Shaun Stephenson – Senior Associate
Commercial Succession Planning
All business owners know, running a business is demanding. This means, legal issues are often the last thing on your mind. But when those issues are what can lead to expensive consequences, it is important to ensure preventative measures are put in place early.
Here are five of the most common mistakes businesses can make (which can cost businesses greatly, but most of the time, could have been avoided):
Verbal or Poorly Written Contracts
Gone are the days where you can rely on a handshake deal or vague agreements. All this does is create confusion around responsibilities, payments and deadlines.
All contracts should be in writing, well-drafted with clear language, which helps to avoid disputes and protects your position if things go wrong.
Incorrectly classifying Workers
Incorrectly treating employees as contractors (or vice versa) is a common and costly mistake. Getting it wrong can lead to Fair Work claims, backpay, and penalties.
If in doubt, seek legal advice in relation to whether your staff are employees or contractors, and ensure you have a written agreement in place to document their engagement.
Entering a Lease for a Commercial Premises Without Legal review
Very often, business owners commit to a commercial premises lease without completely understanding their obligations as a tenant. This can include hidden costs, maintenance responsibilities, personal guarantees or rental increases. Terms of commercial leases should be negotiated prior to signing.
No Protection Over Your Intellectual Property
Your business name, logo, branding and work you produce are valuable assets. Without proper trademark protection or IP clauses in contracts, you risk losing ownership or facing copycats.
No Succession or Exit Plan
The biggest expense I see businesses face is when there are multiple owners of a business and there is no Shareholders Agreement in place. What happens if an owner wants out, or passes away, or becomes incapacitated, or there is a dispute? The absence of having a Shareholders Agreement in place can lead to deadlock, or even litigation. Set the rules early and enter a Shareholders Agreement from the start.
Prevention is always the most cost effective option. If you’re unsure about your legal risks, consider getting a legal health check — it could be the best investment you make for your business. Reach out to Beck Legal’s Commercial Team on 5445 3333.
This article is general in nature. The information is not and should not be considered legal advice to be relied upon.
