Legal Advice for Small Business | Ultimate Guide
As a business owner, trying to identify all the things you need to know for running your business can be overwhelming, confusing, and damn confronting. Introduce the legal aspects of all things small business into this mix, and that can be a recipe for real frustration!
Not only do you want to give your business the best chance at success, but you also need to make sure you are complying with your legal obligations (and trust me, there are a lot!); that you are protected where you can be (and I mean both asset protection and liability), and you want to be sure your business is operating professionally to the highest standard possible.
This article is designed to help you understand where to start; set out where you need to focus your attention and guide you on what you need to be mindful of in the context of legalities.
Business Structure.
Your business structure is a core pillar in your business risk mitigation strategy. You need to understand your business structure and make sure you get this right from the very start. (And if you didn’t get it right early on, then change it as soon as you become aware of this).
It is so important to be operating with the best business structure that suits you and the needs of your business – this will give you the asset protection you need, plus the flexibility to move forward and grow. Whether a sole trader is right for you; or if a company structure, a partnership, or joint venture better suits your needs, identify this early on and prioritise getting the structure set up properly.
Our article Limited liability 101 | What is it, and do you need it? might also be helpful.
What if I’m looking at becoming part of a franchised business? Will this factor into my business structure decisions? Absolutely, yes. It will To Franchise or Not to Franchise?, that is the question. With a little insight and undertaking your due diligence, the answers can become a lot clearer, some of which can be outlined in our article here.
If, as part of your business structure considerations, you are thinking about whether you need physical premises to run your business, understanding what’s involved and what the liabilities are when entering into a commercial lease agreement is important. Commercial leases themselves can be difficult to understand without any prior knowledge of what questions need to be asked or knowing what your obligations might be. The Resource 7 Things To Pay Attention To When Entering A Commercial Lease has been put together to give a little more understanding of the complexities of lease agreements and what’s involved.
The business structure you choose will impact your financials, both in the short term and the long term. Understanding your financials when starting a small business really can be the difference between making or breaking it. The resource The Cost Of A Start-Up | How to keep business costs down, right from the beginning, explains a lot of what goes into the financial cost of starting a new enterprise.
2. Business Documents.
Another core pillar of a business’ risk mitigation strategy is legal documents. These are vital in setting your business up for long-term, sustainable success, so you don’t want to take shortcuts here (and remember, DIY is for Bunnings, not for your legal).
The documents you need in your business will depend on the nature and type of business you are operating. If you are operating a service-based business, for example, the core ‘trio’ of documents that you must have are:
Business Terms & Conditions (or your Service Agreement/Terms of Trade etc);
Website Terms & Conditions; and
Privacy Policy.
These documents will ensure you are complying with your obligations under the Australian Consumer Law (ACL); will ensure the expectations between your business and your clients are outlined clearly to foster long-term positive business relationships (and avoid disputes and dissatisfied clients), and will ensure that you are operating with professionalism.
On the topic of professionalism and business documents, make sure you abide by a few simple rules, which are outlined in our resource How Your Business Documents Can Reflect Professionalism.
There are 5 steps that we consider vital if you are after a legal document that you will be able to rely on when you need it the most - so when it comes to creating a watertight professional legal document reading this article will be very helpful to ensure that you protect you and your business.
More useful resources about necessary business documents worth a read are Think You Don’t Need Website Terms & Conditions?..., Business Terms & Conditions - v - Website Terms & Conditions? What’s the Difference, and Do I Need Them? and also learn whether template legal documents should be implemented in your business here.
3. Your Team
Knowing the difference between employees and contractors when growing your team is vital for longevity.
You have a legal obligation to treat your team the right way (that is, as a contractor or an employee) and there are different obligations for both. If you have a team in your business, whether they are employees or contractors, you need to be sure you have engaged them correctly; know what you are required to pay them and what their legal entitlements are, and you need to have proper employment agreements or independent contractors agreements in place.
When are you preparing employment agreements for your team, be sure to include these key terms to set you and your team members up for a successful employment relationship - our resource ‘Growing Your Team | Must-Haves To Include In Your Employment Agreements’ and Engaging an Independent Contractor | What the High Court has to say will help.
You may find our resource containing a checklist for engaging independent contractors helpful - you can access that here.
In the unfortunate situation where you need to part ways with a team member, making sure you have done your due diligence and are familiar with the Fair Dismissal Code can save you a lot of unneeded stress and potential legal action. As rules are different for small and larger businesses it’s best to know where you stand. To learn more about what this means for your business, take a look at our resource, What’s Unfair Dismissal? Making Sure You’ve Covered All Your Bases.
