Understanding your legal responsibilities as a business owner
Are you considering starting a business? At a loss as to what your legal obligations and responsibilities would be? Well, you’re in luck. Owning and running a business can be a somewhat complicated and stressful experience if you aren’t sure about what you are legally obliged to do. In today’s article, we have a look at the areas one would need to consider when starting a business. From marketing to money management, we’ll go through all the legal responsibilities of starting your own enterprise, so read on to find out more!
Before we can even tackle issues such as accounting or BAS statements, the first thing any potential business owner has to do is handle their business registrations. This is step one of owning a business and will require you to register for an Australian Business Number (ABN) and a business name. The process of doing this is relatively pain-free and can be done online in a matter of minutes. You will also need to ascertain if you need to register for GST. Depending on where you are situated, you may also need to register for other licenses in accordance to your local council laws. These registrations and licenses may include food handling, alcohol or wellbeing premises registration.
Those Dreaded Taxes
Taxes, the one thing that we can all mutually agree on detesting. However, taxes are an integral part of running a business and business owners are required to apply for taxes such as GST, payroll tax, land tax, PayGW tax for employees and fringe benefits tax. In order to ensure that you have applied for all the necessary taxes, it is important that you consult with a member of the ATO or a personal lawyer who will be able to advise you on all your legal obligations, tax wise. Failing to do so may land you in hot water with the ATO and result in hefty penalties.
Keep in mind that your monthly or quarterly business activity statement (BAS) is the reporting mechanism for GST, PAYGW, income tax, fuel tax credits and fringe benefits tax.
The base level of insurance that you need will differ in accordance to your business type. Generally, it is always advised that business owners go beyond just the minimal level of insurance in order to further protect the business from any potential hazards or risks. If you are in a high risk industry such as construction or banking, it is important that you take out additional cover. Some of the common insurances that all business owners have to purchase include professional liability, income protection, public liability and cyber protection. Business insurance is almost always required for all businesses and helps to protect against damage or loss of business assets, property, machinery breakdown or natural disasters.
It is a legal requirement for all business owners to keep records for all business transactions. Tax related records will need to be kept for a minimum of 5 years from the time of lodgement. These include bank transactions, purchases, customer invoices, cash received and paid, loans and asset disposals. Employee related records are to be kept for a minimum of 7 years and include contract details, timesheets, wage records, payroll and any other records relating to your employees.
Last but certainly by no means the least, legal contracts are an absolute necessity for all business owners. The last thing you want is to trust in emails, phone conversations or word of mouth when it comes to sensitive business matters. This is why it is so important that written contracts are prepared as proof of agreement. It would be wise to get some expert advice on where your business may need legal contracts such as non-compete agreements, contractor agreements or terms of service. You are allowed to use freely available templates depending on the type of business you run, but we always advise that you get the necessary legal advice prior to using free templates. When it comes to intellectual property issues and trademark registrations, contracts are an absolute must.
Running a business, when done right, can be an incredibly rewarding experience. We hope that this article has given you insight into the legal responsibilities of a business owner. To anyone who is interested in starting a business, we always recommend getting the advice of a trusted lawyer in order to ensure that you successfully meet all the obligations of owning a business. All the best!