Survival of the fittest is what we are expected to focus on, in today’s fast moving Australian business community. Having a business and running it successfully combines different ingredients together. Therefore, a small business has to face many challenges and overcome innumerous hurdles on a daily basis. There is a never ending list that should be taken into account while talking about challenges and hurdles, but legal issues also take top priority. Few of the major legal problems associated with small businesses are listed below.
Choosing the Right Legal Structure
Not only do you have to make a choice of what exactly you are offering to the people, but also, it is immensely significant to choose the right legal structure. This decision can either make or break you in the anticipated difficult times of your business. This also directly affects your personal liability, amount of taxes your business will have to pay, and the entire future development of your business and its legal implications.
The most common legal structures are:
- Sole Proprietorship:
A sole proprietorship is an unincorporated business where the owner of the business is personally liable for all debts of the business.
This is where two or more people get-together to start a business. The business is not a separate entity. Therefore, all owners are liable for all the debts.
- Limited Liability Companies:
This type of business has a separate entity where owners can’t be held responsible for the company’s liabilities and debts.
Protecting Copyrights and Intellectual Properties
Many small businesses come up with the most innovative ideas and develop them into remarkable products. However, it has been widely observed that small businesses often face disastrous outcomes due to lack of awareness of the copyright and intellectual property laws. A small business which is thriving on a unique piece of work that it originally developed, may lose the product to some other business just because it never protected the originality of the work by putting these laws into practice. On the other hand, it might just infringe someone else’s copyright protected materials due to lack of knowledge of these laws as well.
Employee Laws are one of the basic things that a business has to follow. A business must know exactly what laws and regulations are in place for its employees, that it has to abide by, according to the legal structure it is operating in. The Australian legal system protects employees through various laws. Failure to comply with them can result in huge penalties and fines. Moreover, it can drastically damage the reputation of your business.
Customers’ Claims and Law Suits
A large number of unsatisfied customers can prove to be lethal for any business as customers can file for lawsuits against the business if the promises made to them were either false or overstated. Hence, it is highly significant for small businesses to analyse the product and its benefits carefully before marketing it. Lawsuits can even lead businesses to bankruptcy.
Small businesses need to carefully tackle these legal hurdles and challenges to avoid fines and penalties and also to mitigate losses and personal liabilities for the owners.