Starting a business involves much more than choosing a name, creating a logo and finding customers. The legal decisions made in the early stages can affect personal liability, tax arrangements, ownership, commercial relationships and the future value of the business.
A legal professional can help you establish strong foundations before misunderstandings, disputes or compliance problems arise. Here are seven important questions to ask.
- Which business structure is right for me?
Ask whether you should operate as a sole trader, partnership, company or through a trust arrangement. Each option has different consequences for control, liability, administration, taxation and succession.
In Australia, a registered company is a separate legal entity. However, directors and other company officeholders continue to have important legal responsibilities, including helping make sure the company can pay its debts and maintains appropriate financial records. Your lawyer should work alongside your accountant or tax adviser when assessing the most suitable structure.
- What registrations, licences and approvals do I need?
A business may require an Australian Business Number, business-name registration, company registration, industry licences, council approvals or professional registrations.
Registering a company and registering a business name are separate processes. A company trading under a name that differs from its registered company name may also need to register that business name. Ask your lawyer to identify the requirements applying to your industry, location, products and services.
- What agreements should exist between the owners?
Businesses involving two or more people should not rely on verbal promises or friendship alone. Ask whether you need a shareholders’ agreement, partnership agreement, unit-holders’ agreement or another formal ownership document.
The agreement should address decision-making, individual responsibilities, profit distributions, additional funding, dispute resolution and what happens if an owner becomes ill, dies, retires or wants to sell their interest.
- Are my customer and supplier contracts strong enough?
Well-prepared contracts clearly explain what is being supplied, what it costs, when payment is due and what happens when something goes wrong.
Ask your lawyer to review your terms of trade, proposals, service agreements, warranties, cancellation provisions, liability clauses and debt-recovery processes. Your contracts should also be consistent with Australian Consumer Law and any obligations applying specifically to your industry.
- How should I engage employees and contractors?
Incorrectly treating an employee as an independent contractor can expose a business to legal and financial risk.
Ask what employment agreements, contractor agreements, workplace policies and confidentiality clauses your business requires. These documents should clarify duties, remuneration, intellectual property ownership, use of equipment, workplace conduct, confidentiality and the process for ending the working relationship.
- How can I protect the business name, brand and ideas?
Registering a business name does not provide the same legal protection as registering a trade mark. A registered trade mark may protect a distinctive business name, logo, phrase, product or service and help prevent confusingly similar use by competitors.
Ask who should own the intellectual property, whether searches should be completed before launching the brand and how work created by founders, employees and contractors will be legally assigned to the business.
- What privacy, cybersecurity and risk policies are required?
Businesses frequently hold customer names, contact details, payment information and confidential records. Some small businesses are covered by the Privacy Act and must comply with the Australian Privacy Principles. Covered organisations may also have notification obligations when an eligible data breach is likely to cause serious harm.
Ask whether you need a privacy policy, data-breach response plan, cybersecurity procedures, record-retention rules and appropriate business insurance.
Good legal advice is not only for resolving disputes—it can help prevent them. Review your structure, contracts, ownership arrangements and compliance obligations as the business grows, hires employees, enters new markets or introduces new services.
Spending time on the legal foundations today may protect your assets, relationships, reputation and business value tomorrow.
This article provides general information only and is not legal advice. Seek advice from a qualified legal professional about your circumstances.
If this article has inspired you to think about your unique situation and, more importantly, what you and your family are going through right now, please get in touch with your advice professional.
This information does not consider any person’s objectives, financial situation, or needs. Before making a decision, you should consider whether it is appropriate in light of your particular objectives, financial situation, or needs.
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Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Please consider whether the information is appropriate to your circumstance before acting on it and, where appropriate, seek professional advice.