Business Toolbox: Legal

Business toolbox: Legal tips for electrical contractors

Knowing where you stand legally is incredibly important for small businesses – so we’ve put your legal questions to our experts!

Our Legal expert:

James Ballantyne, Managing Director, Ballantyne Law

Q: I’ve got the opportunity to buy another contractor’s business. What are the considerations? James Ballantyne, Managing Director, Ballantyne Law, says:

What are you buying?

It is critical that you identify what it actually is you are buying. Is it shares in the company that owns the business, or are you buying the business itself? For most contractors, purchasing the business assets (such as the tools, goodwill, intellectual property and other tangible and intangible assets) directly is the better, and much lower-risk option. Buying the business assets gives you much greater control over what you are taking on and limits any exposure to historic (and sometimes hard to identify) liabilities that may be associated with the company. Proper due diligence should be undertaken to ensure that there are no unwelcome surprises.

How are you buying it?

You should ensure that the purchase is properly structured. We don’t recommend tradies own and operate their business in their own name, as doing so puts their personal assets at risk, and provides little taxation flexibility. It is important to ensure that whatever structure you consider (such as a company or a trust or a combination) complies with relevant licensing obligations.

What are the revenue implications?

Depending on which state you are in, there may be duty payable on the purchase of business assets, and while most business purchases are a ‘going concern’ and GST-free, it is critical that the contract is properly drafted to ensure this.

When should you buy?

You should ensure that any contracts of sale are properly reviewed by your lawyer, and that you obtain proper taxation advice from your accountant before committing to buying a business.

What is your exit strategy?

The best time to think about what will happen when you leave your business is when you start your business. Ensuring you have properly planned for a departure (whether it is through retirement, a sale or an involuntary event like death or illness) will help maximise value and minimise risk and unpleasant tax surprises.

* Please remember, this advice does not take into account your personal or business circumstances, is general in nature, and is provided for information purposes only. Please seek professional legal advice that’s tailored to your circumstances if you need it.

Our Legal expert:

David Chung, Founding Director – Creo Legal

Q: What do I legally need to do with regards to the updated data privacy laws?

David Chung, Founding Director at Creo Legal, says:

Small businesses with less than $3million in annual turnover are exempt from complying with the Privacy Act, including the latest updates, unless they are certain types of businesses, such as healthcare providers or financial service providers.

Nevertheless, small businesses are increasingly being targeted by cyber criminals who use automated methods of attack, making it economical for them to attack hundreds or thousands of smaller businesses.

Small businesses in every industry should adopt reasonable privacy and data security measures to avoid the commercial and reputational damage associated with suffering a cyber attack.

These include reviewing their data collection practices to ensure that they are only collecting information from customers and other persons that they absolutely need for their business to run. The tendency is to collect everything just in case it is needed, and this only compounds the risk for very little commercial benefit.

Data should be stored with a reputable storage provider with appropriate security measures such as multi-factor authentication. Only staff who have a need to have access to customer information should have access. People are commonly the weakest link in organisations of all sizes, so limiting who has access to sensitive data is a practical way of managing cyber risk.

Small businesses should also consider how they use the information they collect. If they intend to disclose information to third parties, they should tell their customers. Usually this information is contained in a privacy policy published on the business’s website.

Privacy policies don’t have to be complicated, they just need to let the public know how and when information is collected, how it is stored and protected, and if and when it is disclosed to third parties.

* Please remember, this advice does not take into account your personal or business circumstances, is general in nature, and is provided for information purposes only. Please seek professional legal advice that’s tailored to your circumstances if you need it.