How to get legally in order when establishing a business

How to get legally in order when establishing a business

Whether it’s drawing up a new contract, trademark protection or entering into a lease, establishing your own business can come with a myriad of legal hurdles.

Often, it’s hard for business owners to know exactly what needs to be done, and in many cases, how to do it. Whether you have a business background or not, it can be a completely overwhelming process.

As the founder and principal lawyer at Her Lawyer, it’s my mission to help women entrepreneurs and business owners navigate these kinds of legal hurdles and ensure their business is set up for longevity and success.

When it comes to legal protection, knowledge is power and being equipped with the right advice from the beginning can save future headaches.

Below are some of the key questions you might want to consider.

First, what are they key reasons business owners and entrepreneurs seek legal advice when getting started?

Every business is different when it comes to its legal needs. Many businesses won’t get any help at all — at least not until a major problem emerges. But overall, some of the most common areas business owners approach Her Lawyer for include:

Legal issues

Business owners tend to make first contact with us about a discrete issue. This could be a business dispute, a lease they need to sign or a contract they need prepared. But in many cases, they then want our help to understand how the issue they have fits into a larger picture.

If they’ve come to us to help solve a problem, they want us to help them make sure it never happens again. It’s about identifying risks, coming up with a legal strategy and helping to manage it.

Contracts

After legal strategy, clients most often approach us for help preparing a contract. That’s usually their foundational document, which sets out the terms on which they are prepared to do business with their clients or customers.

Collaboration agreement

The next most common contract would probably be a kind of collaboration agreement. That might be a shareholders’ agreement (an agreement between the co-owners of a company), an influencer contract or a kind of joint venture agreement where they’re co-producing a product or service with another business owner.

Trademark protection

Business owners need to secure trade mark protection. We do this through our Tactical Trade Marks project, which helps business owners understand their potential IP and how best to secure protection for it. We also help clients to go on to secure that protection by applying to register a trade mark.

Leasing

Leasing is another big reason clients approach us for help. Entering into a commercial or retail lease is a huge step for a business owner and understanding their rights and responsibilities – and negotiating the terms – is essential before signing on the dotted line. 

What should I legally prioritise when establishing a business a budget?

With so much going on when you’re starting a new business, it’s hard to know where to start when getting legally in order.

My advice? You should prioritise your greatest area of risk first.

For most service-based businesses, your key legal document will be a client engagement agreement. This manages your relationship with clients and protects you in the event of a client dispute about any number of things such as termination, payment, changes to scope and more.

If you’re selling goods online, then your key document should be eCommerce Terms and Conditions. This protects you in a similar way as it manages the terms of the delivery of your goods to clients.  

If you’re on a tight budget, you should focus your attention on customising these key documents and look to trusted templates for documents in lower risk areas such as a Privacy Policy or Terms of Use. Of course, your best level of protection comes from completely customised legal documents where a lawyer can consider the specific risks to your business.   

When should a business owner actually engage a lawyer?

Seeing a lawyer when you’re starting out your business means that you get started on the right foot. This is the ideal scenario because it means you can map out what legal strategies and documents you need in place to ensure your business is set up for success.

Realistically, cash flow can be an issue for a lot of start-ups, so we tend to deal with businesses who have grown to a point where they’re able to financially prioritise legal help.

What we aim to avoid for business owners is getting to a position where they’re forced to seek legal help because something has gone wrong. We’d rather see women in business thrive and the best way to do that is from a proactive legal standpoint rather than being forced to respond because some didn’t go to plan.  

How can I avoid a panic moment when something goes wrong?

Whether it’s a poorly drafted or non-existent contract, employee dispute, trademark issue or last-minute lease advice, they all have one thing in common – they cause extreme stress, financial burden, and possible reputational damage to the business. 

Getting legal advice is essential, and try not to let fear, or the feeling that you’re not sure what you’re doing, stand in the way of getting advice. 

Panic moments are best avoided by getting legal advice early, and proactively addressing potential issues.

There’s nothing more stressful than scrambling for legal advice the night before a settlement deadline or when your business reputation is being compromised by a rogue client. Knowing your business risks and familiarising yourself with some legal basics can also help.

We’ve got several blogs and legal guides on our website to help you do this.  

The team at Her Lawyer.

I’m hiring staff. What legal factors do I need to consider?

Hiring a new employee is an exciting time, but it doesn’t come without its risks. Familiarising yourself with employment law, particularly the Fair Work website is a great place to start understanding some of these risks.

Key considerations include any applicable awards, classification under an award, payroll, tax and super. You’ll also want to speak to a broker to ensure that your business has the correct insurances in place, such as worker’s compensation insurance.  

Work Health and Safety law affects every business owner and tells us that business owners have a duty to provide a safe place of work which includes taking steps to minimise the risk of harm to employees. A work health and safety policy is a great place to start. 

Of course, you should also have a customised employment agreement in place in order to properly protect your business.

How do key legal issues we should consider differ according to the business you’re running?

In my practice, I see a wide range of businesses being started and run by women. While every business is different and has its own concerns, many of these businesses can be grouped into a number of key areas that then individually share their own challenges (and opportunities).

Below are three such major groups of businesses:

Consulting businesses

Consulting businesses usually revolve around the relationship between the business owner and the client, where the business provides a service. Having a client engagement agreement is really important because it sets the expectations, rights and responsibilities of each party.

If you’re the type of consultant who also contracts work out, you’ll also want a contractor agreement in place to protect yourself. 

Depending on the nature of your business, you may also require a privacy policy. We recommend that most businesses have a privacy policy as best practice, however, some businesses, such as health professionals (psychologists, therapists, etc) are required to have one by law. 

eCommerce businesses

Your key document in this business model should be eCommerce Terms and Conditions. This will cover important terms such as delivery, risk, payment, refunds, credit, and more.

As your business lives online, you’ll need to give some extra though to protecting your website too. Terms of Use govern the way that visitors can use your website, so we recommend this document alongside a privacy policy. These are usually displayed on the website. If you’re also offering an online course or subscription model, you’ll likely need separate terms for these too.

You may also want to consider a copyright protection strategy. This is important in protecting your valuable intellectual property, such as the content or images on your website. There’s no copyright police, so it’s your responsibility to check for infringement and it’s best to take steps to avoid it from happening in the first place.  

Retail businesses

Retail businesses usually have a bricks and mortar home. This means that you’re either looking a purchasing a commercial property or signing up for a lease. In either situation, it’s really important to have a lawyer look over those contracts and undertake certain searches and checks to make sure you’re getting what you pay for. Taking on a lease or purchasing a property can be a big risk to your business, so you want to make sure you’re making the right decision.  

Depending on your industry, you may also want to investigate the applicable regulatory bodies. An example of where this might affect your business is product labelling. The ACL provides that certain things must appear on labels, for example food labels. Another example is the Therapeutic Goods Association. This body regulates claims about medical devices and health products, for example, where a business makes a claim about a product that can deliver certain health outcomes.  

Both eCommerce and Retail businesses should familiarise themselves with the Australian Consumer Law. This is the law that governs how businesses act in relation to consumers (customers). You can get more information about the ACL through the ACC website and Fair Trading. One of the most well known areas of the ACL is consumer guarantees. This deals with situations where a business have to provide a refund or exchange.  

Businesses should also consider a policy or procedure that outlines the way that staff should deal with complaints or requests for refunds. This will ensure compliance with the ACL and maintain a consistent level of customer service throughout the business.  

Women’s Agenda is working with Her Lawyer to deliver key guides and ideas covering off some of the most common legal issues facing women in business. You can check out Her Lawyer here.

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