10 Things New Entrepreneurs Should Know When Considering a Startup
Building a company from the ground up is undoubtedly exciting. But like any venture, it comes with financial and legal considerations that can significantly impact your team’s growth and success. Here are ten important considerations new entrepreneurs should think about when establishing a startup in Australia.
1. Startup Business Costs
Of course, starting a business involves various costs. These include fees associated with registering your business name and securing necessary licences. Expenses related to setting up your business, including purchasing equipment, marketing, and hiring employees, can easily pile up, so be sure to prepare for these costs. You must also set a budget for legal fees, including costs for drafting necessary contracts.
Need a boost in your startup funding? Explore government grants. The Australian government offers various grants to support startups, particularly in the tech sector. Some notable grants include:
Research and Development Tax Incentive: One of Australia’s best startup business grants, this incentive provides a substantial tax offset for eligible research and development activities.
Accelerating Commercialisation Grant: This government grant offers funding to help startups in Australia commercialise innovative products or services.
Incubator Support Initiative: Is your startup still in the incubation stage? Consider this initiative, as it provides grants to incubators to assist startups in developing their business models and accessing funding.
You should also consider securing a startup business loan in Australia. What do you need to apply for small business or startup loans? Begin with a good credit score and a detailed business plan. Some lenders may require personal or business assets to secure the loan. So, research different lending options, including banks and online lenders, to find the best terms & conditions for a loan to start a business.
2. Business Structure
Choosing a business structure is one of the most important decisions you will make as a startup owner. That’s because it’ll affect your tax liabilities, legal responsibilities, and how you manage your business. The most common business structures in Australia are:
Sole Trader: Being a sole trader is simple and cost-effective, but you are personally liable for all debts.
Partnership: This business structure involves two or more people sharing ownership and responsibilities. Partners are jointly and severally liable for debts.
Company: Running your startup as a company means it’s a separate legal entity offering limited liability protection but with more regulatory requirements.
Trust: A trust is an entity that holds property or income for the benefit of others. It can be complex and costly to set up and maintain.
3. Partnership Agreements
Are you starting your small business in Australia with one or more partners? A partnership agreement is essential. This document should outline:
The roles and responsibilities of each partner.
How profits and losses will be shared.
Procedures for resolving disputes.
Conditions for dissolving the partnership.
You must also prepare a shareholders agreement if your startup business involves multiple shareholders. This legally binding document must outline the following:
The rights and obligations of shareholders.
How decisions will be made.
Procedures for buying and selling shares.
Dispute resolution mechanisms.
4. Employer Responsibilities
You may start running your business by yourself, but you will eventually hire employees. That’s why it’s vital to understand your legal obligations as an employer. These include preparing employment contracts, where you should clearly outline the terms of employment, including job responsibilities, salary & termination conditions.
You must ensure compliance with the Fair Work Act 2009, which covers minimum wage, leave entitlements, and working conditions. As a business owner in Australia, you are also required to make superannuation contributions for your employees.
5. State and National Legal Obligations
Different states and territories in Australia have specific legal requirements for businesses. These include registering your business name with the Australian Securities and Investments Commission (ASIC). Depending on your industry, you may need specific licences or permits to operate legally. Also, don’t forget about your tax obligations. The general rule is you must register for an Australian Business Number (ABN) and Goods and Services Tax (GST) if your turnover exceeds $75,000.
6. Intellectual Property & Trademarks
Protecting your intellectual property (IP) is crucial, especially if your startup in Australia is based on a unique product, technology, or service. Key types of IP include trademarks, which protect your brand, including names & logos, and copyright, which automatically protects original works of art, literature & music. You may also need patents to protect your company’s new inventions and processes.
7. Business Terms & Conditions
Clear terms and conditions are essential for protecting your startup business and ensuring smooth operations. Some contracts you may need include client agreements, which outline the services or products you will provide and the terms of the arrangement. You also need to have clearly outlined supplier contracts to detail the terms of your agreements with your vendors and suppliers. Do you have an online shop or a business website? Ensure compliance with privacy laws when handling customer data; include privacy policies on your website or online store.
8. Commercial Lease Contracts
If you plan to lease a commercial space, understanding the terms of your lease agreement is also crucial. Before signing the dotted line, be sure to understand the lease term or lease duration and options for lease renewal. The rent amount and any additional costs, as well as fit-out and maintenance responsibilities, must also be stipulated in the commercial lease contract to set your expectations as a lessee.
9. Cybersafety
Cybersecurity is a critical concern for businesses today. As your company transacts online, you must enhance your startup’s cyber safety by keeping all your software and systems up-to-date. Consider implementing strong data protection measures to protect sensitive business and customer information. Moreover, educate and train your staff on cybersecurity measures and best practices.
10. Insurance Policies
With ample insurance coverage, you can protect your business from unforeseen risks. Here are some essential insurance policies for startups in Australia like yours:
Public Liability Insurance: Do you have a head office or run a physical store? You need public liability insurance to cover claims of injury or property damage caused by your business.
Professional Indemnity Insurance: Whether you’re running a small health facility or architecture startup, you need insurance to protect against claims of professional negligence.
Business Interruption Insurance: Protect your startup with business interruption insurance. It covers loss of income due to unexpected events that disrupt your business operations.
Summing It Up
When familiar with these essential considerations, you can set your startup on a path to success and avoid potential financial and legal pitfalls. Also, consider seeking professional legal advice to ensure your startup fully complies with all relevant laws and regulations. Our business & commercial lawyers on Sunshine Coast are here to guide you as you start a business from home and grow it to something bigger.
Contact us today to schedule a consultation with a commercial lawyer.
Disclaimer: This article is general in nature and does not constitute legal advice. If you require legal advice in relation to your personal circumstances, you must formally engage our firm, or another firm to provide legal advice in relation to your matter. Bradley & Bray lawyers take no responsibility for any use of the information provided in this article.
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