depending on the circumstances, can create risks for the business.
From structure, general agreements to Wills/Estate planning, through to any potential family law issues that could eventuate, understanding your legal risk is part of everyday good business practice.
Watts McCray Lawyers recommends to all businesses, in particular the SME, family and non-family businesses alike, that they conduct a LEGAL REVIEW.
This REVIEW , undertaken at no cost to you and can identify your current legal risk and recommend the appropriate course of action. Go to www.wattsmccray.com.au/Norwest and see what this review means for your business.
For more information and assistance please contact Chelsea Winter, Commercial Lawyer or Mr Tony Hercok, Partner and Chief Operating Officer of the Watts McCray Lawyer Group.
