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Avoid a Business-wreck With Early Legal Advice
Getting the legalities right in your small business can save you tens of thousands of dollars in the long run.
In my 20 years of legal experience, I’ve seen multiple small businesses making the same mistakes. In fact, repeat mistakes are so common, that I have co-authored a book Lawyer In Your Corner with legal tips and checklists of legal essentials for small business owners.
1. BUSINESS ENTITY.
Give some thought at the start of your business whether you wish to proceed as a sole trader, a company or a different type of trading entity such as a trading trust. If you trade as a sole trader, you risk your personal assets if your business goes belly-up. Properly structuring your business from the start is not very expensive. Most accountants will do it for you for little or no charge, other than government fees.
I always recommend that my clients set up a company through their accountant because although I can do it for them, I want them to get taxation advice from their accountant at the start.
2. BUSINESS NAME REGISTRATION.
Before starting to trade, you need to obtain a business name registration, which you can easily do online yourself via Australian Securities and Investments Commission (ASIC). Before you register your business name, it is worthwhile getting a trade mark in place.
Most participants of my Legally Bulletproof Your Business workshops do not realise that ASIC does not check the Trade Mark Register before allowing a business name to be registered. This means that your registered business name could, in fact, infringe a registered trademark (see tip #4 below on how to avoid this).
3. DOMAIN NAME PROTECTION.
While the main name registration is pretty obvious, my top two tips for domain name protection are:
- Avoid domain names which infringe prior registered trade marks (see tip #4 below).
- If you search for a domain that you want, and it is available, register it immediately. There are automatic programs or ‘bots’ on the internet that trawl to see what domains people are interested in. If you do not register it right away, it could already be registered by the time you come back (even just a few minutes later) and the new owner may want thousands of dollars to sell it back to you (as opposed to as little as $20, which you could have got it for initially).
4. AVOIDING TRADE MARK INFRINGEMENT.
The only way to avoid your business or brand name from infringing a registered trade mark is to ensure that you have the brand registered as a trade mark yourself. At my small business legal workshops, participants are often most surprised to learn that their registered business name could be infringing a registered trade mark.
5. PROTECTING YOUR TRADE MARK FROM THEFT.
Once you have a trade mark registered, you have the right to stop others from using it, or something similar on your goods or services for which you have it registered (or similar goods or services).
My clients often wonder whether their business is too small to bother with trade mark registration. One client recently had a competitor register her business name as a trade mark and then threaten her with trade mark infringement litigation.
I told my client that we could probably get the competitor’s trade mark registration removed, but the only way to do that would be through litigation, which would cost at least $100,000. In the end, she elected to rebrand, which cost her $25,000, plus around $10,000 in legal fees to make sure that she was not going to have ongoing problems with her competitor. Before she changed her business name, obtaining a trademark registration was a priority for her. For under $1,500, protection of her new business name as a trade mark (valid for ten years) was a no-brainer for her.
As a small business owner, you can literally save yourself tens of thousands of dollars. Sadly, some small business owners find out about legal essentials too late and end up in bankruptcy.
When you think of the value of legal advice, think of the business-wreck that legal advice can help you avoid. It can be like car insurance … would you rather pay the premiums or pay for a new car (and possibly someone else’s costs) after an accident?
Avoiding the legal accident in your business is much less costly and stressful.
“The opinions expressed by Smallville Contributors are their own, not those of www.smallville.com.au"
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