Starting a small business is not an easy task, as there are many initial decisions that you must make. The establishment phase of any business is a critical time for establishing a strong basis upon which you can build a successful business.
There are all kinds of factors to consider when starting up a business and a number of legal requirements that must be complied with. While the process can seem quite daunting, consultation with key support professionals, such as your solicitor, accountant and financial planner, can assist you in ensuring your business is appropriately structured and complies with all legislative requirements.
There are four basic types of business structures: sole trader, partnership, company and trust, which have different benefits and drawbacks, and suit different business purposes. In selecting which structure best suits the needs of you and your business, a number of considerations must be taken into account, such as the objectives of the business, the tax structure you want, protection from personal liability, the legal obligations of the different structures, how long you intend to run the business, whether you will have employees, whether you will bring in a partner or whether you have one already, and whether the business will need equity investors.
When deciding on the right structure, your solicitor will assist you in identifying the needs of the business and its risk factors. It is important to consider whether you will need protection for your personal assets when deciding which structure is best for your business. For example, if your business will employ people who might be at risk because of their work (construction workers, for example) a company structure may be suitable because of the insurances and indemnities that a company can take out.
Your solicitor may recommend a combination of trusts and companies. A company gives you limited liabilities and favourable tax rate. Trusts give you flexibility over how income is distributed. You may use a company and a trust together to create a business vehicle that provides for the separation of assets.
For example, you might put land and buildings of the business into a trust and the operations of the business into a company or different trust structure. Separating the assets allows the business owner to spread the business’s risk across two structures, offering a level of legal protection in the event of litigation.
The type of business structure you have selected affects the way your business name is registered.
A recent survey revealed that 80 per cent of small businesses surveyed incorrectly believed registering a business name also provides trade mark protection. Registering a business name does not give any proprietary or ownership rights. Ownership of a name in Australia is only possible through trade mark registration.
If you choose to operate your business as a company, you will need to register your business as a company with ASIC, however if you are not operating your business as a company, you will need to register the business name with your State’s consumer affairs body. By law, anyone trading under a business name in Queensland must register their business name with the Office of Fair Trading.
Your solicitor and accountant will assist you in obtaining what you need of the following:
We recommend that you seek advice from an accountant in regards to your taxation obligations, be it GST, PAYG, FBT etc and also in regards to employee superannuation.
Your solicitor can assist you with advice on your rights and obligations in the Landlord/Tenant relationship and assist in negotiating the terms on the lease, as well as providing advice on assignment of a lease, subletting, periodic tenancy etc.
Insurance requirements will vary from one business to another. We recommend that you consult with your insurance broker/financial planner to ensure that you are not exposed to risk due to insufficient cover.
By working with your solicitor when starting your business, you will also be provided with advice on areas that you may not have necessarily considered such as compliance with legislation in the following areas:
Here at Briese Lawyers, we are happy to cooperate and consult with your accountant and financial planner to ensure that all your requirements and all aspects of your new business have been considered and appropriately dealt with. Further details with respect to starting a business may be obtained by contacting one of our lawyers, who can offer practical legal advice and guidance.