Introduction

Starting a business can be a new and exciting step. However, while many new business owners and founders focus on branding, sales and operations, legal compliance should not be overlooked.

Failing to put in the right legal foundations from the outset can expose a business to unnecessary risk, lead to disputes and cause costly compliance issues both now and in the future.

Whether you are launching a new business, buying an existing business or starting a side hustle, this legal checklist can help guide you so you can ensure that your business starts off on the right foot.

Please note this is a general guide only and should not be taken as legal advice. The below may vary depending on your circumstances and the nature of your business.

1. Choosing the right structure

One of the first decisions business owners and founders will need to make is selecting the appropriate business structure.

Common business structures include:

• Sole trader;
• Partnership;
• Company; and
• Trust.

Each structure has different advantages and implications for taxation, liability, asset protection and administration.

For example, being a sole trader is generally inexpensive and simple to set up, however, you are personally liable for the business including its debts and obligations. In comparison, a company is a separate legal entity that offers greater asset protection but it has additional compliance requirements associated with it.

In addition to seeking legal advice about the appropriate structure for you, it is also important that accounting and tax advice be obtained to ensure that the business is set up appropriately from the outset.

2. Register your business and obtain the relevant licences

Once you choose the appropriate business structure, your business will need to be registered.

Depending on your circumstances and the nature of the business, this step may include:

• Applying for an Australian Business Number (ABN);
• Registering a company with ASIC;
• Registering a business name;
• Registering for GST;
• Registering for PAYG withholding; and
• Obtaining industry specific licences and permits.

What licences and permits may be required will vary across industries. For example, hospitality businesses may be required to obtain food permits and liquor licences.

3. Protect your business name and brand

Many business owners and founders mistakenly believe that registering a business name with ASIC gives them complete and exclusive ownership rights over that name.

In Australia, all business names must be registered with ASIC unless the name is your exact personal name or the company’s exact legal name.

However, registering a business name does not provide exclusive legal protection. As such, your business name, logo and/or brand should also be protected through trade mark registration.

A registered trade mark can help prevent competitors from using a similar brand and provide remedies if your trade mark is infringed upon. It can also become a valuable asset as your business grows.

Before you invest in branding for your business, it is important that you conduct appropriate searches to ensure that you do not infringe on another’s intellectual property rights.

4. Put written agreements in place

When starting a new business, ensuring that written agreements are in place is paramount.

Many disputes arise because business relationships are informal and the parties fail to properly document their rights, obligations and expectations.

Depending on the nature of the business, the following written agreements should be put in place:

• Client or customer agreements;
• Terms and conditions of trade;
• Supplier agreements;
• Contractor agreements;
• Employment agreements;
• Shareholders’ agreements; and/or
• Partnership agreements.

Having well-drafted agreements in place can help define each party’s rights and obligations, reduce uncertainty and provide protection if disputes arise.

Choosing to invest in quality legal documentation from the outset is often less expensive than resolving disputes later on.

Get your shareholders agreement, employment contracts and website legals sorted with our fixed fee legal packages.

Fixed Fee Legal Packages

5. Understanding employment obligations

If you intend to engage staff, you should ensure that you are aware of the legal obligations that apply from the outset.

Obligations that may apply include:

• Providing compliant employment agreements;
• Paying employees correctly under the National Employment Standards and applicable modern awards;
• Implementing and maintaining workplace policies;
• Meeting superannuation obligations;
• Managing leave entitlements; and
• Ensuring a safe workspace.

One of the most common areas of legal risk for businesses relates to employment law, particularly when engaging casual employees or independent contractors.

To ensure ongoing compliance, business owners and founders should ensure that proper systems and documentation are in place before engaging staff.

6. Privacy obligations

Depending on its operations, a business may collect personal and/or sensitive information from customers, employees and suppliers.

If your business collects, stores or uses personal or sensitive information, your business may need:

• A privacy policy;
• Data handling procedures;
• Website privacy disclaimers; and
• Appropriate cybersecurity measures.

Privacy obligations continue to evolve and businesses should ensure they understand their obligations regarding how personal and/or sensitive information is collected, store and protected.

View our website legal package.

Website Legal Package

7. Insurance requirements

While not strictly a legal requirement in all cases, obtaining insurance is an important component of managing risk.

Depending on your business activities, you may wish to consider:

• Public liability insurance;
• Professional liability insurance;
• Product liability insurance;
• Cyber insurance;
• Workers’ compensation insurance; and
• Business interruption insurance.

Ensuring that appropriate insurance is in place can provide valuable protection for businesses.

Ongoing compliance

Starting a business is only the beginning. Business owners and founders must continue to meet ongoing legal and regulatory obligations, including but not limited to:

• Maintaining company records;
• Lodging ASIC documents;
• Meeting taxation obligations;
• Renewing licences and registrations;
• Updating legal documents; and
• Complying with employment, privacy and consumer laws.

Conducting regular legal and accounting reviews with your professional advisers can help identify issues before they become costly problems.

Conclusion

Starting a business involves much more than registering an ABN and launching your brand. Establishing the appropriate legal foundations from the outset can help protect your business, minimise your risk and position the business for long term success.

If you are planning to start or buy a business, obtaining legal advice early on can help ensure your business is set up correctly and well-positioned for future growth.

Additional resources

Frequently asked questions