Since the global pandemic began, the world has been forced to adapt. This can’t be more true for people who used this as a perfect opportunity to launch their business.
Recently Lawpath – Australia’s leading online legal software platform for small businesses conducted internal research and found that professional services businesses saw a 41 per cent increase from Nov 2020 to 2021, with Q3 2021 witnessing most business registrations. Furthermore, company registrations doubled in 2022.
The market is ripe, and entrepreneurship continues to excite people. But the big question is, how do you get started when you’re, well, just getting started?
As a first time entrepreneur, there’s a lot riding on your shoulders, and you would rather not think about the legalities of your business, but the hard truth is that getting the legalese right is crucial for your success.
Here’s a list of legal hurdles (or challenges) that you can encounter and tips to overcome them:
1. Choosing the wrong business structure
Not giving enough time and moving swiftly with your business structure selection can cause you a lot of harm.
Whether you are a sole trader, a partnership or a company or trust, it’s good to know that each entity structure comes with its own set of tax and legal obligations. Sole traders are taxed on their profits individually which can be expensive, but the same is not true for companies.
This is one of the examples, and to seek clarity, it is advisable to speak with a business lawyer who can thoroughly understand your business needs and suggest the right structure.
2. Not formalising agreements and contracts
Gone are the days when you could shake hands and seal the deal, except in a few cases. That’s why formalising agreements and contracts is crucial as they are legally binding.
If you don’t wish to deal with headaches and dramas in the future, it is best to lay down the ins and outs in your agreements with your co-founders, vendors, stakeholders, suppliers and investors.
3. Not getting licences in order
If you wish to trade legally, it is imminent that you have your licences in order – this isn’t universal, but true for a lot of businesses in Australia. Not having the correct licences can lead to heavy penalties and fines. This is especially true if you operate a cafe, restaurant or any business in hospitality.
Not sure whether you’re eligible for a licence? You can test your eligibility here.
4. Declaring incorrect taxes
As an individual filing, your taxes is a no-brainer, but it isn’t as straightforward for small businesses where taxation can be an uphill battle.
It is, therefore, recommended that you work with professionals that not only understand your business structure but can also recommend ways to assist with filing the right taxes.
5. Launching a website without due diligence
If you’re an online business, you know well that your website is your bread and butter, but imagine if you have to take it down because you chose to ignore website terms and conditions or privacy policies?
To prevent this from happening, it is advisable that you comply with rules and regulations and have the right legal documents for your business.
The joy of launching a new business is unparalleled, and ensuring that it’s protected will help you stay on track. Ask 250,000 small businesses across Australia who have trusted Lawpath. Lawpath’s Legal Advice Plan gives you access to legal documents as well as easy access to on-demand lawyers that will set your business for success.
Get smart with your legal and save time and money with Lawpath today.
