• Does My Business Need Terms and Conditions? | Enterprise Legal

    Terms and Conditions are an excellent ‘starter’ document which every business should invest in. If you’re starting a new business, it should be the first business document you have in place. If you’ve been in business for a while and have been getting by without a set of Terms and Conditions, you should absolutely still consider them as they become particularly important as your business grows.

     

    A well-drafted set of Terms and Conditions will not only protect your business in the event a customer/client makes a claim for defective products or services, it will also clearly deal with important business policies such as refunds, payment timing and methods, insurance and cancellations.

     

    Of course, because all businesses are run differently, it follows all Terms and Conditions should be different too. Your specific business methods and procedures should be taken into account in preparing a quality set of Terms and Conditions. For example, if a business requires a deposit to be paid, their Terms should sufficiently state in what circumstances (if any) the deposit would be refunded or otherwise.

     

    Whether you’re starting a new business, have been operating for a while without any Terms, or would like a second opinion on your current Terms and Conditions, the expert Business Law Team at Enterprise Legal can help. At Enterprise Legal, we take the time to learn about your business before preparing your Terms and Conditions.

    Contact EL's Business Law Team today or book in your Free Business Health Check!

    ☎️ | (07) 4646 2621
    ✉️ | Submit an Online Request

     

  • Is It Time For My Organisation Update Our Constitution/Governing Rules?

    Whether you refer to them as Governing Rules or a Constitution, you should regularly be considering whether an update is needed. However, knowing when to actually ‘pull the trigger’ on conducting a full review and update (or whether you just need a small internal policy change) is the tricky part, and as is the classic legal response, it ‘will depend’ on a number of factors.

    It is absolutely a case-by-case basis, but to help your organisation make that call, we have identified the following key factors to assist:

    1. when the Constitution was last updated;
    2. the structure of your organisation;
    3. the industry in which your organisation operates; and
    4. ‘who’ prepared the latest version of the Constitution.

     

    When Was The Constitution Last Updated?

    There is no hard and fast rule as to timing, and there is no time limit on how long a Constitution will be effective for. But, the law is constantly evolving and changing and any legal document (or any part of it) could quickly become ‘outdated’. A Constitution holds such significant bearing on how an organisation operates, so it is a document any organisation should at least consider updating every couple of years, to ensure it remains relevant in the context of changes in the law. There may also have been significant changes in the structure or policies of the organisation during that time, so there may be some practical changes to implement.

     

    What Is The Structure Of Your Organisation?

    A corporate entity with a Sole Director and Shareholder probably doesn’t need regular updates to their Constitution, but a non-profit who reports to members and stakeholders should frequently ensure the organisation keeps their Constitution up-to-date, as that ensures good governance measures are followed and any legislation changes are accounted for. For example, if there have been major changes to a Board of Directors then there are likely going to be significant changes to the way the organisation operates, so a great starting point would be updating the Constitution to ensure the new Board is on the same page with the direction the organisation is going to move to.

    Specifically for any Incorporated Associations in Queensland, there have been significant changes to the governing legislation (the Incorporated Associations Act 1981 (Qld)) which have been implemented in stages over the last few years. This means that right now is a great time for any Incorporated Association to review their Constitution.

     

    Industry Changes

    Depending on the industry in which your organisation operates, there may be more frequent industry changes which ‘force’ an organisation to reconsider various governance measures. For example, an organisation that operates in the technology space is likely going to have more frequent reason to update their Constitution, than an organisation which operates in the retail or hospitality industry, which are much more ‘established’ industries.

     

    Who Prepared the Current Constitution?

    If your organisation is using a template-style document that has been ‘borrowed’ or is adopting any legislative model rules, they won’t be drafted in a way that accounts for things such as industry changes, specific organisational policies and procedures, nor recent or incoming legal changes. However if you engaged a lawyer to prepare your Constitution and your organisation took the time to carefully consider the impacts it would have on governance, it won’t need to be updated as regularly.

     

    What’s Next?

    Our expert Business & Property Team has extensive experience in corporate governance, structuring matters with a particular expertise in assisting non-profits, charities and sporting organisations.

    If your organisation is considering updating their Constitution, get in touch with our team today and we can help you with updating your Constitution and structuring advice:

    ☎️ | (07) 4646 2621
    ✉️ | Submit an Online Request

  • Enterprise Legal | Business Structures 101: Companies v Trusts v Sole Traders

    Let’s be honest – legal entities and business structures can sound like a pretty dry and complicated topic. We can’t really sugar coat that, but we can tell you that if it’s not something that is addressed and set up to suit your business, you could be missing out on some very important advantages, and exposing your business and your assets to more risk than is necessary. Stick with us on this topic – it can be the difference between a business that thrives and a business that struggles.

