STEP 8

Legal Obligations and Protecting Your Business

Setting up budgets

Depending on where you are and what structure you choose, there are legal obligations that come with starting a business, including registrations for your chosen business structure, licences and insurance – just to name a few.

You don’t want to build your business up to lose it. Protect your investment by planning ahead.

This guide is not a comprehensive statement of the law and if you have any questions you will need to contact a Lawyer to discuss your specific matter.

Legal 101

As a small business you will have a number of legal obligations that you need to take care of.

Ignorance of the law does not excuse.

This just means that just because you don’t know about it, doesn’t mean that it doesn’t apply to you. It is your responsibility to understand what might impact upon your business. You aren’t expected to know everything yourself, but you can build a team around you to help you understand where you might be risk exposed.

There are a number of people who can help you out in this space and the types of professionals that you would get help from include:

Lawyers

Insurance Brokers

Risk Management Consultants

Workplace Health and Safety Consultants

Accountants

Regulation

A number of industries are subject to regulation and oversight. These can include State based administration such as Property, Motor Industry, Security, Tattoo, Auction, Second Hand Dealing, Debt Collection and Personal Services (like matchmaking).

There might be other Federal compliance requirements as well. An example here is ASIC which is the corporate, markets, financial services and consumer credit regulator.

Ordinarily regulation is driven by the industry that you work in, so check out any industry resources that are available. We have access to a number of these in our Hub.

Fair Trade

There are various laws surrounding fair trading and consumer laws that are there to protect you, your business and your customers.

Some of the things to consider when setting out your business practices include:

  • Avoiding misleading your customers about price, quality and value
  • Avoiding making false claims about products or services
  • Avoiding making false representations about indigenous souvenirs and artwork
  • Avoiding unfair business tactics
  • Avoiding illegal selling methods
  • Being truthful about country of origin claims

 

There is an excellent resource put out jointly by the States that includes a checklist for you to apply to your own small business. Here is a link to the Small Business Self Assessment checklist to help you understand which parts of Australian Consumer Law may apply to your business.

This is not a complete list and you should check with your lawyer to see what other things might apply.

Privacy

In Australia you need to consider the Privacy Act 1988 which is administered by the Office of the Australian Information Commissioner (https://www.oaic.gov.au/).

Consumers have a number of privacy rights and these need to be protected by the business. Most websites are required to have a Privacy Policy that tells people how you will be using their private information.

Most small businesses are not covered by the Privacy Act 1988, but some are. Now for this exclusion to apply, you must have an annual turnover of $3 million or less.

If you aren’t sure whether this may apply to you, then you can use their 15-question checklist as a self-assessment. Make sure you keep a print out or PDF copy of your answers and responses so that you can demonstrate that you did check whether this applied to you or not.

https://www.oaic.gov.au/privacy/privacy-for-organisations/small-business/#PrivacyChecklistForSmallBusiness

You can also discuss this with your industry association or your lawyer.

Understand Contract Basics

Contracts are an everyday part of small business life. To ensure business runs smoothly it is essential to make sure that your contracts are in order.

Some of the different types of contracts that you might need include:

  • Terms and Conditions
  • Client Agreements
  • Contracts with your employees or contractors
  • Shareholder Agreements

There are a number of online template based legal service providers. And buyer beware, if you are going to download something for free off the internet, you must make sure it is fit for purpose and that it covers Australian law. We do have some Australian based template companies, such as LawPath and LawDepot to name a few.

If you do use these however you are taking a risk that it just isn’t quite right for what you need it for.

Then the question becomes, ‘Do you want to run around looking after this?’ Your time is probably better spent working on getting your business up and running, so look to hire a commercial lawyer to give you a hand. (You can find them here)

This is one area where money spent up front can save you a lot of time and money later if you find that you don’t have the correct contracts in place.

Don’t risk everything you worked hard for … Protect it!

Risk management is a process of looking at your business and seeing where the risks are and coming up with a plan for managing them in advance.

We believe that risk management is asset management.  In this context and assets include your time, your people, your physical and intangible assets, the environment that you operate in and your reputation.

PEAR (use picture of a pear – fruit – ) People, Environmental, Asset, Reputation

A good risk management plan will produce some exceptional results for your business … when it’s done well. This means putting time into effective planning and implementation and once that is done, taking the time to regularly review and monitor the processes.

Some of the benefits include:

  • Minimise reputational risk in the event of an incident
  • Minimised likelihood of contract dispute
  • Reduced exposure for legal action
  • Reduced risk of loss
  • Reduction in the time spent dealing with incidents or business down time
  • Reduced profits as a result of re-work
  • Likelihood of lower insurance premiums

You’ll see a lot of the words used here are about minimising the impact of issues. And that’s the key point. You’ll want to use these processes to reduce both the direct and indirect risks and to recognise the impact of the consequence if something were to happen.

Protect your Intellectual Property

We discussed trademarks in the last chapter on registering your business. Now we are going to talk about Intellectual Property (IP). Managing your IP properly can protect your ideas both here in Australia and overseas.

Now protecting your IP is more than just registration, there are numerous tasks that you must do to maintain an effective registration. This is a specialty field with a number of strict rules, so advice is essential to ensure that you are truly protecting your asset.

If you believe you have an idea that is eligible then you must get expert help in the form of a Patent Attorney. You can find them here.

Get the right insurance

Insurance just might save your business someday in the event of a worst-case outcome. And some of your customers may require you to have a certain type and amount of insurance cover in order to do business. Just as some professional registrations might also require a minimum level of cover.

Let’s take a look at the main types of insurance policies that you might need for your business:

  • Business Continuity
  • Key Person
  • Professional Indemnity
  • Property
  • Public Liability
  • Workplace Health and Safety / Workers Compensation

The insurance requirements for every business will be different and these items listed above are not an exhaustive list.

While you can organise all of this on your own it can often save you a lot of time to work with an insurance expert who can help you arrange all the cover that you need and then they can do all of the legwork for you in finding the right type of cover and a reasonable premium.

You can find a small business insurance broker here.

Manage Workplace Health & Safety

Workplace health and safety laws seek to protect workers when they are at work. If you have employees (or people who fall under the extended definition of employee) then you will need to have cover.

You can discuss this with your accountant or contact the State workplace governing body for more information.

To close out this topic, once again, this guide is not a comprehensive statement of the law and if you have any questions you will need to contact a specialist to help you out.

Getting this foundation right from the start is an investment in the long term future of your business. So take the time to get it right.

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Next Steps

In the next chapter we will be looking at Building your Team. Chapter 9: Build Your Team

CTA: Want to join a Pre-Cede workshop about this topic? Sign up here!

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