Small Business – Having a Good Start

May 31, 2009

Amidst this gloomy economic climate where many have lost their jobs and are tempted to use savings and retrenchment benefits to generate income for the family, many see operating a small business as the solution to their financial difficulties. Running your own business can be very satisfying, but it can be fraught with pitfalls for the unwary. Only a quarter of small business people seek professional advice before starting their own business. This may explain why three-quarters of small businesses fail within the first five years.

One of the first steps in establishing your own successful small business is to seek legal advice on the best business structure for your business: sole trader, partnership, company or trust. Each structure has its own advantages and disadvantages which will affect your taxation position, personal legal liability, the life of your business, the availability of capital and the flexibility of your business operations. There may be relevant legislation which affects the structure you choose. At Hutchinson Legal we can advise you on the most appropriate structure for your business needs.

If you are considering buying a small business currently defined as a business valued below $350,000.00 you should receive various documents from the seller, including:

Form 19 Estate Agents Act 1990 (Vic) giving details of the financial position of the business;

Section 51 statement indicating whether or not the agent is going to help you find finance;

  • Contract;
  • A transfer of the registered business name (if applicable);
  • A transfer of any permits or licences (if applicable); and
  • A transfer of the lease of the premises and/or any equipment.

Do not sign a contract without first having the contract and the related documents checked by a solicitor. Your solicitor will ensure the contract reflects your expectations and all legal requirements are met.

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