     

    Do You Even Know What Entity You Have?

    As a threshold issue, if you don’t know exactly what your current entity structure is, then that’s ok (it’s not easy, and it’s not necessarily a ‘water cooler’ kind of topic), but this article is definitely for you and you should contact our expert Business Law Team so that we can help you identify it.

     

    Common Entity Types 

    This three most common entity structures we encounter at EL are:

     

    1. Sole Trader/Individual: 

    This is effectively the ‘starting point’ for many businesses. A sole trader is a single person who is carrying on a business under an ABN. An individual is of course capable of suing and being sued. In order to change the business structure, a sole trader must ‘transfer’ the business to another entity, which can be costly and will require payment of transfer duty based on the value of the transfer.

    Income Distribution: all income of the business is distributed to the individual, which is to be declared in conjunction with any other income that individual earns. This is typically not an issue in the initial phase of a business while profit is building, but can be problematic if the individual is already paying a high rate of tax, as all profit earned by the business is also taxed at that rate.

    Risk Profile: all assets owned by the individual can be at risk in any claim against the business. For example, if a customer/client or employee of the business sues the business and is successful, the individual may be required to sell other personal assets in order to pay out the claim, or risk declaring bankruptcy if the value of those assets are not enough to pay the claim.

     

    2. Company:

    A company is a separate legal entity to the people/persons that control it. The company is capable of suing and being sued. The controlling persons can be easily changed from time to time, which allows flexibility for business owners wanting to sell or bring other business partners on board.

    Income Distribution: companies have additional flexibility when it comes to distribution of income, as it is ultimately distributed to the ‘shareholders’, which could be the individuals who control the company, another entity controlled by those individuals (for example another company or trust), or another entity controlled by a third party (for example an investor who has contributed funds to the business but does not assist in the day-to-day running of it). However this flexibility is somewhat limited, as the income must be distributed in accordance with the percentage of shares held by the shareholders.

    Risk Profile: the company can be sued, and all assets held by the company are at risk in any claim against the business. If the company does not hold enough assets to pay the claim, the company may be required to wind up. Except in limited circumstances, typically the assets of the individuals who control the company are safe from any claim, so at worst the business will fold, but the individuals will maintain any other personally-held assets.

     

    3. Trust:

    A trust is again a separate legal entity to those persons/entities who control it. The trust is capable of suing and being sued, and the controlling persons can also be easily changed from time to time by amending the trustee.

    Income Distribution: trusts also have greater flexibility to distribute income, as it is distributed to the ‘beneficiaries’ of the trust, which can be individuals, companies, other trusts etc. A trust can be set up as a ‘discretionary’ trust, which allows the trustee flexibility to distribute income to the beneficiaries in any proportion that they determine.

    Risk Profile: the risk profile of trusts is similar to that of companies, in that a trust can sue and be sued, and all assets held by the trust are at risk in any claim against the business. If the trust does not hold enough assets to pay the claim, the trust may be required to wind up, but similar to companies the assets of the trustees and beneficiaries are safe from any claim. In this situation, the business would fold but the individuals will maintain any personally-held assets.

     

    There are of course other entities that you might encounter (such as partnership, unit trusts, etc), but they are largely either ‘outdated’ or only used in very specific circumstances. That does change from time to time based on things such as legislation and market preferences, but for now the three structures we have mentioned above are the most common.

     

    Accounting Benefits v Legal Risk 

    In any decision around appropriate entity structures, often the accounting and legal advice are the same, which makes a decision easy. However, sometimes that advice can be conflicting, and you might find that trading in a certain entity will give you the greatest tax and accounting advantages, but will expose you to greater legal risk.

    The classic example of this is a start-up business – in that example, while income is on the lower end because the business is starting out and growing, you’re often better starting off as a sole trader and minimising your accounting and set-up costs. The trade-off here is that you carry additional risk because your personal assets are exposed in the event of any claim. Depending on the type of business you operate and the personal assets you hold, you might be happy to accept that risk in favour of gaining some tax and accounting advantages.

    At Enterprise Legal, we understand the competing accounting and legal benefits and risks, and we like to work with your accountant to discuss the best structure for you, both now and in the future. This way, you are armed with the knowledge from both sides and can make an informed decision.

     

    How Enterprise Legal Can Help

    At Enterprise Legal, we offer a free Business Health Check, in which we arrange a time to meet with you in-person or by phone/Zoom to assess your business needs. In addition to assessing other legal needs, this includes an in-depth analysis of your existing entity structure, and a discussion with you around other options, and the steps involved to change your structure.

