Legal Restrictions Check your existing contract(s) to make sure you won’t breach any restraint of trade or non-compete obligations. Some restraints are unenforceable, and this may be an area where you need legal advice.
Make sure you understand which licences you might need to operate your business. The
Personal Structure Seek advice from a tax advisor to ensure your personal structure is as tax efficient as it can be. A family trust or self-managed superannuation fund may be appropriate in some instances.
Make sure your personal assets are clearly separated from your business activities so that they are not exposed.
Depending on the advice you receive, set up any personal companies and trusts that may be necessary.
Company Structure Seek advice from a lawyer and a tax advisor about how to best structure your business – for example, whether to operate through a single company, or whether a holding company may be appropriate (or whether a company structure is appropriate at all).
Seek advice from a tax advisor to make sure you understand the business’s tax obligations – for example, in relation to income tax, GST, PAYG, FBT.
When speaking to your accountant, ask them to help set up your accounts. This will maximise efficiency for your ongoing tax and reporting obligations.
Set up any corporate structures that may be required, as recommended by your advisors.
Stakeholder Agreements When you set up a company, you will be given a pro forma constitution. Make sure the document you are given is appropriate for your company.
Unless you are a sole trader, you should have an agreement that regulates the relationship between the founders of the business. This could be a shareholders agreement, partnership agreement or joint venture agreement, depending on the nature of your arrangement.
Many businesses will have agreements in place so that, if a stakeholder dies or becomes incapacitated, their stake will be sold to the other stakeholder(s).
Business Name Selection When choosing a business name, you need to be thorough in your checks. Otherwise, you run the risk of selecting a name that is already taken. Don’t just search for exact matches – check for names that are fairly similar. Sources to check include:
Registrations Unless your business name is the same as your company name (or your own name), you will need to register your business name separately.
Licences are usually issued by Government bodies or industry associations. You will need to contact the relevant body to see what is required.
There are a number of websites through which you can acquire an internet domain. (You will find them in Google.)
Most businesses will have their accountant obtain an ABN. If you wish to do this yourself, visit Australian Business Register.
You will need to register for Payroll Tax, visit Payroll Tax Australia for more information.
Intellectual Property Protection Non-Disclosure Agreements (or ‘NDAs’) are commonly used to protect confidential information. They are used in various contexts, particularly in fundraising and for the purposes of specific deals. NDAs are usually prepared by lawyers.
If you have developed a proprietary piece of technology, you can gain monopoly protection for a period of time by applying for a patent. To do this, you will almost certainly need a patent attorney. You can learn more about patents on the IP Australia website.
If you will be relying on employees to produce or develop any kind of intellectual property, your employment contracts should contain provisions designed to ensure that you will own this intellectual property.
Physical Premises If you plan to rent premises, you will be asked to sign a lease in your landlord’s preferred terms. Before signing any heads of agreement or lease, we would suggest speaking with a property professional or property lawyer to ensure your terms reflect market conditions. Most businesses will engage a property lawyer to check the terms of the lease before signing it.
Keep in mind that landlords will almost always require security before granting a lease – usually (3) months' rent – which is usually provided by way of bank guarantee.
Insurance Speak to an insurance broker to determine which types and levels of cover are best for you. Below are some common examples.
You may need to take out workers compensation insurance, visit Fair Work Ombudsman for more information.
Protection for loss or damage to your physical property, including real estate.
Protection for any personal injury, property damage or other loss you cause in the course of your business.
Insurance against negligent advice you provide in your capacity as a professional.
Protection for the business in the event of the death or incapacity of a key staff member.
Protection against claims that may be brought against individuals as a result of them being (or having acted) as an officer of the business.
Personal insurance for an individual to maintain a consistent level of income in the event of a serious illness or injury that results in a period of time away from work.
Finance Note that you won’t be able to set up a bank account until after you have set up your corporate structure.
Regardless of what type of business you are starting, it is worth checking to see if any Government grants might be available. The Australian Government:
If you are borrowing from a bank or other financial institution, they will have their own documents. If you are borrowing from family or friends, it may still be worth putting a formal loan agreement in place.
Depending on how you wish to fundraise, and whom you intend to approach, you may need to prepare formal fundraising documents. An information memorandum and subscription agreement are usually required, together with a shareholders agreement. You will also need to make sure that you comply with the Corporations Act fundraising rules.
Employment If you plan to employ anyone, you will need a template form of employment contract. Usually, this is something your lawyer would prepare for you.
If you plan to engage people as independent contractors, your form of contract will be different. Before engaging anyone as an independent contractor, you will need to make sure that the law would not treat them as an employee. The Fair Work Australia website provides a useful guide.
The National Employment Standards prescribe a minimum standard of protections that apply employees in Australia. It is important that you are aware of them. You can find them on the Fair Work Australia website.
Depending on the nature of your business and the types of workers you plan to employ, your employees may be protected under an Award. (This can be the case, even if you haven’t signed up to one.) You can check the Fair Work Australia website to see if there any Awards that apply to your business.
Established businesses usually have a variety of workplace policies that apply to their employees. They may range from commercial policies (such as the limits of staff
Third Party Contracts Most businesses have a standard set of terms (or a standard form contract) on which they sell their goods and services. At a basic level, the purpose of these terms is to ensure you are paid, and to limit your exposure if something goes wrong. These terms are almost always prepared with the assistance of a lawyer, to ensure they are appropriate to your business and also to ensure they are legally compliant (for example, with the Australian Consumer Law, which applies to a variety of business-to-business transactions).
Businesses that enter into large contracts with their suppliers will often have a standard set of supplier terms. The basic purpose of these terms is to ensure you receive what you are paying for, and to ensure you are protected if you don’t. Again, these terms are usually prepared with the assistance of a lawyer.
Businesses that enter high value contracts, particularly contracts that involve services, will usually have a pre-defined set of criteria against which they will evaluate any potential business transaction. For example, payment terms, creditworthiness, indemnities and limitations on liability are often relevant considerations. These tools are critical from the perspective of effective risk management.
Legal Compliance Some industries have legislation specifically designed for them. Examples include the financial, insurance, construction, real estate and telecommunications industries. It is important for you to understand the legal framework in which your business operates.
Independently of legislation, there may be standards and codes that apply to your industry. If you are not familiar with which standards and codes may apply, your industry association can often be a useful source of information.
Privacy and anti-spam legislation apply to virtually all businesses in Australia. If you collect any information about other people – most businesses do – you need to make sure that you comply with the legislation. You can learn more about the privacy legislation on the OAIC website and the anti-spam legislation on the ACMA website.
There are laws across Australia that are designed to protect consumers and small businesses. The Australian Consumer Law is the primary piece of legislation, and there is also unfair contracts legislation in all jurisdictions. Having unfair contracts can breach the legislation, and so can misleading people about their rights under the legislation (even if you don’t know what they are). You can read more about these laws on the Australian Competition & Consumer Commission website.
Miscellaneous Although it is not a legal requirement, from a purely commercial perspective your business should have a written business plan, including a budget.
Independently of good practice and risk management considerations, you are legally obliged to hold certain types of documents for a period of time (such as invoices, receipts and other tax-related documents, as well as certain employment records). It is important that you have an organised system for collating and storing your written communications and business records.
As you will already be aware, there are countless other things you will need to organise, such as a website, phones,