Starting a business? Why 'it'll be right!' is the wrong mindset

Starting a business is an exciting adventure – kind of like jumping out of a plane, except you really want to make sure you have a parachute (and maybe a backup one, too). Getting legal advice before launching your business helps to ensure you have the right protections in place.

In this article we’ll consider a few of the key activities that your commercial lawyer can help you with as you navigate the joys, stresses and perils of starting your new business.

Picking a business structure isn’t just about sounding fancy at networking events, it impacts everything from your tax obligations to your ability to sleep at night knowing your personal assets are safe.

If your business takes a hit, you don’t want your personal bank account (or your house) going down with it. Sole traders and partnerships expose you to unlimited liability, whereas companies and trusts provide a much-needed financial firewall. That doesn’t mean that a sole trader or partnership structure is inherently bad. In fact there are many businesses where it makes sense, it just means that you might need to give some additional thought to your personal affairs to make sure they are in order.

As the saying goes, nothing is certain except death and taxes — so you may as well make sure your business structure doesn’t make the latter more painful than it needs to be. Sole traders and partnerships are often the simplest setups, but they also mean you’re taxed personally on all profits. Companies, on the other hand, have their own tax rates, which can sometimes be lower than personal rates, depending on your income.

If you're running a charity or not-for-profit organisation, a company limited by guarantee or an incorporated association might be the way to go, as they can provide tax exemptions and deductible gift recipient (DGR) status. If flexibility is key, a trust might provide an opportunity for you to distribute income more tax effectively. A lawyer (often working closely with your accountant) can help you navigate the maze of tax implications and ensure you set things up efficiently and perhaps more importantly in a way that doesn’t result in you making an expensive mistake.

Governance might sound like something only big corporations worry about, but even small businesses need structure. Good governance keeps decision-making clear, ensures compliance with corporate laws, and helps you avoid potential complications in the future.

If you need investors, they’ll want to see that your business is structured properly. A well-thought-out legal setup makes raising capital smoother and more attractive to potential backers.

Generally, companies and unit trusts provide the best opportunities for bringing in new investors, as they offer clearer mechanisms for issuing shares or units. Investors prefer these structures because they allow for easier valuation, transfer of ownership, and protection of shareholder or unit-holder rights. If capital raising is part of your business plan, a lawyer can help you set up the right structure from the start.

A key question for any business founder is “what is your exit strategy?” The answer to that question might of course change over time, but turning your mind to possible exit paths is an important consideration upfront because it can influence the way in which you structure the business, operationally and also from an investor and governance perspective. Planning ahead can sometimes be the difference between capitalising on your hard work down the road and not.

Running a business means playing by the rules. Depending on your industry, there will be a whole list of legal requirements to keep in mind, from privacy and data protection laws to industry-specific regulations.

• Privacy & Data Protection – If you collect customer data, privacy laws require you to handle it properly, or you could face hefty fines (and some very unhappy customers and reputational damage to your business).

• Licences and permits – Certain industries require specific licences or permits to operate. Restaurants, healthcare providers, and financial services businesses, for example, all have strict licensing requirements.

• Consumer protection and competition laws – If you're selling products or services, consumer rights and competition laws ensure that customers are treated fairly and receive what they paid for.

• Workplace Health & Safety – No matter what industry you operate in, strict WHS laws in Australia require you to do all things reasonably practicable to maintain the health and safety of those interacting with your operations – breaches not only have the potential to result in harm to individuals but could also trigger criminal liability for business owners and senior managers. Understanding your obligations and putting in place robust systems to manage WHS risks is therefore a non-negotiable in all businesses.

• Environmental Compliance – If your business impacts the environment, you will need to meet specific environmental standards, particularly in industries like manufacturing, agriculture, or construction.

A commercial lawyer with regulatory expertise can help you navigate these obligations so you don’t get caught off guard.

Whether you’re dealing with customers, suppliers, or partners, contracts are your safety net. Without them, you’re relying largely on trust alone—and let’s be honest, that’s not always a great strategy. Properly drafted agreements ensure that all parties understand their obligations and what happens if things go south. They also help you avoid those “should have seen this coming” moments that can derail your business.

One of the first things a commercial lawyer can do for your business is help you to develop a robust set of standard trading terms for the supply and purchase of goods and services. Having clear, well-drafted terms protects your business from misunderstandings, disputes, and financial losses.

If your business needs physical premises, that will generally involve either entering into a lease or perhaps purchasing property.

Leases can be long-term financial commitments with hidden costs lurking in the fine print. Rent increases, maintenance obligations, outgoings, and lease termination clauses can all materially impact your bottom line. What about personal guarantees? A commercial property lawyer can help identify risks, negotiate more favourable terms, and ensure you don’t get stuck with an agreement that hampers your business growth. If you're purchasing premises, legal due diligence is just as crucial. Checking for zoning restrictions, encumbrances, and compliance with local laws can save you from nasty surprises down the track.

If you’re hiring, you need to get things right from the start. Employees are a huge asset to your business (and are often the face of your business), so having clear contracts and policies in place is critical.

A handshake and a smile won’t cut it. Your employment contracts need to be crystal clear on salary, responsibilities, confidentiality, termination clauses and notice periods. You’ll also need to be clear on whether your employees fall under a particular industry award and that your meeting those minimum terms.

From workplace safety to discrimination and workplace grievance processes, having well-drafted policies ensures a professional and legally compliant work environment. Plus, it sets the right expectations for your team so everyone’s on the same page and can be influential in setting the right workplace culture.

Starting a business without relevant legal advice is like trying to build a house without plans, it might work for a while, but sooner or later, cracks will appear. Getting good legal advice early should be viewed as an investment in your long-term success. Not only can it help you avoid costly mistakes and ensure you’re compliant, giving you peace of mind so you can focus on what you do best, but it can also create genuine value by driving efficiency and allowing you to grow your business in a structured, thought-out and seamless way.


This article provides general commentary only. It is not legal advice. Before acting on the basis of any material contained in this article, seek professional advice.

From private, family-owned enterprises to not-for-profits and ASX-listed entities, we have been the trusted adviser to major South Australian companies for more than 20 years. These long-standing relationships are a testament to our ability to genuinely understand our clients’ businesses, anticipate their legal needs and solve problems for them – whilst minimising risks and maximising commercial opportunities.

Your business will also benefit from our ability to deliver technical and strategic services in a range of commercial legal areas, including taxation, mergers and acquisitions, dispute resolution, property and workplace law.

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