Starting a new business is exciting, but there is also a lot of paperwork involved. It’s because commercial and company laws are quite complex, with many regulations to understand and adhere to. You don’t need to be a legal professional, but understanding the basics of company law can save you from serious issues in the future.
Deciding on the structure of the business is one of the first legal decisions you will make, and it has some far-reaching consequences. Your business structure determines your legal liability, tax obligations, and, of course, how much control you have over the business.
Every company structure is different, such as sole traders, partnerships, companies, and trusts. An example of a key difference is that your personal assets are mostly protected from business debts if you’re part of a company. But as a sole trader or part of a partnership, personal assets aren’t protected.
If you choose to operate as a company, you’ll need to comply with the Corporations Act of 2001. This legislation outlines the legal obligations and responsibilities of company directors and officers, such as maintaining proper financial records, acting in the company’s best interests, and avoiding conflicts of interest. Non-compliance can lead to serious penalties, including fines and imprisonment, and ignorance of the law can’t be used as an excuse. Considering what’s at stake, you must engage an experienced commercial lawyer to help ensure you meet your regulatory requirements.
Most aspects of company law revolve around contracts and agreements. Whether it’s employment contracts for staff or supplier agreements, you need to understand your obligations in this space. Basically, all contracts and agreements should be written carefully to protect yourself and your business interests.
Ideally, if you need to sign or create any legal documents in the course of operating your business, you should seek legal advice. These can help protect you against legal issues and also ensure your contracts are enforceable under Australian law.
*This information is current at the time of publication. For accurate legal advice, please contact Scammell & Co on 08 8440 270.
