Setting up and running a business is a competitive and complex task governed by numerous regulations and statutes. Studies have shown that perhaps half of all new businesses fail within five years of starting.
Understanding some of laws that govern businesses can help avoid some common problems.
Who Regulates Businesses?
The Australian Securities and Investments Commission ("ASIC") is responsible for the administration of the following Commonwealth legislation:
- Corporations Act 2001 (Cth), which governs all types of companies, from incorporation through to winding up, as well as financial services;
- Business Names Registration Act 2011 (Cth)
- for laws relating to unconscionable conduct and consumer protection in relation to financial services (Division 2 of Part 2 of the Australian Securities and Investments Commission Act 2001 (Cth)); and
- laws relating to insurance and superannuation (s 12A(1) of the Australian Securities and Investments Commission Act 2001 (Cth)).
ASIC has a national Enforcement Directorate that has staff located in each region including South Australia. The Enforcement Directorate is responsible for investigating contraventions of the Corporations Act 2001(Cth) and the Corporations Law, other offence allegedly committed by directors or promoters of companies and contravention of laws relating to financial services, insurance and superannuation. Complaints by aggrieved members of the public may be made in writing or in person to any office of ASIC, via ASIC's InfoLine or email.
The Australian Competition and Consumer Commission ("ACCC") administers the Competition and Consumer Act 2010 (Cth) which regulates the commercial operations of corporations and in particular such matters as warranties, price fixing, market manipulation and misleading conduct on the part of companies. The ACCC also conducts investigations and receives complaints about corporate type matters directly from members of the public.
Consumer and Business Services is a State Government department that also regulates the activities of companies in relation to fair trading.
You can either start your own business from scratch, or buy an existing business or franchise.
Whichever you decide, you will need to work out the most suitable business structure for your type of business. Each has its advantages and disadvantages but it is something that you need to think about before you begin.
You may want to operate as a sole trader or partnership to reduce the administrative costs and simplify matters. Trusts are also sometimes used as a way of holding a business. Further information about how each of these structures work are set out under the following headings:
As a business grows or if the enterprise is more complex or ambitious, a company might be more suitable. Further information about companies and how they are run can be found here:
Purchasers of businesses and franchises have certain protections under the law, and there is further information here:
If an entity carrying on a business wishes to use a trading name that is not exactly the same as the owner's or a company name, the name must be registered on the national Business Names Register which is administered by the Australian Securities and Investment Commission (ASIC) under the Business Names Registration Act 2011 (Cth). For more information, visit the ASIC website. Registration can be done online through ASIC Connect .
An Australian Business Number is required to register a business name, and this number must be used on any tax invoice issued by the business, and is also required to claim certain rebates. For further information about ABNs see the Register for an Australian Business Number page on the business.gov.au website.
However, registration of a business name does not give proprietary rights in the name itself. Whilst no-one else can register the same or similar business name, care should be taken to protect the name as a trade mark, to prevent others from using it as their own trading name. See the section on Intellectual property.
The Business Names Register allows a person dealing with the business to search and find who is responsible for the business, and to check if the company is still operating, and detailed information about the business can be obtained either free or for a small fee from ASIC.
The law also protects consumers by requiring that certain services only be provided by qualified people.
Anyone practising and charging a fee as a lawyer, doctor, architect or psychologist must have appropriate tertiary qualifications and satisfy registration procedures.
The Australian Business Licence Information Service can provide information on what licences and particular type of business may require. Consumer and Business Services can also advise on which trades require licences.
The following trades are usually required to be licensed:
- land agents
- land sales representatives
- gas fitters
- second-hand motor vehicle dealers
- security and investigation agents
- tax agents
South Australian Health Commission approvals are needed for various food business and a liquor licence is needed if liquor is sold.
Sometimes an unqualified or unlicensed person may be promised a fee despite not having a licence or qualification. However, a person commits an offence and payment cannot be recovered (even if a good quality service is provided and the person was promised payment) if that person does not have the necessary qualification, licence or registration.
The content of the Law Handbook is made available as a public service for information purposes only and should not be relied upon as a substitute for legal advice. See Disclaimer for details. For free and confidential legal advice in South Australia call 1300 366 424.