4. Intellectual Property
You work hard in your business, and you need to be clear on what intellectual property you own and what you have exclusive use over.
If your business needs to have exclusive use over your business name or tagline, for example, then you need to be proactive with this and seek advice on whether you can apply for a trademark.
If your business produces original content or material by way of articles, photography, design, or blogs, then you need to be across your rights in respect of your copyright in this material, and if you have this published on your website, make sure you have drawn attention to your copyright in your website terms and conditions.
Our article Trademarks and Copyright: Is It Really Yours? provides an overview of this important topic, and we dive into some famous trademark cases to discover what we can learn from them in The Intellectual Property That Wasn’t Theirs.
5. Debt Management
Cash flow is the cornerstone of any small business, so having your systems and processes set up to make being paid as simple and easy as possible is vital.
The most important part of this process is to have your business terms and conditions tailored properly to your business (trust me, this is not the time for DIY!)
Be sure your invoices are compliant, and that they are issued under your business terms and conditions. If you are using bookkeeping software (which I seriously hope you are!) then have automated reminders set up for invoicing.
Having this process implemented properly can mean the difference between being paid by your clients or not. It’s that simple.
6. Risk Management and Insurance
Insurance is the third pillar of a business’ risk management strategy. Whilst not particularly sexy, insurance is a must. One of my mantras in business (and in life) is ‘something unexpected will always happen’. Expect the unexpected and get a head start by holding the necessary insurance policies for your business. There are no short-cuts here.
Making sure you have all your legal ducks in a row when dealing with disputes is as important as any other legal document your business has and understanding the process with dealing with disputes can be more easily understood through our articles on What is a Dispute? Make sure you've got all your bases covered and Navigating through troubled waters? | Ways a Business disputes lawyer can guide you to safety.
I often get asked the question, I Own A Small Business - Do I Need A Lawyer? My answer to this is, it is better to get your business lawyer on board early to get things right from the get go, rather than when things start going a little pear shaped. Get to know your legal expectations when starting out here and in our article Small Business Legal Expertise - How It Can Benefit Your Small Business.
Technology often plays a huge part in helping minimise risk. Having the right internal systems and processes in place will aid in streamlining, systemising, automating, and securing all the relevant data that is relevant to you and your business needs, be it as simple as pinging you for calendar events or as far as running the complete database that your company relies on. I go more in-depth in the following article - How Technology Helps The Way We Do Small Business | The legal ins-and-outs of doing business online.
All of the suggestions and guidance in this article are vital to long-term success in any small business, and my guidance here is based on the principle that my business is founded on, and that is In business, prevention is better than cure.
Take the time today to action what you need to action from the above – trust me, you won’t regret it.
Selling your business.
Of course, there is the matter of selling your business. This can often be overlooked, but it is just as important to get this right. You can read more about the important steps when selling your business in these blogs: ‘6 Legal Advice Tips You Need When Selling Your Business’, ‘Selling Up? Here’s The Legal Low Down, and ‘Legal Advice you need that makes financial sense | Selling your business’.
Does My Small Business Need a Privacy Policy?
In short, my view is that every business needs and should have, a privacy policy. We are living in a digital age and more and more businesses are transacting online. Having a privacy policy is an important way to build trust with your audience - read on here for more on this topic. You might also find our article Marketing Yourself Online | Legal Advice For Protecting You And Your Business interesting.
Director Identification Numbers
If you are a Director of a Company - if so there are important changes to the Corporation Act that you need to be aware of, read on here for more.
Signing documents electronically and digitally
When entering into a contract with another party, there are now many safe ways to sign documents electronically and digitally that are legally compliant - you may find this article interesting if you’d like to know more.
What are Assets and Liabilities?
Small business owners wear all the hats - we know this! Are you across your assets and liabilities and what these entail? Read on here for a breakdown.
Run your business from home | The legal requirements
It is becoming more and more acceptable to work from home - but is it really as simple as just setting up your laptop and working from your dining room table? You may find this article helpful, if you’d like to know what you need to consider as a business owner before you start running your business from home.
Help! | Seeking legal advice for your business when the wheels have started to fall off
Challenging times in business are difficult to navigate at the best of times, knowing that you don’t have to faces these struggles alone, is paramount to your sanity and the survival of your business. That’s why it’s so helpful to have a relationship with your small business lawyer, so that you can reach out and ask for guidance and support as you need it, to help you resolve any issues quickly without incurring unnecessary costly fees.