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To successfully launch a business, you will likely be busy juggling a number of different tasks. It’s pretty common for business owners to get overwhelmed before they’ve even officially started their business. We don’t blame them – gearing up to start your own business is an exciting but busy period.
During this time, it can be easy to forget your legal obligations. This is a mistake you don’t want to make, as how well you deal with the legal factors concerning your business is going to play a significant role in its success.
To make it easier for you, we’ve compiled a list of the 5 steps you need to complete when starting a business in Australia (the legal version).
1. Map Out Your Business: Decide On Business Structure
It may seem basic but the first step you should be taking is creating a business plan. When you create a business plan, you essentially lay out the blueprint for your business. From there, it’s much easier to understand your goals and see things like your business’s potential strengths and weaknesses. With that kind of clarity, you’ll be in a better position to make the right decisions for your business.
One of the most important choices you will make when starting your business, is deciding on the legal structure your business will have. In Australia, the most common legal structures are:
- Sole trader
- Partnership
- Company
All three of these legal structures are distinct from one another, so it’s important to have a good understanding of them before you choose the right one for your business.
To register your business as a sole trader, the process will be quick and cost effective. However, sole traders are entirely responsible for their business. When you become a sole trader, your business is attached to you legally. As a result, if something happens to go wrong with the business, you can be held personally liable.
The same concept applies for partnership business structures. It can be pretty simple to form a partnership however, all partners will be personally attached to the business. Therefore, whatever happens within the business – good or bad, will impact each partner personally.
A company on the other hand, is the complete opposite of the above. Despite a slightly more complex set up process, a company stands as a legal entity on its own. The company will be able to enjoy many of the legal rights an ordinary person enjoys, such as the ability to have its own bank account, earn money, lose money and be involved in court matters. Essentially, the company can exist legally separate from you. As a result, you can enjoy much more legal protection as your liabilities are better protected when you register as a company.
If your business is a serious endeavour that you plan to run for a while and possibly even expand in the future, then we recommend setting up as a company.
2. Register Your Business Or Company
Now that you have an idea on the kind of legal structure you want your business to have, it’s time to begin the registration process. As we touched on before, a sole trader and partnership registration process is far more relaxed, whereas setting up as a company requires more effort. Let’s take a closer look at this below.
Registering As A Sole Trader Or Partner
To register as a sole trader or in a partnership business structure, you will need to apply for an Australian Business Number (ABN). Applying for an ABN is a relatively simple and quick process, plus it won’t cost you anything.
To apply for an ABN, just go online to the Australian Business Register. Follow the steps to complete your ABN application and if it all goes well, then you should receive an email containing your ABN shortly after. If your business is a partnership, then each partner will need to get their own ABN.
Once you have received your ABN, you’re all set to start business operations.
Registering A Company
To register a company, you will need to follow the rules and regulations set out by the Australian Securities and Investments Commission (ASIC). ASIC is the main regulator of Australian companies, so registration and any ongoing obligations are done with them.
The actual application to register a company can be done online and shouldn’t take very long. However, before you get to the stage where you can begin your application, you will need to sort out some details first. In order to register a company, you’ll need to know things like who the directors and shareholders of your company will be, as well as how it will be governed.There’s also the matter of figuring out the kind of company you want to register.
The whole process can be complicated if you’re not familiar with it, so it’s always a good idea to get a legal expert to help out with setting up your company.
3. Protect Your Business Name And Other Assets
After you have registered your business or company, it’s time to register a business name. If you’re a sole trader or in a partnership that uses your personal names as the name of the business, then you don’t need to worry about registering a business name.
If you’ll be using something original, then your next step is to register your business name.
When you have come up with an original name for your business or even a logo design, then it’s important to legally protect it as fast as possible. Remember, registering a business name doesn’t mean you legally own that name. Furthermore, designing a logo doesn’t give it any legal protection, so your options will be limited if someone else decides to copy you.
To avoid others infringing on your unique business name or stealing your logo, then you need to register it as a Trade Mark. Doing so will give you the legal protection necessary.
Registering a trade mark is done with IP Australia. It’s a pretty long process – once you have established that your desired trademark hasn’t been registered by someone else, you’ll need to fill out an application. If the application is approved, the trade mark will be published for the public to see. This phase is called ‘trade mark opposition’ which allows others to object to your trade mark. During this time, if no one challenges your trade mark, then you will be able to officially get it registered once the trade mark opposition period is up. You will then own the legal rights to your trademark for the next 10 years (with the option for renewal).
If someone does happen to challenge your trade mark, then you’ll have the chance to defend it with IP Australia (should you choose to do so). It’s best to have a legal expert guide you through the process of registering your trade mark right from the beginning, so they can make sure everything goes smoothly. If your trade mark gets challenged, having a legal expert who’s been there from the start will be much more advantageous.
4. Get Expertly Drafted Contracts
Once you’ve registered your business or company, protected your business name and logo, then it’s time to get the right contracts drafted. The strength of your contracts will determine how well your business is protected, so it’s important to invest well in your contractual agreements.
The type of contracts you need will depend on your unique needs however, we listed a few key ones that are commonly used:
- Supply Agreements
- Partnership Agreements
- Service Agreements
- Distribution Agreements
- Non-Disclosure Agreements
- Employment Agreements
However, it’s not just the contracts you will be signing with another party that are important. There’s a range of legal agreements you might want to look into getting that don’t involve multiple parties signing it although, they are just as integral when it comes to protecting your business.These legal agreements include:
Legal experts can help you determine which legal documents are most needed for your protection, so get in touch with ours today.
5. Understand Your Legal Obligations
Now that you’ve got your business all set up and ready to go, there’s no more legal things to think about, right?
This couldn’t be more wrong.
The law and business go hand in hand, meaning legal considerations are going to be ongoing when you run your business or company. Understanding your legal obligations is a crucial part of running a successful business. As such, mastering the art of legal compliance is essential for anyone running their own venture – luckily we’re always here to help.
The exact legal considerations will again, depend on your exact operations. However we’ve listed some common legal obligations you’ll likely need to think about:
- Employment regulations
- Regulatory compliance
- Consumer laws
- Data and Privacy laws
- Intellectual property laws
It’s important to talk to someone who is an expert in their field when asking about any of the legal obligations related to the above categories. They’ll be able to give you advice that isn’t generalised. At Sprintlaw, we’ve got a number of business legal experts under the one roof, so get in touch whenever you’re ready.
Next Steps
When starting your own business, it’s important to remember the legal side to setting up and running a business. To summarise what we’ve discussed:
- Start by mapping out your business plan and deciding on the appropriate legal structure: sole trader, partnership, or company
- Register your business or company with the necessary authorities, such as obtaining an ABN for sole traders/partnerships or following ASIC regulations for companies
- Protect your business name and assets by registering them, including trademarks through IP Australia for legal protection
- Draft expertly crafted contracts tailored to your business needs, covering supply, partnerships, services, distribution, confidentiality, employment, and legal documents like privacy policies and terms of service
- Continuously understand and comply with legal obligations, including employment regulations, consumer laws, data privacy, and intellectual property laws
- Seek expert legal advice to ensure thorough understanding and compliance with legal requirements specific to your business operations
- Be proactive in addressing legal considerations as they are ongoing and crucial for the success and protection of your business
If you would like a consultation on starting a business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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