Questions You Should Ask Your Business Legal AdvisorMarch 1st, 2019
As a business owner or entrepreneur, you’re probably already well aware of the benefits of having go-to experts you can consult for help. When it comes to business legal advisors, the type of advice they give you can impact everything from compliance to strategy.
So what should you be asking your business legal advisor to get the most from their expertise? We look at the top questions to ask.
What to ask before you start a business
Take the opportunity to ask your business legal advisor about the best business structure, strategies to minimise risk, and types of contracts you’ll need. If it’s a new advisor, make sure you ask them about their experience and qualifications.
- Business structure – Deciding on a business structure is one of the most fundamental decisions at this stage. Your business legal advisor can help you choose from structures like sole trader, partnership, corporation, or trust. You should also ask your legal advisor about the implications of different structures on cost to run, paperwork, licensing, tax, ownership, personal liability, and management and control.For example:
- What are the tax implications of choosing a partnership business structure vs a corporation business structure?
- What paperwork is involved from a legal perspective?
- How does business ownership impact operations?
- What licensing is required for my business?
- What are legal requirements of the company directors?
- Types of contracts – Ask your legal advisor about the types of contracts your business should be using, from employee contracts and leases to contracts for protecting confidential information (like non-disclosure agreements) and facilitating everyday transactions. These contracts could help reduce the risk of disputes. They could also enhance transparency on rights and duties with suppliers, employees, and contractors.For example:
- When should a non-disclosure agreement be issued?
- Which clauses need to be updated regularly in employee contracts?
- How do I frame an exclusivity contract with a supplier or distributor?
- Choosing and protecting your business name and intellectual property – Check with your legal advisor before you settle on a business name so you can avoid using a name already in use and infringing on the trademark of another business. Ask your advisor about how to formally register your name and trademarks so you can protect your business name, copyright, and other proprietary know-how.For example:
- How do I stop another business from using my trademarked name?
- How do I enforce copyright laws?
- When can another business use my logo in their advertising?
- Constitution and replaceable rules – Ask your advisor about what should be in yourcompany constitution or replaceable rules. If you’re opting for a partnership or trust, check with your lawyer about what to include in your agreement. These kind of internal governance documents outline how to operate your business and how decisions are made.For example:
- What authority does my business partner have over me?
- How can control of the company be split from a legal perspective?
- What legal requirements are needed for a trust company structure?
- Other risk-management tips – Ask your lawyer about any other risk-management strategies to adopt. For example, work health and safety laws, anti-discrimination regulation, and state/territory regulations that might have compliance implications. You might need to address these risks with handbooks, training, and internal procedures.For example:
- What occupational health and safety measures am I not yet covered for by insurance?
- How do I ensure an equal opportunity workplace from a legal perspective?
- When should legal compliance become involved, and in what areas?
What to ask while you’re running a business
Once you’ve started your business, keep considering your business legal advisor an important partner for maximising compliance, risk, and strategy. Prepare what you want to ask ahead of each consultation so you can get the most out of them.
Here are some areas you should be asking them questions about:
- Structure – As your business grows, you might decide to change your structure. Ask your legal advisor about the best way to do this.For example:
- How does changing my business structure impact current employee contracts?
- Does my business structure change impact my current tax obligations?
- When do I need to notify the Australian government of a business structure change?
- Challenges – Running a business is tough. If you’re facing insolvency or other issues, it might be time to ask your business advisor about turnaround strategy and insolvency options.For example:
- What implications are there for my business if I enter voluntary administration?
- Who do I escalate unpaid invoice issues with?
- What legal recourse do I have to negotiate creditor payment terms?
- Employment – It might be a good idea to consult your business legal advisor each time you make a new hire. Ask them to check your employment contract and ask about duties to employees.For example:
- Should employee contracts be tailored to specifically suit the role?
- Are employee duties as laid out legally compliant to OH&S requirements?
- Any major decisions – Ask your legal advisor about major milestones like signing a new lease. New marketing materials and a new supplier contract could also be good times to ask about risk, liability, and legal implications.For example:
- Are there hidden clauses in a new lease agreement that may cause me difficulties in the future?
- What disclaimers should be included in our marketing material to protect the company from a legal perspective?
- Is the company at risk from an unfair dismissal lawsuit when making areas of the business redundant?
What to ask when closing a business
Closing your business can be complex, especially if you have a large business with significant assets.
- Formalities – Ask about how to formally dissolve your partnership, company, or other legal structure.For example:
- What legal requirements are involved when closing a business that is structured as a partnership?
- What government organisations need to be notified of the business closing down?
- Employees – Ask your advisor about obligations you have towards employees, including those that apply even after you’ve closed down.For example:
- Are employee benefits such as superannuation still required to be paid during the liquidation process?
- From a tax perspective, at what point am I able to cease paying employee tax?
- Lease – You might want to check in with your advisor about the best way to deal with your lease and fulfil your obligations if you are still locked into a contractual lease period. For example:
- Does my lease agreement allow me to transfer the lease to a new tenant?
- What consequences are there for breaking my lease early?
- General tax and legal issues – Ask your advisor about your tax and legal obligations, including cancelling your business name and ABN, notifying the ATO, and cancelling tax registrations like GST. Run-off cover for insurance might be another issue. Ask how long you have to keep your business records for.For example:
- What do I do if I miss a Business Account Statement submission?
- What do I do if I receive a wind-up notice from the ATO?
- Bankruptcy or liquidation – If you’re having trouble paying your company’s bills, you might be considering bankruptcy (sole trader) or liquidation (companies). Ask your advisor about applying to become bankrupt or liquidation options. Note solvent companies can opt for liquidation in order to shut down their business.For example:
- Do you have a recommended course of action for managing business debt?
- How will applying for business liquidation impact my personal credit history?
Get the answers you need
From inception to closure, running a business requires playing by the rules, and an expert legal business advisor can give you practical as well as strategic advice in this area. Choosing the right operating structure gives you the foundation for a great beginning, and regularly consulting your advisor as your business grows could help you manage different risks. When it comes time to shutting down your company, your business legal advisor can also show you how to do it compliantly.
Australian Debt Solvers are industry leaders in financial advisory for those with financial problems and we’ve got the best legal advice for any business situation. We’ll help you resolve your matter quickly with specialised commercial legal advice, so contact us today on 1300 789 499.
If Your Business Finances Are Out Of Control, We Can Help.
Call us on 1300 905 107 or Click Here For More Information.
Latest posts by David Hill (see all)
- Explaining a Deed of Company Arrangement - February 24, 2020
- Biggest Business Collapses and Voluntary Administrations of 2018 - March 8, 2019
- A Guide to Receivership - March 6, 2019