Commercial & Business Law

You may be thinking of starting your own business and being your own boss. Research and preparation are essential if you want to make it a success undertaking. This is because the market can be competitive and there are many legal and regulatory requirements to be considered.

For example these include:

• Choosing the appropriate business structure and registering your business entity.
• Complying with Australia’s complex taxation laws, including registering for Goods and Services Tax (GST), if applicable.
• Ensuring you understand your obligations as an employer under Australia’s workplace laws and occupational health and safety regulations.
• Obtaining any relevant licences and permits from local councils and other government bodies.
• Protecting your business’ intellectual property, and registering any necessary patents, trademarks and designs with IP Australia.
• Ensuring ongoing compliance including keeping proper accounting & financial records and submitting annual tax returns.
• Mitigating personal risk and ensuring you have plans in place to cover a range of contingencies.

Obtaining advise from a solicitor is essential to ensuring your business is best placed to face a range of legal challenges and opportunities that arise throughout establishing and building your business.

Choosing a business structure

If you are running a business, it is important to have the right legal structure in place to support your goals. We can help you choose a\the structure that best suits your needs and provides for the future growth of your business and the protection of assets.

If you are going solo, you can set up as a sole trader using an Australian Business Number (ABN). Operating as a sole trader is simple and cost effective. However the owner is wholly liable for the debts and activities of their business.

A partnership may be ideal when two or more people share the same vision of success with each contributing their skills, experience, and resources to run the business. Careful choice of a Partner pays dividends in the long run sharing the responsibilities and energy of building the business. A downside is that there is potential for conflict between partners and partners are jointly and individually liable for the debts of the business.

An incorporated Company structure is popular for small to medium sized businesses and could be a good option, particularly if you want to grow your business. While there are some setup and ongoing costs, companies may be able to access more favourable tax rates and transfer of ownership can be effected through the sale of shares. A Company is a separate legal entity and can provide a certain level of protection for its Directors through Limitation of Liability. Care should be exercised when entering guarantees as directors of the Company as this can extend personal liability.

A trust structure can help to protect assets and may offer taxation benefits. Trusts can be complex, however, and must be set up and administered correctly to obtain their anticipated objectives.

Buying or selling a business

Whether you are looking to buy or sell a business, a share in a business, or a Company, it is important to get advice from an experienced lawyer. We can draft, review, and negotiate the sale conditions, recommend due diligence, and ensure that your legal rights are protected. We strongly recommend to our clients to also obtain input from their accountant who we work with to structure your transaction to provide an optimum outcome taking into account the legal, financial and taxation implications.

The sale and purchase of a business sometimes includes incidental agreements such as a service contract or commercial lease. These documents need to be carefully examined to ensure they are appropriate for and transferrable to the incoming business operator. The transfer of intellectual property, domain names and trading names are often relevant as are the arrangements for any current and transferring employees of the business.

Shareholder agreements and partnership agreements

There are certain agreements that can be prepared to help with the ongoing management of your business.

A shareholder agreement is a binding contract between the shareholders of a company. It governs the relationship between the shareholders and specifies who controls the Company, how the Company is owned and managed, how shareholders’ rights are protected and how they can exit the Company. A robust shareholders agreement provides a framework for the transparent ownership and management of a Company. If a shareholder agreement is materially breached, an aggrieved shareholder can take action against another shareholder to assert their rights.

A partnership agreement is a contract between partners in a business. A formal partnership agreement sets out your arrangements so that you and your partner/s are aware of all your responsibilities. The agreement also sets out procedures for termination, retirement, or sale of the business as well as processes to value the business or to resolve disputes, if necessary.

Although setting up a formal agreement may present an upfront cost, in our experience these costs are a small investment compared to Court or Tribunal proceedings determining a dispute where no agreement exists.

Is your business owed money?

In a perfect world, you would never have to chase payment of money owing to you from customers for outstanding debts. The reality is that some clients or customers will be slow payers or refuse to pay their invoices at all. There are a number of paths to chasing payment of money owing to you. The choice will depend on the circumstances, the identity of the debtor, and the amount owed.

If the debtor is a Company, serving a statutory demand can be an effective way to recover funds. The demand creates a presumption of insolvency unless the Company pays up or can justify reasons to have the demand set aside, in Court.

If the debtor is a sole trader or partnership, you may start with your lawyer issuing a letter of demand or pursue payment in the Local or District court. Depending on the circumstances, there may be room for negotiation, and you could enter into a Deed with the debtor for repayment of the debt by instalment payments.

There is a cost-benefit consideration when pursuing an unpaid debt. An important consideration is to avoid throwing good money after bad. We understand the relevant avenues and processes of debt recovery and can guide you in making a sound commercial decision to recover the outstanding debt and, to the greatest extent possible, your legal fees.

If you need assistance in this area of Law, contact John Comino at [email protected]  or George Caramanlis at [email protected] or call us on 02 9386 5888 for expert legal advice.