As an entrepreneur, getting to start your business is an exciting first step. When taking that leap of faith, naturally a lot of things tend to run through your mind – finances, marketing, networking, sales. However, it’s important not to get so caught up in the business side of things that you forget about the legal requirements involved in setting up a business. 

Thankfully, we are here to remind you all about it. Keep reading to learn more about the legal factors you will need to consider when starting your own business. 

What Legal Requirements Are Needed To Start A Business?

When starting or running a business, it’s important to keep in mind that business and the law go hand in hand. Business as an industry is a pretty regulated area, so if you want to thrive as a business owner then legal considerations should never be an afterthought. 

Instead, you need to think about legal requirements from the moment you decide to start your business, as that’s where your legal responsibility begins. We’ve listed some of the key legal factors you need to look out for when starting a business down below.  


To start trading as a business, you will need to register it first. Your business registration is one of the most important steps you’ll take, as this will lay out the foundations for your business. Due to this, it’s important to carefully consider all your options and make choices that are right for your business. 

To register your business, you will need to determine the kind of legal structure your business will have. In Australia, the most common types of legal structures business owners tend to opt for are: sole trader, partnership or a company. 

To register as a sole trader or with a partner, you need to apply for an Australian Business Number (ABN). This is a pretty simple process which can be done online and it’s free of charge. Once you receive your ABN, you’ll be all set to start business activities. Also, don’t forget to register a Business Name if you’re going to be calling your business by something other than your personal name or the names of the partners. 

Registering as a sole trader or a partner is a fairly straightforward and quick process, which often appeals to business owners. However, it’s important to be aware of the drawbacks of these legal structures. As a sole trader or in a partnership, your business will have no legal separation from you. That means, if something goes wrong with your business, then you will be personally liable for it. 

This can be a pretty big risk, so if your business is a serious endeavour, then it’s best to go the route of registering it as a company. 

Registering as a company is somewhat more complex and costly. However, it does allow significantly more legal protection as your company will be a legal entity on its own. Your company will exist separately from you, which is much better for your liabilities. 

It’s always best to get the help of a legal expert when registering your company – the process involves sorting out things like shareholders, directors and company governance. It’s better to have an experienced professional that knows what they’re doing by your side when getting this done. 

Permits and Licences 

Another legal factor that’s important to consider when starting a business, is making sure you take care of any permits or licences you may be required to have. Certain industries may need you to obtain permits or certifications before practising business. For instance, if you’re starting a bar, then it’s important to make sure you have the right permits in place to sell alcohol. 

State and local councils may also have their own rules regarding licences. It’s important to brush up on any state or local regulations and see if there are any permits or licences you need to apply for when starting your business. It can be a bit confusing to know where to find the right information – if you need any help our Regulatory Compliance experts are ready to assist. 

Contracts and Legal Documents  

When starting a new business, contracts can be useful in helping fulfil any legal obligations you may have as well as keeping your business secure. For instance, if you’re going to be entering into a partnership, then it’s a good idea to secure the ground rules of your partnership in a Partnership Agreement.  

Of course, the exact legal documents you require will depend on the nature of your business, plus its unique needs. A legal expert can provide guidance on the legal documents you should have in place when starting your business. We’ve listed a few common ones for your here: 

Is A Business Plan A Legal Requirement? 

No, having a business plan is not a legal requirement for starting a business. Even though you can start a business without drafting a business plan, that’s not something we recommend. Business plans are extremely useful documents. They help keep all your resources, research and ideas in one place. Essentially, it becomes the blueprint for your business which can really help you stay on track. 

Moreover, if you plan on setting up a company with shareholders and investors, there’s a good chance they are going to want to see a business plan before they put any money towards your idea. If that’s something you’re thinking of doing, then it’s crucial to draft a strong and concise business plan. 

What Are The Legal Requirements For An Online Business? 

Setting up an online business is done the same way as setting up an in person business. However, as you will be functioning online, it’s important to take into account the additional legal considerations, as being online comes with its own set of risks. 

In order to manage these risks, you can utilise the help of legal instruments. For instance, a Website Terms and Conditions can help you regulate your website and manage your liabilities. If your website is going to be collecting data off its users, then according to Australian privacy regulations, you need to have a Privacy Policy up on your website. 

Even though an online business can be great for convenience and efficiency, it is necessary to ensure that you properly identify where your business may need legal protection as being online can expose your business to different kinds of threats. Chatting with a legal expert can help you better understand your legal responsibilities when functioning on the internet as an online business – be sure to get in touch with one of ours soon. 

Any Other Legal Considerations I Should Know About?

As important as it is to consider the legal aspects of setting up your business, it’s crucial that your legal considerations don’t end as soon as you’ve managed to successfully set your business up. 

For business owners, legal obligations are an ongoing part of running a business. Therefore, it’s always important to look out for things like consumer law, employment regulations, data and privacy rules. These things are often evolving and changing, so keeping up is essential. 

We understand it can be hard to stay caught up with everything – after all, you have a business to run! it’s always easier if the information you need is delivered directly to you. Join us in a Sprintlaw Membership – we’ll keep you updated on everything you need to know and if you have any questions, you can always book a call with one of our legal experts. 

Next Steps

When starting your business, it’s important to keep up with the legal requirements so you can begin your business venture the right way. To summarise what we’ve discussed: 

  • Legal requirements are integral from the start of your business journey, so don’t overlook them amidst other considerations
  • Registration is a key step; choose a legal structure (e.g., sole trader, partnership, company) and register accordingly
  • Sole trader/partnership registration is straightforward but offers no legal separation from personal liabilities, whereas registering as a company provides more protection despite being more complex
  • Ensure you obtain any necessary permits or licences, especially industry-specific ones like alcohol licences for bars
  • Legal documents such as contracts (e.g., partnership agreement, employment contract) are crucial for clarifying obligations and securing your business
  • While not a legal requirement, having a business plan is highly recommended for organisation and attracting potential investors
  • Online businesses require additional legal considerations, including website terms and conditions and privacy policy to manage risks associated with operating online 

If you would like a consultation on the legal requirements of starting a business, you can reach us at 1800 730 617 or for a free, no-obligations chat.

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