When starting up a new business venture, there are some common mistakes that people make, or things that are overlooked during the early stages. Below are some tips to ensure that your business runs smoothly in the long run.
- Decide on the best business structure
There are different structures that you can operate a business under, and each have their advantages and disadvantages. These include sole trader, partnership, trusts and companies. Depending on the type of business you have, and what your needs are, one of these structures, or a combination on them, may suit you better than others. You should speak to an accountant and a legal advisor about which type of structure is best suited to your needs.
- Complete all necessary registrations
Once you set up your trading entity, you need to ensure that you have completed all necessary registrations that you need to operate that entity. These registrations include things like registering your business name, ABN, and registering for GST. If you are unsure what registrations you require, you can contact the Department of Commerce, your accountant or your lawyer, all of whom should be able to point you in the right direction.
- Get some clearly worded documents for any agreements you are making
Regardless of which structure you decide on, you should always get things in writing. If you do not document your agreements, you leave things uncertain, and this almost always leads to costly disputes down the track. So for example, if you decide on a partnership, ensure you get a partnership agreement drafted, if you decide on a company, get a shareholders agreement. This principal continues to apply for agreements you make as you grow your business, so if you employ people you should get employment contracts and if you are supplying goods or services, you should have terms of trade.
- Have documents reviewed before you sign them
Always have important documents like sale of business agreements, leases and sub contracts reviewed before you sign them. These types of agreements are generally going to lock you into various risks and obligations for a long period of time, so it is vital to the success of your business to know what these risks and obligations are.
- Ensure that you are complying with all laws and codes of practice for your chosen industry
There are numerous laws that impact on all businesses, including consumer laws, privacy laws as well as any industry specific codes of practice you need to be aware of. So it is important to ensure you are fully aware of what these laws are and how they will affect you.
- Begin with the end in mind
It is good to have a long term plan for your business, and as with any other agreement, it is best to record this plan in writing. So ensuring you have a succession plan in place with your business partners for long term events like the eventual sale of the business or the death of a partner, it is important to consider your need for things like buy/sell agreements to protect your family, as well as your business.
These are just some of the key tips to consider when starting a business and are by no means an exhaustive list. If you are considering starting a new business venture, or purchasing an existing business you should speak to your lawyer, accountant and financial advisors to ensure that you are going into it aware of all of your risks and ensuring that you are best protected against them.
If you are considering starting a business and have any queries, please contact us at Lynn & Brown Lawyers on 9375 3411 or https://www.lynnandbrown.com.au/contact/
About the author:
This article has been authored by Steven Brown from Lynn & Brown Lawyers. Steven is a Director and has over 18 years’ experience in legal practice and practices in commercial law, business law and estate planning.