There are legal obligations for most small businesses. They will vary depending on the nature of the business.
To avoid problems in the future it is important to understand your obligations. Typically, most business will have some legal responsibilities relating to:
- business structure and registrations
- selling goods and services
- leasing premises
- employing staff
- occupational health and safety
- privacy and information protection
- intellectual property
TIP: It is recommended that you seek legal and business advice before starting your business.
Your business structure will determine which tax registrations you need, in addition to your personal liabilities.
You are responsible for ensuring you have the correct business registrations and that they are maintained and renewed.
Your tax requirements may include registering for goods and services tax (GST) and pay as you go (PAYG) withholding, and reporting to the Australian Tax Office (ATO).
TIP: Some organisations advertise to register your ABN for a fee. It is free to apply for an ABN with the Australian Business Register. You can apply online and in most cases your application will be processed immediately. In some circumstances your identity may need to be verified and this may delay the processing of your application.
You may need certain licences to conduct your business. Use our business licence finder to determine which you need.
If you sell goods and services you will need to comply with the Competition and Consumer Act 2010, which also includes the Australian Consumer Law (ACL). The ACL outlines specific protections for consumers against unfair business practices. These include:
- ensuring standard form contracts do not have unfair terms
- honouring customer guarantees
- ensuring the safety of products and services
- complying with rules on sales practices (such as price, customer information, lay-by agreements and unsolicited customer agreements).
Small retail shops are generally able to trade 24 hours a day, however in some cases the type of business can dictate the hours that it can open. Find out more about retail trading hours from the Department of Mines, Industry Regulation and Safety.
A contract is a legally binding agreement between two or more people. It may be between you and another business or you and your customer. It is important to understand your obligations relating to contracts.
In Western Australia, retail shop leases must comply with the Commercial Tenancy (Retail Shops) Agreements Act 1985. It is important to seek legal and business advice before negotiating a commercial lease.
If you operate your business from home, you will need to register with your local council and seek their approval.
If you employ staff you will have a number of additional obligations. These may include:
- workers’ compensation insurance
- establishing and maintaining a safe workplace
- pay and employment conditions
- tax and superannuation
- keeping employee records
- leave entitlements
- equal opportunity laws
- injury management.
Read more about employer obligations.
You have a duty of care to the health and safety of your staff, contractors, customers and the general public. WorkSafe WA has developed information and resources to assist small businesses to comply with their OHS obligations.
Most small businesses will not have to comply with the Privacy Act 1988, however there are exceptions. A small business with an annual turnover of $3 million or less will have to comply if it is:
- a health service provider (eg. medical practitioner, pharmacist, chiropractor, gym, child care centre)
- trading in personal information (eg. buying or selling a mailing list)
- a contractor that provides services under a Commonwealth contract
- an operator of a residential tenancy database
- a credit reporting body
- business that are related to a business that is covered by the Privacy Act.
More information is available from the Office of the Australian Information Officer.
Protect your intellectual property (IP) to ensure retain your exclusive legal rights to it. It is also important not to use someone else’s IP in your business without their permission.
TIP: If you are an Aboriginal business operator, Law Way: Indigenous Business and the Law will help you understand the essential responsibilities, risks and obligations of operating a business.