As we enter the new financial year, it’s the perfect time to set some new year’s resolutions for your business, and there is no better resolution than to complete a legal health check of your business.

We know that 1 July is a big deadline. And as lawyers, accountants and professional advisors we have just wrapped up helping our clients, all whilst conveniently using the EOFY rush as an excuse to get out of dinner with the in-laws.

To ensure your business is up to scratch, we’ve compiled our top legal health tips to successfully lead you into the financial year ahead.  

 

so what is a legal health check?

A legal health check is a review of your business, and in particular its legal practices, relationships and compliance with applicable laws.

It’s not the kind of resolution you can toast to with fireworks and champagne, but it’s key to protecting your assets, highlighting potential weaknesses and closing the gap in any regulatory compliance.

Here’s some of the key areas to review as part of your legal health check:  

  

your business structure

Depending on your businesses structure, there are different legal and tax considerations, so it’s crucial to ensure you have it right.  

A part of this is making sure your business structure considers your businesses goals [now and in the future].

If you leave it too late, there may be tax and duty consequences once your business has grown to a place where the current structure isn’t optimal, or even viable.  

It’s crucial to make sure your structuring documentation is set up and documented correctly, which includes:

  • The agreements between the business holders – for example Shareholder Agreements, Unitholders Agreements and Partnership Agreements.  
  • Checking if you have considered exiting options, including if your business requires Buy Sell Agreements [which deals with what happens if a business partner loses capacity or passes away].
  • If a trust is involved, making sure your trust deed has the correct mechanisms in place to appropriately distribute income and capital, buy property in different states without incurring foreign tax consequences, have a wide range of powers to allow the Trust to be a commercial vehicle and ensuring the correct default roles are in place for trustees and appointors/principals.  

This part of the review should be two-pronged, with a review from both our tax and legal teams.

 

your contracts and agreements

It’s important to have your key contracts and agreements reviewed regularly to not only make sure they reflect your understanding of the agreement, but to also ensure that they comply with all relevant laws.

This is more important than ever, especially following the recent changes to the unfair contract term regime which came into effect late last year. In essence, the changes:

  • Strengthened enforcement and remedies by introducing significant penalties and expanding court powers.   
  • Captured a wider class of contracts by expanding the definition of small business contracts and removing the upfront price threshold.   

If you have an agreement you first found in the depths of a google search [or even worse, you don’t have any written agreements in place at all], it’s not too late to get help.

While there may be some costs associated with preparing or reviewing agreements, the costs are likely to be far less than statutory fines and/or costs of disputes arising from poorly drafted agreements.   

 

your intellectual property

The intellectual property of your business is one of its most valuable assets, so you need to make sure it is sufficiently protected. A review of your IP requires consideration of: 

  • what IP does your business have? It could be your business name, your brand, products and/or services you offer. 
  • how can you protect the IP you have identified? For example, is it capable of registration [like a business name or trademark], or does it attach on creation [like copyright]. 
  • whether you are infringing on another parties IP rights or another party is infringing on your rights – while it is important to protect your IP, it is equally as important to not infringe another parties IP as this could lead to costly disputes.  
  • the value of your IP and whether it is being held in the right entity – it could be the case that it is more appropriately held by a related entity and licensed back to your business.  

If you are not sure whether any of your IP is worth registering and you can’t wait another year with the same tired logo or branding, our marketing team can help you with all of the things that ChatGPT can’t [yet], like preparing and implementing your new marketing strategy, building your new website or creating engaging content.  

 

 your products and services

Every business and industry is different, and you need to make sure you are always up to date.

Not just for regulatory compliance, but also best commercial practice to protect your interests. A review of your products and services will help determine what laws might apply.

While some laws will apply to all or most businesses, there may be some industry specific legislation that you need to consider.  

 

your personal circumstances

We always recommend individuals double-check their estate plan is up-to-date and reflects their intentions and wishes.

This is vital for what happens to your business if an unfortunate, unexpected event occurs. While this is often a structuring consideration, passing control of your business is something to also consider in your estate plan.  

 

businessDEPOT are here to help

Resolutions can be hard to stick to – but this doesn’t involve hitting the gym or cutting out carbs. All you need to get your legal health check started is give the team at businessDEPOT Legal a buzz on 1300BDEPOT or get in touch via legal@businessdepot.com.au and we can do the heavy lifting for you 

  

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general advice disclaimer  

The information provided on this website is a brief overview and does not constitute any type of advice. We endeavour to ensure that the information provided is accurate, however information may become outdated as legislation, policies, regulations and other considerations constantly change. Individuals must not rely on this information to make a financial, investment or legal decision. Please consult with an appropriate professional before making any decision.