#144 The A's to your Q's
I recently reached out on social media and asked for your most pressing questions about business law and today, I’m sharing the answers with you. A lot of these questions are ones that I get asked all the time, so I know this episode is going to be helpful for you, no matter where you’re at in your business journey.
One of the most common questions I receive from new clients is about the best business structure. While there is no one-size-fits-all answer, the two most common structures for small businesses are sole trader and company. I explain the difference between these and the importance of thinking about your long-term vision and goals when determining which structure you should operate under.
Many people also contact me about legal documents, and if you’ve been listening for a while, you’ll know this is something I am passionate about. The starting point is understanding your business, the industry you operate in, potential risks, and compliance requirements. While different businesses may require specific documents, there are three core documents that all small businesses should have: business terms and conditions, website terms and conditions, and a privacy policy. These documents form the foundation of your legal protection and are essential for most businesses.
Let’s say you already have documents in place, but you’re not sure if they are legally binding and enforceable. This is another common question I receive and getting this right is critical in making sure your business is protected. While having a lawyer draft and tailor your contracts is a good starting point, there's more to it. Proper usage and handling of the contracts are equally important. And although using a template might be tempting for the time and cost savings, this is something I recommend you steer clear of. Templates may not cover all the necessary details, and using them without understanding their limitations is a risk that’s not worth taking.
Another topic very relevant to small business owners is understanding your obligations when hiring or dismissing employees. It's really important to understand the difference between employees and contractors and I share how misusing these terms can lead to legal complications. I also talk about the importance of complying with the small business fair dismissal code to make sure that employee terminations are carried out fairly and in compliance with the law.
I hope this episode answers some of your burning questions about business law. Remember, legal matters can be complex, and seeking professional advice is always recommended. As a business owner, it's vital to have a reliable network of advisors, including a knowledgeable business lawyer, to guide you through legal challenges and ensure your business remains protected. If you have any further questions or need support, don't hesitate to reach out. I’m always here to help.
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[00:00:00] Tracey: Hello everyone. Welcome back to another episode of the Rise Up in Business Podcast. Today, I'm going to do an episode where I am answering your questions. So I've gone out to you on socials. Here's a hint. If you're not following me on Instagram yet, please do. I'm very active on Instagram. There's a lot of interaction on Instagram and I share a lot of value.
[00:00:42] My handle on Instagram is at TM solicitor. So easy to remember. So jump over and follow along if you haven't already. So I've gone out to you on socials and I've asked, what are your questions? What are the top questions you have for a business lawyer?
[00:00:56] So that I can answer them in this episode. I have eight questions and I'm going to work through them one by one. Let's dive in first question, which is not uncommon. And it comes up a lot with new clients that reach out to me is what structure is best for my business? Great question, but there's no cookie cutter answer here.
[00:01:17] There's no hard and fast rules. the two most common business structures for small business are a sole trader or a company. The sole trader being when it's you as an individual operating in your individual capacity with your own ABN operating your business that way.
[00:01:33] The other most common structure is the company structure where you are a director and a shareholder, sometimes with other directors and other shareholders of a company and the company owns and operates the business. So a company is a separate legal entity, as you probably know, it has its own tax file number.
[00:01:50] It has its own ABN and you're operating your business through the company. From my perspective, legally, the most common reason that a business owner will set up a company structure is if they're in a high risk industry or the business carries risk and we want some asset protection. I am a lawyer, not an accountant, obviously, so I can't talk to you about all the tax reasons and accounting reasons as to why you might opt for one over the other.
[00:02:18] But from a legal perspective, That's the conversation I have with clients around asset protection and vision. But if you're thinking business structure, think longterm, what's your end in mind? What is your vision? What do you ultimately want to achieve with this business? That's a great starting point when you're thinking about your business structure, because different business structures will lend themselves to your vision and your goals.
[00:02:40] So it's definitely worth having the conversation. There's no one size fits all though, is what I really want to share. The second question. So the next three questions relate to contracts. No surprises there. The second question is, I don't know what I need. Can you help? Yes. Can I just say here. You're not alone.
[00:03:00] People that reach out to me often will say, Tracy, I don't know what I need. I don't know what you need to help me with, but I know I need you. And I love that. I love that blank canvas. And I love that really open and honest mindset. Can I help? Yes, of course I can. That's what I'm here for.
[00:03:18] The starting point for this in discussions that you and I will have, or that you should have with any business lawyer is around what your business does, what the industry is. where your risk is and what legal obligations you have in terms of compliance. So different businesses need different legal documents.
[00:03:37] But if you're a long time listener, you've heard me say all small businesses need the three core documents, your business terms and conditions. Or whatever you want to call it, it can be called your client service agreement, your design agreement, whatever it is that you do in your business, it's the agreement that you have with your clients.
