In this article Kim Packer from J and K Law shares her Top 3 Must Haves for small business owners in Australia to keep you and your business on the right side of the law.
- Getting your business structure right and having it properly documented
There are a number of legal entities that you can use to operate your business. These are usually determined in conjunction with your legal adviser and accountant. The reason for choosing the appropriate legal entity is asset protection and risk management but there can also be taxation and financial advantages in selecting one entity over another.
A number of factors need to be taken into account such as the size of your current business operations, the proposed growth and development of your business, the nature of your business and how you currently hold any other assets, aside from the business.
For example, if you own your home or other real property and there are risks for your business with the goods or services your business provides, then you should not operate the business as a sole trader or in a partnership.
If you are in business with another person or other people, you need a written document which sets out the duties and responsibilities of each person, the exit strategy if one person wants to leave the business, confidentiality obligations and other matters which streamline the process if your business relationship with the other person breaks down.
- Protecting your intellectual property
Your intellectual property is usually one of your most important and valuable business assets. Intellectual property includes your client lists, supplier lists, technical specifications and drawings, budgets and forecasts, marketing strategies, sales information, price lists etc. You need to ensure that third parties, including employees or contractors cannot use your intellectual property to undermine your business or compete with your business.
You also need to ensure that any development of your intellectual property by your employees or contractors vests in you, so you have a continuing right to use the improved intellectual property.
- Status of your employees and contractors
Irrespective of how you classify your employees or contractors, there is a clear legal distinction between the two work arrangements and failing to ensure you properly categorise your employees and contractors can leave you vulnerable to unpaid PAYG tax and superannuation, unfair termination claims and underpayment of salary and employee entitlements.
The main underpinning factors between employees and contractors is the level of control and flexible each type has. Contractors have far greater control and flexibility in their work arrangements. They can generally chose the hours within which they work and who will actually perform the work you require, ie they can subcontract another person to do the work if they cannot do it themselves. There are a number of other factors which dictate where your worker is an employee or a contractor so you should seek legal and financial advice if you are looking to engage an employee or a contractor in your business.
This information is intended as general information only and is not intended to be legal advice for you. J + K Law make no representations regarding the suitability or accuracy of this information for you or your business. You should seek legal advice before making any decisions regarding your business.