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Key Legal Aspects to Prioritise When Starting a Business

Setting up a business? Here are the top legal aspects you need to adhere to for a seamless and smooth-flowing venture.


Starting a business takes a lot of hard work and requires long grueling hours just to make sure everything is in order. If you are on the cusp of starting your own business, you have to learn about the finer details of having contracts in place to run a smooth-flowing business.

We’ll do the legwork for you as we walk you through the business legalities you need to know.


Choosing Your Business Structure

The very foundation of a seamless-running business is its structure. Setting up the correct structure and all its associated documents from the beginning will provide a solid sense of direction for your business.

The three most common business structures are sole trader, company, and partnership structures. Read more about each structure here.

In a nutshell, the structure you choose will depend on your plans, how much you envision your business growing, its value, how risky your activities are, what type of industry you are in, and whether you are doing it alone or with others.

Finding the right structure can be a difficult feat, but help is always available. If you are not sure which one is best for your business venture, you can reach out to us for a corporate consultation with one of our lawyers.


Documents You Need For Setting Up a Small Business

If you are going for a partnership, you will need a Partnership Agreement. You and your partner will need to register for an ABN.

If you are looking to start a company, you have to register with ASIC as well as have a Shareholders Agreement if there is more than one owner.

If you are the only owner of the business who is undertaking low-risk activities and doesn’t have a huge budget, you might consider becoming a sole trader. To become one, you need to register your ABN which is a free and quick process.

The only downside of being a sole trader is that your business liability won’t be separated from your personal liability. This means that you could be held responsible if something goes wrong. To protect yourself in this case, the important documents you will need are insurance and well-drafted contracts between you and your customers.


Getting Contracts in Place Between Your Business & Your Customers

The next big step to setting up a small business is to have the right contracts in place. Regardless of your business structure, these contracts will provide the necessary legal protections that you need and also help minimise risk. It will outline the expectations of both parties.

The type of contract you will need will depend on the type of business you are running. For example, if you are running an online clothing store, you would have a contract between you and the customer in the form of Online Shop Terms & Conditions which may cover things such as delivery, payment, and returns.

If it is a physical garment or clothing store, you wouldn’t need contracts with your customers, however, you would still need contracts with your suppliers.

We have extensive experience in drafting contracts and agreements for small businesses in a diverse range of industries including Hire Agreements, Services Agreements, Gym Terms & Conditions, Recruitment Terms & Conditions, Graphic Design Terms & Conditions, and more.


Why You Need to Have a Contract With Your Customers

Having contracts in place with your customers offer several benefits.


  • You are more likely to be paid on time.

  • Your intellectual property has an added layer of protection.

  • The contract can clearly explain the scope of work and make provision for more payment if more work needs to be done.

  • Disputes between customers and your business can be avoided.

  • Your business’ liability is limited.

  • Your business is more likely to comply with the relevant law, for example, the Australian Consumer Law, by only having fair contract terms.


Setting Up Contracts With Your Business Suppliers

Having strong relationships with other businesses, especially your suppliers, is important for the success of your enterprise.

These benefits include:


  • Greater reliability, and therefore, continuity in the goods or services you provide.

  • You will have recourse to other options if there is a problem with supply.

  • Payment terms are clear.

  • Both parties will understand if your agreement is exclusive or not.


What Other Documents Might I Need?

Are you employing other people? You may want to set up Employment Contracts. If you are using contractors, or a contractor yourself, you will need a Contractor Agreement.

Not sure whether you are using contractors or employers? We are here to help. We can organise a consultation with a lawyer to explain this to you.


Do You Need On-Going Legal Help?

A lot of things can happen along your business venture. You might want amendments made as your business changes or if in any case, the law changes. Please reach out to us at Law By Design if you need any assistance in starting your business. You can reach us at heidi@lawbydesign.com.au.

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