[00:03:58] And if you have a website, which most small businesses do these days, the second document you need is your website terms and conditions. And the third is your privacy policy. So they are the core trio of documents. And to be honest, they're the ones I do most often for clients. And we package them up. So we have packages, various packages, but the most common package that clients engage me for are the business T's and C's, the website T's and C's, and the privacy policy.
[00:04:24] But as I say, depending on what you do in your business and what type of business you have, will nuance the type of documents that you need. Can I help? Yes. Reach out, ask the question. You can contact me via email. You can contact me via DMs and Instagram to start the conversation around your business and what you need to do moving forward.
[00:04:44] The second, well, the third question, the second contract question, how do I know if my contracts are legally binding and enforceable? Gosh, that's a good one. How do you know? Well, if you've had them drafted for you and tailored by a business lawyer or a contracts lawyer, chances are they're legally binding and enforceable.
[00:05:05] There are so many things that come into play for a document to be legally binding and enforceable. You can't just assume because you've got them from a friend or you've bought a template that they're legally binding and enforceable because not only Do they need to be drafted in a certain way to be legally binding and enforceable, they need to be used in a certain way. So you need to give them to the clients in a certain way. Sometimes they need to be signed, sometimes they don't. Sometimes they get issued with a proposal or a scope of works, sometimes they don't. It's all nuanced, which is why I say on here and over on socials so much, don't use templates for your legal documents because you don't know what you don't know, and you don't know if they're any good, you don't know if they're doing all the things, and you have no way of knowing if they're legally binding and enforceable.
[00:05:58] So, have a look at them, where'd you get them? Have a think about that when you're asking yourself the question, are they legally binding or enforceable? And, if you're not sure, Again, reach out, let's have the conversation and that dovetails into the next one. The next question I had, which is, can you review what I have in place?
[00:06:17] Yes, I can. So if you're not sure if they're legally binding or enforceable, if you're just not sure that what you've got is what you need or that what you've got is doing what it needs to do, by all means, please reach out and ask the question. I have packages that I offer for document review. There are ways that we can tackle it. There's various ways we can tackle it in terms of our approach to review what's in place but I always like to take the time to understand your business and how you do business so that I can answer the question holistically because there's no one size fits all. So we really need to understand holistically what you're doing so we can assess what you need and then we can look at what you've got in place.
[00:06:58] So that's the third one. the next two questions, great questions, they relate to employment law. Really common questions here. I get asked these all the time so I was really pleased to see these pop up. First one was, what do I need to be aware of when employing staff? so good. So good for asking this.
[00:07:19] And I feel like this is almost a typical lawyer answer in a way and you know, I don't like doing that. But it really comes down to what industry are you in, what business are you operating and how are you engaging people? As a starting point, you need to understand the difference between employees and contractors. That's huge. So I often hear people using the term contractor and casual employees interchangeably, and often they're wrong. People have got them around back to front. So we need to understand, first of all, the difference between the employee and the contractor. If you want to read more about this, you can dive over to my website, tmsolicitor.com.au and go to the resources page. I write a lot of content for the resources page. We update it every couple of weeks with something new. And there is a ton of content on there around employees and contractors and the difference and how do you know and all the things. So the first thing I'd say, what you need to be aware of is the difference between them.
[00:08:18] Then I would say you need to be clear on what your business needs. Sometimes the business actually needs a contractor. Other times it needs a part time employee, but knowing the difference between those roles helps you work out what it is you need in your business. I have conversations with clients a lot, and they think they need a casual employee, when actually what they've described to me is a part time role and sometimes people have contractors and unbeknownst to them, they're not genuine contractors, they're actually employees, and that raises a whole heap of issues in terms of legalities and potential exposure for the business so we've got to get it right.
[00:09:01] We've got to get it right, the terminology and the roles and understand what the business needs and understand the best way to meet those needs for the business. And the third point I'd say here, which will come as no surprise, whichever way you land, you need to make sure you've got written documentation in place.
[00:09:20] So whether it's an employee, full time, part time or casual, or whether it's a contractor, you need to make sure you have the appropriate agreement in place for that team member. there's just no shortcuts here. The risk is huge if you don't have documentation in place or if you don't have the right documentation in place, your business can be exposed down the track of things you're not even thinking about now.
[00:09:46] In six months, 12 months, 18 months time, something unexpected happens or something occurs that you weren't anticipating, your business can be exposed if you don't have this right. And what do I mean by exposed? Well, if you've got a contractor who's really an employee, for example, you could be exposed later when you receive a claim for unpaid leave entitlements or unpaid superannuation and gosh, that can accrue quickly because you didn't have the right framework in place for the role.
[00:10:14] I thought it was a contractor. We agreed they were a contractor. They signed a contractor agreement but the reality is they were an employee. So then it doesn't matter what the agreement says. They were an employee as far as the law is concerned. Things have gone awry and that person's gone to the Fair Work Commission and they've served you with a claim for unpaid super or unpaid leave entitlements or a whole host of other things.