    We work with your accountant and other financial advisors to give you all the information, and discuss the best way to move forward. We can even create your new entity, amend your existing structure, or draft supporting entity documents to support your entity structure (such as company constitutions, association rules, shareholder’s agreements etc). 

     

    If you have any concerns or questions about your existing entity structure for your business, contact our expert Business Law team today: 

    ☎️ | (07) 4646 2672
    ✉️ | Submit an Online Request

     

    Disclaimer: because we are #lawyers, we have to say that the advice in this article is generic in nature and not intended to apply to everyone’s personal circumstances. Please contact our EL Business Team, as well as your accountant, for customised advice regarding your business structuring.

  • Director Identification Number Scheme | Enterprise Legal

    What It Is

    On 1 November 2021, the Australian Business Registry Services (ABRS) introduced a requirement for directors of relevant companies to obtain a Director Identification Number (Director ID).

    A Director ID is a unique, fifteen-digit identifier given to a director of a company who has completed an application and verified their identify with the ABRS.

    A director must personally apply for their own Director ID (and it is is free to apply) and will only ever have one Director ID, regardless of how many companies or similar entities they are a director of.

     

    Who It Applies To

    Any person who is currently appointed as a director or alternate director of a company, registered Australian body, registered foreign company or Aboriginal and Torres Strait Islander corporation must apply for a Director ID.

    You can apply for a Director ID even if you are not currently a director, and it will stay with you for life and can be used if you do ever become a director.

     

    When You Need It

    The below table provided by the ABRS succinctly sets out the timeframes for application for a Director ID:

    Director ID Scheme – ABRS Timeframes

     

    How To Apply 

    All Directors must make their own applications – unlike other arrangements for company documents your accountant or registered tax agent is not permitted to do this for you.

    In order to apply for your Director ID, you will need to go to the ABRS Website and follow the process to download the myGovID app (this is different to myGov). The direct link is Apply for your director ID | Australian Business Registry Services (ABRS).

    As part of the application process, you will need to complete a verification of identity, so before you apply you should gather the following information/documents:

    1. your tax file number (TFN);
    2. your residential address as held by the ATO; and
    3. information from two (2) documents to verify your identity – the relevant documents that ABRS suggest are:
      1. bank account details;
      2. an ATO notice of assessment;
      3. superannuation account details;
      4. a dividend statement;
      5. a Centrelink payment summary; or
      6. a PAYG payment summary.

    If you are unable to apply online, you can apply by phone or by paper form, but you will still need the above information / documentation.

     

    How Enterprise Legal Can Help

    Although we are unable to complete the application for you, we are available to assist you with any questions or concerns you have regarding the Director ID, including whether it applies to you, when you need to make an application by, and any questions about how the application works or the best application method for you.

     

    Contact Enterprise Legal's expert Business Law team today:

    ☎️ | (07) 4646 2621
    ✉️ | Submit an Online Request

  • Should My Business Have a Services Agreement? | Enterprise Legal

    If your business provides services, then the answer is YES!

     

    A Services Agreement is an essential document for every service-based business! If you’re just starting out, you should put a Services Agreement at the top of your ‘legal document priority list’ (which is definitely a list everyone has). For existing business owners, whether you’ve been going ok without one or rolling out some stock-standard agreement you found from a Google search, you should put it back on your legal document priority list, as it only becomes more important as your business grows.

     

    A tailored, well-drafted Services Agreement both protects your business (for example, in the event that a customer or client makes a claim for defective services) and clearly deals with important business policies such as cancellations, payment timing and methods, insurance etc.

     

    A Services Agreement should also be customised for your specific business and the services you provide, because one size does not fit all when it comes to these kinds of agreements. From matters such as specific legislation that might apply to the industry (eg. NDIS, medical services, specific privacy law requirements), how much notice must be given for a cancellation, to the basic style and tone of the document, different businesses will have different requirements, so it is important that your Services Agreement reflects what your business needs. This is where you can get unstuck if you ‘take inspiration from’ (eg. copy) another business’ Services Agreement (you might be copying something that isn’t actually very good) or buy a generic online document! For example, if you provide support services for NDIS participants, then grabbing a Services Agreement from the website of your local gym is probably not going to be suitable for your business.

     

    Whether you’re starting a new business or have been operating for a while and either don’t have a Services Agreement or you would like a second opinion on your current Services Agreement, the expert Business Law Team at Enterprise Legal can help. At Enterprise Legal, we take the time to learn about your business before preparing your Services Agreement.

     

    Contact the Business Law Team today or book in for your Free Business Health Check:

    ☎️ | (07) 4646 2621
    ✉️ | Submit an Online Request