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The Legal Documents Every Small Business Must Have

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The Legal Documents Every Small Business Must Have

When it comes to a concise list of essential business documents, there is no one-size-fits-all, but three documents apply to most businesses. Beyond that, the legal documents you must have will be guided by your business structure, products or services, and your method of trading.

Most businesses:

1. Public Liability Insurance.

As the name suggests, this insurance protects the public from any personal injury or property damage caused to them as a result of dealing with your business. Whether it’s tripping over your entry mat, or having the supporting column of their home taken out by your delivery van; the risks for each industry will be different, but a risk none the less. Even businesses that operate online or from home will have some interaction with the public, particularly if they occasionally conduct product launches, markets, or display at trade shows. Most event organisers will require a Certificate of Currency to confirm you are covered.

2. Income Protection and Fixed Expenses Insurance.

These types of insurance go by different names, but their purpose is to protect the main sources of income and provide solutions in situations where that income ceases through death or injury. It will generally apply to yourself, your business partner and key employees. Fellow Smallville Contributor, Drew Browne wrote two articles recently that highlight the importance of these types of insurance and I highly recommend them.

I asked Drew what other considerations were important and he said, For those business owners who may not have a verifiable income and therefore may not qualify for personal income protection, Business Expenses Cover is available to cover 100% of your business’s fixed overhead costs. These are usually contractible in nature like rent, vehicles leases, utilities and professional costs.”

3. Intellectual Property Protection.

Copyright laws in Australia go a long way to protecting content produced in the course of your business, but take some time to ensure everything you’ve worked hard to create is protected before publishing it or releasing it to the public generally. It could just be your logo, slogans and product names. Or it might be the courses you teach, the apps you create, the way you package your products, or the clothes you design. Consider Trade Marks, Patents and Designs as ways of preventing the miss-use of your assets.

In addition to these three essential issues are a range of other documents that depend largely on the unique characteristics that identify your business. Look through the headings and consider the documents that might apply to you.

Business structure:

  • Sole Trader – A valid Will and Powers of Attorney.
  • Partnership – A Partnership Agreement.
  • Company – A constitution or adoption of the Replaceable Rules.

Shopfront, warehouse or bricks & mortar establishments:

  • Insurance – For the building, contents and stored products (in addition to public liability).
  • Employees – Employment contracts or Contractor agreements, and WorkCover insurance.
  • Policies – Once you have more than one person involved in your business, you’ll need to build a collection of policies to maintain consistency. Consider everything from Computer Use and OH&S, to Grievances and Privacy policies.

Online businesses:

  • Terms and Conditions of Use.
  • A Privacy Policy.
  • Zoning permission – If your business operates from home, make sure your local council zoning allows the activities you intend to conduct.

(For more information on these documents refer to my article A legal checklist for websites – How does yours rate?)

Research and development:

  • Confidentiality Agreements.
  • Intellectual Property Protection – Consider Standard and Innovative Patents.
  • Joint Venture Agreements.

Products and services:

  • Sales and Service Contracts.
  • License Agreements.
  • Product Liability Insurance – This protects you against claims of injury caused by your product.
  • Labels and Warnings – Not strictly documents, but a legal requirement for many products. Consider: contents, appropriate use and age restrictions as a start.

Industry specific:

Some industries have additional legal obligations, so it’s important to check the websites and information made available by your industry’s governing body. ABLIS (The Australian Business Licence and Information Service) is another source to check which licences or other means of compliance are required. Consider:

  • Specific Licences.
  • Working with children checks.
  • Child Protection Policies.
  • Professional Indemnity Insurance (for all professionals providing advice).

This list is by no means exhaustive, and there is no better way to obtain personalised advice than by talking with a solicitor. I do hope, however, that this article provides you with a good starting point, to protect your interests and meet the needs of your business.

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