The next installment of our How To series is here with local Lawyer, Liam Young. When starting out, often the last thing on your mind is business administration. But take it from us... it pays to cross your T's and dot your I's before launching. In this post Liam provides invaluable advice, covering off all the must-do's prior to launching your business. Read on and enjoy!
So, you’ve decided to take the leap and start your own business. First up, congratulations because putting your idea into implementation is always the biggest step.
Now that you have started up, or are about to, there will be some legal aspects to running an business that you probably haven’t considered but will be incredibly important in the long run.
The list of legal considerations that may affect you are too endless to mention and will always be dependent on your own circumstances. There really is rarely a one size fits all approach to starting up. That said, there are some things that are common to all new businesses and I’ll touch on a few of these here.
More than likely the first thing that should be done is to incorporate your company. This can be done relatively easily online or with the help of your accountant or solicitor.
It is generally considered that a company is the most useful structure to trade through when starting a business. That said, there are other options such as operating as a sole trader that may suit you depending on your circumstances.
At this stage in the process you should also be turning your mind to agreements between the parties that are running the business. If it’s just you running the business then this won’t apply (unless you have some financial backing from third parties). However, if there are 2 or more of you involved then you need to turn your minds to getting an agreement done that sets out how things are to work in the event everyone wants to go their separate ways.
It may seem too early but the last thing you want is to get a few years down the track and one of your partners needs to exit the business and there’s no real plan for how that will happen. Nothing will cost you more than a messy exit from the business by a partner who feels hard done by.
2. Intellectual Property
As a creative business intellectual property is your key asset. You need to make sure you protect this asset to the fullest extent possible from the outset.
There are many different categories of intellectual property but you are most likely to be seeking to protect either a patent, a trademark or copyright.
How you’ll protect each of these categories is different so it is important that you either research it thoroughly or, preferably, get some advice. There’s some great advice available on ipaustralia.gov.au
3. ABN and Tax
This is more the sphere of your accountant but you’ll need to register for an ABN so that you can commence trading.
You’ll also need to get yourself set up to start remitting tax and other payments, such as:
You will need a few essential policies that set out how you’ll interact with your customers everyday. These are:
- Terms and conditions – this will govern areas such as returns and refunds, consumer guarantees, delivers and disclaimers. These need to be clear to your customers, for example, a button accepting the terms and conditions when purchasing via your website.
- Payment Card Industry Data Security Standard – This is an information security standard for handling card payments that is designed to increase controls around cardholder data and reduce credit card fraud. You may outsource payments to a third party, such as Paypal, who will be responsible for this.
There will be a host of contracts that you will start entering into. Make sure you read them and understand your obligations under them.
For example, some supply contracts may require director guarantees that make you personally liable if you fail to make payment.
You will also probably need some standard contracts for aspects of your business, such as for suppliers or contractors working for your business.
6. Legal Health Check
Make sure you develop a good working relationship with your solicitor so that you can run issues by them as the need arises.
At some point you should get your solicitor to run their eyes over your business and let you know what is working well and where there are areas of improvement. This should then be done on a regular basis.
Liam Young 1300 189 697