Start ups in Australia – Things to consider

Australia has been a keepsake for entrepreneurs seeking to transform innovative ideas into successful businesses. A very good example of a successful start up is Canva. This company has an estimated valuation of around $26 billion and it all started from a small pipedream by a couple. Canva started with little resources and business exposure and bolstered its way up to compete with the tech giants such as Microsoft and Adobe. This article will guide you through the key issues faced by aspiring entrepreneurs in Australia, particularly focusing on the legal considerations and relevant legislation.

Key legal considerations for start-ups

Business Structure

It is crucial that you chose a correct business structure that fits your business needs. Every structure has its own unique features, advantages, disadvantages, tax requirements and legal obligations. The most common structures in Australia include sole trader proprietorship, partnerships, company, and Trusts. The decision of a business structure also is reliant upon these factors:

• total control of the business
• limitation of liability
• flexibility
• capital/costs
• tax implications

Upon selecting a suitable business structure, the next steps include registered your business name and obtaining the necessary licenses and permits required to run your business. If you chose to operate the business under your own name, you are not required to register your business name with the Australian Securities and Investments Commission (ASIC). Furthermore, it is important to note that all registered companies require strict compliance with Corporations Act 2001.

Intellectual Property (IP)

Many start ups offer a unique range of products and services. They key to differentiating and staying ahead of your competition is by implementing IP. It is important because it safeguards the unique identity of your business, which denies competitors from diluting or imitating its features. Your brand is your selling point, and you must protect it by trademarking and patenting any innovation or invention.

If you have a look at the notorious golden arches, you immediately know that it is linked with McDonalds. No other brand should come to your mind because no other company uses those symbols and colours, which are all effectively trademarked by McDonalds. Failing to consider your IP options would put your start up in a vulnerable position and ultimately be overtaken by your competitors.

Employment

Using Canva again as an example, it started with just 2 people. As of right now, they have grown substantially and currently employ over 3,500 people worldwide. This number is expected to increase because they receive a staggering 30,000 job applications a year.

A successful start up will require significant manpower as it continues to grow. This creates the need for hiring new people and understanding the employment and workplace laws. In Australia, employment standards and regulations are dictated by the Fair Work Act 2009. As an employer, it is critical that you familiarise yourself with the state and national levels of employment standards to avoid any legal complications. This includes guidelines such as the National Employment Standards (NES) which outlines the types of leave available, weekly hours required, and termination and redundancy notices. These requirements not only protect the employees, but also protects the employers and provides a clear framework as to the employment relationship.

Taxation and insurance requirements 

Running and operating a business in Australia requires fulfilling all tax obligations and insurance requirements. For most start-ups, the basic tax requirements include registering your business for Goods and Services Tax (GST) or even preparing Business Activity Statements (BAS). Furthermore, your business will be required to lodge an income tax return to the ATO, which is heavily dependent on the structure of your business and its profits. With the addition of employees, you would need to look at paying payroll tax and these figures vary between states and territories.

Insurance is another important requirement because it acts as a safety net against various risks and uncertainties that start-ups often experience. If your start up is all about providing advice and consultation services, it is recommended that professional indemnity insurance is obtained. This applies for professions such as legal, accounting, marketing, IT, and general consulting. Public liability insurance will also be a necessity for start ups, particularly if they engage with the public regularly. Finally, workers’ compensation is a must if additional employees are required for your start up. The company and its employees are protected financially in the case of any work-related injuries or illnesses.

What are your next steps with your start up?

Embarking on a start up journey in Australia is an exciting endeavour, but can be a bit of a pickle, especially understanding the legal aspect of it all. It is crucial that the above legal considerations are properly addressed to ensure that a strong foundation is laid for your start up. Whether it’s choosing the right business structure, protecting intellectual property, or complying with employment laws, FC Lawyers will be able to help you out with everything making the entire process stress free. Contact our team today to discuss your start up legal needs.