Essential Legal Services for Business Owners
We work with small to medium sized businesses regularly, helping them keep on top of their legal obligations and assisting them with a wide range of legal matters, which is why we’ve compiled this list of essential legal services for business owners.
The most common legal services that we provide to our business clients are:
- providing advice about the appropriate structure for your business and setting up a new structure for that purpose
- assisting with the legal requirements of starting a new business
- preparing employment contracts
- preparing license agreements and leases
- giving advice on franchise agreements and other agreements and contracts
- preparing contracts for the sale of a business.
Legal services for business owners: Some tips
Following are some essential considerations that should be in the forefront of your mind if you run a business and particularly so when you are establishing a new business.
- Register your business – business owners have legal obligations to register their business name and to register their business for GST purposes in certain circumstances, to obtain a tax file number, to obtain an ABN and to register for PAYG tax where relevant.
- Protect your intellectual property – make sure you protect your brand by registering any trademarks and your domain name and other brand recognition that you use.
- Become a legally compliant employer – make sure that you are aware of your legal responsibilities to your employees. These obligations encompass a duty to keep employees safe from hazards including bullying and unsafe plant and equipment, to provide them with fair working conditions and to protect their privacy.
Starting a new business
When starting a new business, there are a variety of structures that you can use such as:
- sole trader
We can recommend the structure that is most appropriate for you in all of the circumstances and prepare the documentation that you need for your new business structure.
The following provides some information about the nature of each of these structures to give you the chance to consider for yourself what structure might be appropriate for you.
This is the simplest structure, requires the least amount of accounting work to keep up with and is arguably the cheapest to set up and run. A sole trader retains complete control of the business structure, but equally they carry full responsibility for the debts of the business structure. The other downside is that it offers no ability to share the tax burden of the profits earned in the business as all of the profits are taxed in the hands of the sole trader.
A partnership may be an option for you if you are going into business with someone else. This structure is also quite simple. It has the added benefit of enabling the profit to be shared amongst the partners to ease the tax burden on an individual.
Trading using a company structure is a little more complicated and more expensive to administer each year from an accounting point of view, but it does offer some great benefits. It allows you to build up your business with money earned by the company while paying the company tax rate on funds that remain in the company or are reinvested in the company. This is beneficial as the company tax rate is often much less than the individual tax rate payable by the individual controlling the company.
There is added flexibility in terms of distribution of income if the shares in the company are owned by a trust which then allows distribution of income through the company as a dividend to the trust. This income in the trust can then be distributed to the potential beneficiaries of the trust in the most tax effective fashion.
The other main advantage of using the company structure is that it offers you some protection from liability. The liabilities incurred by the company are not your own personal liabilities and if the business runs into trouble, you are at less financial risk personally than if you had used the sole trader structure. This protection is circumvented however if you sign a guarantee which makes you personally liable to the bank for loan to the company.
In days gone by, the Trust was the most attractive business structure, but due to changes in the law regarding the way distributions from trusts to companies are treated and due to certain tax benefits that existed for trusts, the halo of the trust has become a bit dull. Trading as a trust is more complicated than trading as a sole trader or partnership, but it still does offer flexibility in terms of the distribution of income, which can be a very alluring attribute in certain circumstances.
As with the company structure, the trust structure offers a level of protection from the liabilities incurred by the business.
Useful Links for Business Owners
- Site for information on registration and licensing including liquor licensing and information on small business generally
- Site for government information and services for business
- Insights for funding and grants for business
- Small Business Commissioner for South Australia supporting small business
- Information about employer obligations
We’re here to help your business through any legal obstacles, so contact us today so we can start building our relationship.