Of all the hurdles facing emerging enterprises, legal matters can seem the most daunting. And in the race for revenue, it's tempting to overlook the law.

But before leaving the blocks, it is vital to consider your legal obligations. Taking early preventative measures may save you legal grief down the track but relying on suspect advice runs the risk of fines, prosecution, being sued or worse.

In a venture's early days, some obligations demand immediate attention. For example, choosing an appropriate structure.

Whether you should operate as a sole trader, partner, trust or company depends on individual circumstances, says Craig Hughes, a partner at the business consultancy HLB Mann Judd, Sydney. He suggests seeking expert advice about how each category affects tax, asset protection, exposure and risk and even the eventual sale of the business.

"That's the main area people don't give enough thought to," Hughes says.

Questions he asks clients include why do you want a company, what's your business proposition and how long are you in it for?

Licences, permits and registrations including intellectual property are the next pressing concerns, says the University of Western Sydney's associate dean of engagement in business, Geoff Lee.

"ABN, GST, trading names ... are all part of compliance issues," he says.

"That looks at a lot of small and home-based businesses and whether they have the right permits to operate in the right area and to do certain work."

Insurance is vital for risk management, especially in smaller operations where the departure of an individual threatens a business's viability, Lee says. You could also insure assets and revenue.

"The general rule is if you can't afford to lose it ... insure it," he says.

Discrimination laws also affect workplace policies, for example how you advertise for staff. Owners and managers must provide a safe working environment.

"Work through risk-management plans to identify risky activities and manage your people so they don't [participate in] risky behaviours," Lee says.

Fair trading laws catch out businesses.

"That affects businesses in terms of what they advertise," Lee says. "You can't say you're the cheapest and best if it's not true."

Good records of contracts and agreements help avoid potential disputes and subsequent cash flow problems but verbal agreements can be difficult to prove and trading without contracts carries risks.

"That brings us to the process of collecting money," Lee says.

"Small businesses are notoriously poor in their ability to collect money and don't understand the process they need to go through. You can actually go to court yourself; you just need proof the debt is owed and that's where the contract comes in."

Legal wrangling has the potential to destroy a business, says Matthew Hourn, a lawyer director at Neville & Hourn Legal. Hence the importance of alternative dispute-resolution clauses in contracts and restraint-of-trade clauses in employment agreements that prevent former staff from poaching clients and even wills.

Shareholders' agreements that formalise succession planning help prevent disputes between partners and preserve the continuity of a business, Hourn says. They can cover exit strategies in the case of a disability or death, mergers or sales, as well as restraints of trade and confidentiality clauses plus operational matters such as business plans and financial policies. The goal is to determine a way to measure and distribute the value of a partner's share of a business should he or she leave.

"You have to look at the end goal are you building it up to sell it, do you want to keep it, or merge with other people?" Hourn says.

"It doesn't take long once you start making money to think, well, what would happen if you were to exit all their hard work could amount to nothing."

Hourn says the downturn is also driving small businesses to examine their standard terms of trade, particularly in relation to retention-of-title clauses.

How should business owners approach all these issues? Hourn suggests recruiting a lawyer to run an audit and begin a staged compliance program.

For basic advice, the University of Western Sydney is also about to launch a legal portal on its small-business management website SMExcellence (smexcellence.com.au) while the Legal Issues Guide For Small Business (sblegal.industry.gov.au) includes a preventative checklist owners can consult.

Business-advisery services across the country also offer start-up advice and specialist referrals. The chief executive of the Clearly Business enterprise centre in Sydney, David Baumgarten, says legal awareness is poor among solo operators.

"Start from a worst-case scenario and work back from that," he says.


* STRUCTURE Will you operate as a sole trader, partner, trust or company?

* LICENCES, REGISTRATIONS AND PERMITS Business registration, trading names, domain names, premises, planning and environment, importing and exporting, tax, and specific industry licences.

* ACCOUNTING AND FINANCE Taxes, ABN registration, deductions and rebates,

super, record keeping, debt recovery, e-commerce, credit, finance, banks and the Consumer Credit Code.

* IP AND COPYRIGHT Patents, trademarks, designs, trade secrets, licensing, privacy, confidentiality and niche areas such as plant breeder's rights.

* CONTRACTS AND AGREEMENTS Quotes, property and leases, alliances, distributors, tenders, vendors, franchising and employee agreements. Includes business relationships, shareholders' agreements and standard terms of trade (including a retention-of-title clause).

* INSURANCE Liability, indemnity, assets and revenue insurance including employee insurance and life and disability insurance. May still apply if you work from home.

* FAIR TRADING Product safety and recalls, codes of practice and the Trade Practices Act. Covers misleading and deceptive conduct in regards to labelling, marketing,

warranties and refunds.

* EMPLOYEES Workers' entitlements, employment agreements and policies, unlawful dismissal, recordkeeping, visas, minimum wage and correct staff categorisation (including contractors).

* OCCUPATIONAL HEALTH AND SAFETY Workplace injuries, exposure to hazardous substances, workers' compensation and rehabilitation.

* EQUAL EMPLOYMENT OPPORTUNITY discrimination, harassment and bullying, disadvantage and cultural diversity.


* Australian Retailers Association (www.retail.org.au)

* Business Enterprise Centres (www.beca.org.au)

* Business Entry Point (www.business.gov.au)

* Department of Innovation (www.innovation.gov.au)

* E-business (www.e-businessguide.gov.au)

* NSW Small Business (www.smallbiz.nsw.gov.au)

* SMExcellence (www.smexcellence.com.au)


* Law Society of NSW (www.lawsociety.com.au)

* LEADR (www.leadr.com.au)

* Legal Issues Guide For Small Business (http://sblegal.industry.gov.au)


* Australian Business Register (www.abr.gov.au)

* Business Licence Information Service (http://bli.net.au/)

* GovForms (https://govforms.business.gov.au/)


* Austrade (www.austrade.gov.au)

* Australian Competition and Consumer Commission (www.accc.gov.au)

* Australian Copyright Council (www.copyright.org.au)

* Australian Government Workplace Ombudsman (www.wo.gov.au)

* Australian Securities and Investments Commission (www.asic.gov.au)

* Australian Taxation Office (www.ato.gov.au)

* Australian Workplace (www.workplace.gov.au)

* Department of Employment and Workplace Relations (www.dewr.gov.au)

* Department of Immigration and Citizenship (www.immi.gov.au)

* Human Rights and Equal Opportunity Commission (www.humanrights.gov.au)

* IP Australia (www.ipaustralia.gov.au)

* NSW Office of Fair Trading (www.fairtrading.nsw.gov.au)

* NSW Office of Industrial Relations (www.industrialrelations.nsw.gov.au)

* Office of the Privacy Commissioner (www.privacy.gov.au)

* WorkCover (www.workcover.nsw.gov.au)

* Workplace Authority (www.workplaceauthority.gov.au)

* Workplace Ombudsman (www.wo.gov.au)