If you’re about to set up shop, there are likely dozens of items on your to-do list already. Hiring a lawyer to make sure you’ve dotted all your i’s and crossed your t’s may not be one of them, but it makes sense to address some legal matters early on.
Determining the best way to structure your business is the first and foremost of them, says a spokesperson from Australian Business Lawyers & Advisors.
There are a number of options and each has its own pros and cons. Becoming a sole trader or setting up a partnership is usually simple and cheap but, in doing so, you’ll be personally responsible for your business’s debts and liabilities. Conversely, operating via a limited company may offer greater protection but will see you paying more in set-up and compliance costs.
“Considering the nature of your business and the risks it faces should help you to determine the most appropriate structure from a legal perspective,” Rennie says.
If you’ve come up with a clever name for your business, you’ll want to ensure it’s yours to use and no one else can nab it. You can do so by registering it with the federal government’s Business Registration Service as soon as possible.
While you’re at it, reserve the online versions of your business name and branding too, Rennie counsels. “Protecting these assets will stop others taking them away from you, deliberately or otherwise, and give you a coherent platform to launch from when you’re ready to begin trading.”
Hopefully insurance is never needed but, if it is, it could be the best investment you’ve ever made. Although it’s often overlooked by startups in the early stages, sourcing appropriate insurance is a ‘must do’.
The nature of your enterprise dictates the type and level of cover that’s appropriate. If you’re planning to hire staff or contractors, for example, you may want to protect yourself and your business in relation to their conduct or against issues which may impact them.
This can be a complex area that’s best navigated with the help of a reputable broker. “They’re experts in the commercial side and can identify the risks your business faces, how much it will cost to cover them and whether it’s worth taking out a policy,” Rennie says.
Starting a business is incredibly exciting, but there’s also a lot to get your head wrapped around. We can help you understand what you need in the beginning so you have the right tools at your disposal from the get-go.
Going it alone can be tough. Teaming up with a business partner, or several, can be a great way to share the risks and get started faster – provided you put a partnership or shareholder agreement in place first. Preferably drawn up by a lawyer, it should specify how the business will operate and what your options are if one of the parties starts behaving badly or decides they want out.
Failing to document these foundational ‘rules’ could pose a great risk, Rennie says. “When things don’t go according to plan, or there’s a point of divergence, it can be a long, expensive and sad journey to resolution. And it may end in the business busting up.”
It’s a good idea to make documenting your dealings with customers and suppliers a habit from the very beginning. Doing business on a handshake can seem convenient and cheap, but it’s a nightmare in the making. For example, when the other party’s memory of what was agreed differs from your own.
“If you take the attitude that any relationship or dealings should be put in writing, that’s a very strong base to move from,” Rennie says.
“We frequently see people complain about something not being done, paid or honoured and, with nothing to confirm what the arrangements were, seeking redress can be complicated and costly.”
Starting a business doesn’t have to mean getting bogged down in legalities. Educating yourself about the issues, taking an attitude of informed risk and finding a team of advisers whose expertise you can call on will help your business get off on the right foot.
Disclaimer: It is important to note this information does not represent legal advice and you should seek specific legal advice for your circumstances. We recommended Australian Business Lawyers & Advisors to help you find the right solutions for your business.
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