Many people dream of owning their own business and some people are tenacious enough to take the leap and start their own business. When doing so, it is important to know what legal considerations to take into account. This article will highlight the key legal considerations when establishing a new business.
1. Choosing the most appropriate business structure
You’ve come up with a business idea, established its viability and are ready to push ahead but what is next? First up, you will need to decide on the business structure that is most suitable to your business and its circumstances. This is an important step as it can determine things such as tax liabilities, potential personal liability, responsibilities as a business owner and how much control you have over the business.
The business structures you can choose from are highlighted below and your choice will depend on the size and type of business you intend on starting as well as your personal circumstances. It is important to keep in mind that you can change your business structure if your business or personal circumstances change.
Types of business structures to choose from:
- Sole trader – This is the simplest business structure and gives you full control of your assets and business decisions. This structure will make you personally liable for all income tax.
- Company – A company is a separate legal entity and can, therefore, limit your personal liability.
- Partnership – When the business is owned by two or more people and the income and losses are distributed accordingly.
- Trust – A trustee carries out the responsibilities of the business on behalf of its members and offers asset protection.
2. Acquire the respective tax registrations
Once you have decided on your business structure you will need to acquire the correct tax registrations which may include goods and services tax (GST), pay as you go (PAYG) and reporting to the Australian Tax Office (ATO).
3. Protect your intellectual property (if required)
Intellectual property represents the property of your intellect and includes things such as new products, services, processes or ideas that you have developed. It is important to formally register your IP to ensure legal ownership of such items.
4. Acquire the necessary licenses (if required)
Depending on the industry or profession of your business, you might be required to attain a specific license before you can start operating. For more information on whether you require a license for your business, visit the ABLIS website.
While starting a new business can be an extremely exciting time, it can also be overwhelming. This article highlights some key legal considerations to consider when starting a new business. To ensure your business is set-up correctly it is advised you consult a commercial lawyer to guide you through the process and ensure a stress-free start to your new venture. Contact D’Angelo Legal’s team of experienced commercial lawyers for further assistance and start the conversation.
Disclaimer: The information contained in this article is intended for general informational purposes only and does not constitute legal advice or establish a solicitor-client relationship. The content is provided as is, without express or implied warranties of any kind or considering your circumstances. This article is not intended to be a substitute for obtaining legal advice from a solicitor. Readers are encouraged to consult their legal advisors for specific legal advice tailored to their needs. No reader should act or refrain from acting based on this article’s information without seeking professional legal advice.