A legal checklist for launching a business from scratch


Congratulations! You have decided to move from the safety and security of a job with good pay and benefits to working for yourself to eventually build a business and invest.

Whether it is a side hustle, or the first step towards creating the worlds’ next hot global brand, you will have to remember that there are a few legal steps to add to your pre-launch checklist. 

Do not worry. Everybody who has ever launched a business has had to deal with these items. With a quick bit of homework, you will soon have them sorted.

Do some research first

You may have already done this when you were thinking about the product or service you now want to dedicate your time doing.

Make a business plan. This will include matters like:

  • Accurately describing your product or service and how it meets a demand;
  • How much are you likely to charge;
  • Do you have the appropriate plant and equipment;
  • Where will your business be operating from and will it require a purpose-built fit out;
  • Are there permits, licences, or registrations that you need to obtain;
  • Will you need finance;
  • How many people are likely to demand your service and how many other competitors does the customer have to choose from;
  • Does your branding and marketing help you ‘stand out from the crowd’;

There are many other conceptual business tools that may be included in a business plan such as a S.W.O.T. analysis, but the items listed above will be enough to discuss the legal aspects of the business.

How will your business be structured? 

Once you have an initial draft of your plan, it is now time to re-draft it into a more comprehensive plan.

The first decision is how to structure your business. You can choose to structure it as:

  • Sole trader. You carry on the business as an individual.
  • Partnership. The business will be run by you and jointly with others as individuals with a view to profit. 
  • Company. The business will be operated in an entity that is legally separate from its individual shareholders.
  • Trust. This is where the business asset(s) are held by a trustee on trust for your benefit (or members of your family).

The decision about which structure to choose is important.

It will affect how much control you have over your business, and the personal liability you might face for debts or if things go wrong and the business is sued. 

The different options also come with different tax and compliance implications. 

There is no ‘one-size-fits-all’. What is suitable for one business may not be suitable for another and everyone wants to achieve different goals in business and from their business.

You can always change your mind later. But bear in mind, the later you leave it, the more complicated it can become. 

Take care of registration requirements

If you have decided to trade in a company, then it will need to be registered with the ASIC. 

If you have a business name (that is different to the name of the trading entity), then the business name will also need to be registered with the ASIC.

If your business has a logo or a distinctive business name then you might also want to consider registering these as trademarks with IP Australia. Although this is not required, if your brand starts to get well known, others might try to ‘trade off’ your success by creating something that is too similar. Having your business name and logo trademarked adds additional legal protection.

All businesses need an Australian Business Number (ABN). This is the 11-digit number that identifies your business and which you’ll need for dealing with other businesses and invoicing customers.

Whilst you are busy with registrations, consider whether you will need a website – either to operate your business, or to promote it. If so, now is a good time to check and register the domain name you want. Even if you’re not planning on launching a website straight away, it can still be a good idea to register the domain name anyway. This will stop other people from using it and possibly confusing your customers.

Key contracts that underpin your business

As you get ready to launch, there will likely be certain key contracts that can have a significant future impact on the direction of your business. The ones to really watch out for are those that involve a long-term commitment, or that might limit how you operate or grow your business in future.

Examples include:

  • Property lease. If you are planning to operate your business from premises that you are going to rent, the property lease will be a key document to check. Rent is likely to be a major expense, so this is an obvious one to check. There may also be limitations on how you can use the property, and it will also be important to know who is responsible for organising and paying for utilities, maintenance and upkeep of the property. 
  • Partnership agreement or shareholder agreement. If you are going into business as a collaboration with other co-founders, it is a good idea to have an agreement that sets out your goals, rights and responsibilities, what will happen if one person leaves the business, and how disputes will be resolved.
  • Franchise agreement. For franchise businesses, the franchise agreement is an important source of information about the relationship between the franchisor and franchisee. Franchise businesses also come with some additional compliance requirements that need to be covered.

Managing the risks as you launch

As you launch and grow your business, your biggest areas of focus are likely be staff, attracting and retaining customers, and managing your cashflow all with a view to being profitable.

If you want your business to be successful for the long term, you also need to be careful to balance these objectives with minimising any potential legal risks. There are some simple steps to take that can have a big impact on reducing your risk:

  • Terms and conditions. If you are suppling goods or services, you might like to have some standard terms and conditions that you can provide to customers. As well as making you look professional, these can help manage your customer’s expectations. They might cover what standard of service the customer can expect, how you charge fees and the payment terms. They can also limit your liability in case things go wrong.
  • Employing staff. If your business will employ staff, make sure you know about your legal responsibilities. Make sure you have the right type of agreement in place and you comply with all legal requirements – for example in relation to providing a safe workplace, payroll tax, minimum working conditions and payment of superannuation.
  • Privacy and customer information. If your business will be collecting and handling personal or financial information (for example, marketing information about your customers, or credit card data), then make sure you understand your obligations to safeguard this information, and the limits on how you can use it.

Final word

There is a lot to think about when getting a business off the ground. It can be tempting to think that the ‘legal stuff’ can come later. The trouble is, you will never know when something might happen which will make you wish you had already taken care of it. 

If you want to build a sustainable business for the long term, getting informed and taking control of these risks is essential and you can think of it as an investment. Like any investment, it is worth calling a professional for help. This support can always be tailored to match where you are up to in your business journey. 

This could just well be what you need to give you peace of mind, letting you get back to running - and growing – your successful new business.

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