[00:10:37] That's an example of what I mean when I say your business is exposed and what can happen when things go wrong. So make sure we're crystal clear on the roles, who's filling the role, whether it's genuine, and we've got the right documentation in place. The next question in relation to employment law is can small businesses be sued for unfair dismissal?
[00:11:00] This comes up a lot because most small business owners know that they're exempt in theory at a high level, they're exempt from unfair dismissal claims. But you still have obligations as an employer and you're still bound or you're still required to follow and comply with the small business fair dismissal code.
[00:11:23] So there is such a thing as the fair dismissal code. If you're an employer, if you haven't seen it, if you're not aware of it, jump over to the fair work site and have a look at it. It's there, you can download it. You can end up in difficulty as a small business owner, if you dismiss somebody the wrong way. That's the short answer to the question so whilst technically you are exempt from being sued for unfair dismissal, you can still have a legal stash on your hands. You can still end up in a situation which causes you grief as an employer if you don't do things properly and fairly when terminating an employee. That's the most succinct way I can say it.
[00:12:06] If you are considering performance managing an employee, or if you are sure that you've reached a point where you need to let someone go, take advice first. Hand on heart, take advice first is what I say, because you can save yourself a lot of time and energy and potentially money, because if you get this wrong and the employee feels hard done by or wronged, you can end up in a situation where you've got to justify what you've done, and that takes time, energy, and money.
[00:12:37] something I talk about a lot on here, and I've talked about it recently on the podcast is the value of who you surround yourself with in business. Really your team of advisors should be a business lawyer, who you've got on the end of the phone, who you can ring and say, Hey, Tracy, this person's really not working out. What do I do? What are my obligations? How do I do this? What do you recommend? Ask the question of your advisor. Surround yourself with the right people as a small business owner so you've got this network of support to ask these questions and make sure they're the right people to give you the support you need.
[00:13:15] Last two questions. How much does it cost to have my contracts prepared? I love that. I don't know. It depends. Again, typical lawyer answer. It depends. It depends on what you need. And from what I said earlier, what you need is determined by the industry you're in and the type of business you're running, but reach out and get a quote.
[00:13:36] So for businesses like ours, we have several packages that we offer to clients and we also tailor packages. We don't charge on an hourly rate. We don't charge for emails. We don't charge for perusal of letters or phone calls. Every lawyer or law firm will charge differently so get a really clear understanding first on what you're signing up to and how they charge.
[00:13:57] My view is there's nothing worse than having a lawyer who says to you, yes, I can do this. It'll probably cost this much, but I can't be sure. It depends on the work required so therefore we'll charge you on an hourly basis. So you could get a bill for $1,000 or $10,000, you've got no way of knowing and they're not prepared to back themselves by giving you really firm fee estimates and locking themselves into a fixed fee. I don't like that. That's a story for another episode coming up, but I don't like that. That's not how I roll. It's not how I run my business, but I get that that's how a lot of lawyers do it and that's why business owners can have real objections or real hesitation to reaching out to lawyers to ask the question, how much is it going to cost? So find yourself a lawyer you vibe with that you connect with, find a lawyer who can give you a firm free proposal that they're prepared to stick to so that you know, at the outset what it's going to cost. So to the person who asked me that question, please reach out, email, DM, whatever suits so that I can understand a little more about your business and what you need, what you've got in place, what's missing, so then once I know that I can give you a very firm fixed fee proposal that I will honor so that we can take care of everything that you need.
[00:15:05] And the last question is, do you draft contracts as well as provide all the advice on what's needed? Hell yes. Yes, I do. And I get asked this a lot, actually, which is interesting because I talk a lot, don't I, on here and socials around getting advice and being supported and understanding what you need but I suppose I don't really say then. I can draft it for you. I suppose I just assume that, you know, but for those who don't know me or that for those listeners that are new around here, I love contracts and all things legals and agreements so yes, we draft a lot of these every day. We're drafting something for someone and it can be your contracts and your agreements or your website documents or your distribution agreements or whatever it is that you need. If it's to do with contracts and agreements, chances are we do it, but by all means, reach out and ask the question.
[00:15:57] Uh, there we go. That was a short and sharp episode of the top eight questions that you have shared with me. I hope that some of these have resonated. I hope it's been really helpful. If you've got other questions by all means, please reach out and ask those. I'm always happy to answer questions and. These are the sorts of things that I address in our fortnightly briefing notes that go out to our email list. So if you're not subscribed to our list to receive my fortnightly briefing notes please jump over to the website and sign yourself up or send a DM and share your email address and your name with us and we can add you to the list. I share so much value in these fortnightly emails and I know from the feedback I receive and from the beautiful email responses I get that you not only enjoy reading them, But they add value to you. And often there's some quick and snappy actionable tips that you can implement in your business straight away that can help move the needle. As always. Thank you so much for listening. I love recording this episode for you and I will catch you next week.
LINKS:
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