If you managed to watch any of the Shark Tank episodes which aired on Channel Ten recently, you would have observed the panel of ‘Sharks’ verbally destroy contestants who struggled to answer some of the Sharks questions about some business basics. Steve Baxter wrote in an article for BRW recently, “We saw plenty of amazing inventors, outstanding sales people and hard workers who had achieved extraordinary progress. But we saw far too many people who didn’t understand the basics…”.
In terms of basics, here three legal questions you may need to ask when you’re starting a new business venture. People often end up knocking on our door trying to right wrongs which could have been avoided if they had asked the right questions in the first place.
What structure is right for me?
When deciding on a structure for your business, choose the one that bet suits your business needs. There are advantages and disadvantages for each structure. You may change your business structure throughout the life of your business as your business grows and expands. A good website covering the basics is www.business.gov.au or otherwise seek professional counsel.
Do I need to protect my brand?
Yes! There are different ways to protect and manage your Intellectual Property (IP). Developing an IP strategy is essential to making the most of your investment and should focus on your competitive strengths. Your brand, inventions or designs are assets unique to your business. You can combine registered and unregistered rights to optimise IP protection by using confidentiality agreements together with the registered rights such as trade marks and designs. For more information go to: www.ipaustralia.gov.au to see what IP can be protected.
Do I need to worry about Contracts?
Small business are major users of contract law and having contracts in place (such as terms and conditions, employment agreements etc.) can protect you and prevent costly legal battles later on. Technological change offers great opportunities for small business but first, you need to establish what laws apply to your new business and what is the nature of your business. Some of the common contracts which most businesses do require are as follows:
Client contracts – If your business provides services, you will need a master client contract to be amended for each client which sets out the services you provide and expected start and completion date, your fees and how and when you expect to be paid.
Terms & conditions – If your business is selling goods then you will need a sales contract that can be signed by your customers or a set of online sales terms and conditions which can be viewed online. The sales contract should indicate what products are for sale, the prices for the products, payment terms, retention of title, your exchange, returns and refunds policy and your guarantee obligation under the Australian Consumer Law.
Employment contracts – If you employ any staff you will need an employment contract. It is important that your employees understand their obligations, and the best way to ensure this is to have an employment contract which clearly sets out your expectations. You will need to ensure that all your employees are being paid according to any applicable Awards and that they will receive their statutory entitlements.
Contractors contracts – If your business does not have employees but choose to have contractors who they can contract work to, it is important that you and the contractor each understand your rights and responsibilities in the principal and contractor relationship. Misunderstandings which occur, such as the contractor holding itself out as an employee of your business, could lead to your business incurring liability and possibly legal action taken against you.
Leases – If your business operates from a physical premise that you do not own, then your lease is a very important contract that should be reviewed in detail.
Having good legal documents can help avoid disputes and worse, litigation, which is costly and time-consuming, and takes you away from focusing on growing your business.