What Do I Need to Know About Starting a Business?

Legal Issues with Social Media

legal_issues_social_media

When does social media activity lead to criminal prosecutions? 

Posting to social media sites in the privacy of your own home can have ramifications in your workplace and other aspects of your day to day life. Some types of posts to social media sites can even put you at risk of being charged with a criminal offence!  The Australian Communication and Media Authority provides a useful run-down of cases where Australians have been prosecuted as a result of their activity on social media sites like Facebook.

A young man in South Australia was prosecuted for criminal defamation after he posted hateful comments about a police officer.  The court found his comments acted as inciting acts of violence against a person in authority.  Lots of people “vent” on Facebook and similar sites, but if you post goes so far as to incite hatred or violence, you could wind up in Court.  Threatening people with violence online or offline is a criminal offence.  Never post comments encouraging violence against individuals, groups of people or organisations.  The general rule, if you wouldn’t say it in person; then don’t say it online.

Posting horrifically offensive messages on tribute sites (known as “trolling”) can also lead to criminal charges.  The offence is known as “using a carriage service to menace, harass or cause offence”.  Often trolling is done anonymously, however in the case of R v Hampson [2011] QCA132 the QPS Computer Crime Team were able to identify and locate the person who had posted the offensive messages to a Facebook tribute page.  Hampson received a sentence of 3 years to be released after 12 months at first instance in the District Court.  On appeal, the Court of Appeal described the conduct as “ghoulish, disgusting and depraved” and although the sentence was reduced to 2 years without release after 8 months, imprisonment was the appropriate penalty.

Other cases have involved people positing images of themselves engaged in criminal activity to sites such as YouTube and those images have been used by police to commence charges against the person depicted.  A Victorian woman encouraged her teenage daughter and her friends to physically assault another teenage girl while she filmed the attack.  The footage was posted on MySpace.  She was charged with affray and causing serious injury by aiding and abetting teen attackers.

A man who placed a webcam on the dashboard of his car to capture his ‘burnouts’ on a suburban road was charged with reckless driving after he posted the film on Facebook.  In these cases, posting the material to the internet was sufficient to ground the prosecution case against the poster!

 

 

Employers and the Employee / Contractor Decision Tool

employers and the employee

Employers do you have employees or contractors?

It can be time consuming and confusing for clients to try and understand the exact type of arrangement and obligations that go with it.  Also there have been many cases where a business owner thinks that a person has been engaged as a Contractor only to subsequently discover that they are deemed to be an employee and hence entitled to certain benefits and entitlements.

The Australian Taxation Office has set up a couple of online decision tools which are a series of questions and answers and resulting explanations.  The good thing is there is no requirement to enter the TFN so the results are confidential.

Contact Us

Personal Properties and Securities Act

personal properties and securities act

Are you ready for the PPSA?

New legislation called the Personal Property Securities Act (“PPSA”) came into effect recently.  It will dramatically alter the way we deal with personal property and the way in which security over personal property can be protected.

“Personal property” is any property (except real estate and fixtures to land) such as machinery and equipment, motor vehicles, book debts, stock, trademarks and patents etc.

The PPSA will regulate any “security interest” in personal property.  If you do not protect your rights you risk losing your interests in that property.

For example you could lose:

  • priority to another creditor; or
  • title to your property if it is left in the possession of someone else (eg. if they sell it or if they go into liquidation etc ).

How does the PPSA affect you?

If you answer yes to any of the questions below, you should contact us to discuss how the PPSA may affect you and what steps you should take to protect your interests.

  • Do you own personal property that could be in someone else’s possession for longer than 90 days ?
  • Do you consign goods to other people to sell ?
  • Do you manufacture and sell goods ?
  • Do your conditions of sale state that you retain ownership until you are paid (i.e.
    retention of title clause)
  • Have you granted “fixed and floating” charges or have they been granted to you ?
  • Do you include charging clauses in your standard documents to give you security for an obligation ?

Registration

A single national online register of Personal Property Securities interests called the PPS Register (“PPSR”) has been established.

It is essential to register your security interests in order to obtain priority. By registering your security interest you can prevent another person taking ownership of your goods.

Any delay in registering your security interest or inaccuracy in the registration could be disastrous.  New security interests created must be registered quickly and in some cases may be registered before the transaction is completed.

 

Questions?

If you have any questions about this blog post, do not hesitate to contact McLaughlin & Associate Lawyers via call or email.

Alternatively, you may visit our office in Springwood.

Going into Partnership

going into a partnership

Are you considering a Business Partnership Agreement?

I have a friend who rather cynically says that, “a partnership is the only ship sure to sink”. Whilst I am confident that is not always the case, we certainly see enough partnerships that have sunk to know that it can be a mine field – which is why you need a legal business partnership agreement.

Most business partnerships seem to be forged between siblings and/or best friends; probably because there is a history between them going back a long way and there may well be a shared mutual love or enthusiasm for a particular interest which they believe they can turn into a profitable business.

My observations of partnerships that have gone wrong (due to a lack of a Business Partnership Agreement) are the following:

  • There is nothing worse than seeing two people who were once best friends become bitter enemies because of a failed business venture. You need to be very clear when going into business what roles and duties each of you are to perform and reduce that to writing so that you are both clear as to your position within the business. For most businesses to be successful there needs to be balance. Invariably one partner is good at the back end (Administration, financials, operations etc) and the other at the front end (Marketing, sales, public relations). When both partners are good at the one thing it often means that another part of the business is being neglected.
  • Make sure both of you are at risk financially should the business fail. There is nothing like having some ‘hurt money’ invested in the business to make sure everyone is focused on its success. Cases I see that are most prone to failure is where one partner has put up all the capital. This means he/she is the one who is up all night worrying and working around the clock to ensure the business stays on track.
  • Whether it is a partnership or a company, make sure the Business Partnership Agreement or Shareholders Agreement is in place to cover events such as one partner wishing to retire, death etc.
  • Often businesses start to fracture when one or both of the partner’s spouses get involved in the business. Have very clear ground rules concerning the involvement of family in the business.
  • Speak up – make sure you have open lines of communication so that if something is troubling you, you have a way to address this. An example may be a meeting at a coffee shop once a month to discuss the business and raise any concerns either partner may have about the business or performance of the other partner. All too often such emotions arise where one partner will become annoyed and frustrated at the conduct or lack of performance from the other partner, but does not say anything, preferring just to sit on it and stew until it reaches boiling point. Then things are said in the heat of the moment and can put tremendous pressure on partnerships.

My advice to people going into partnership is to look carefully at the person you are going into partnership with, look at their strengths and weaknesses and whether they compliment yours and are you prepared to lose their friendship in the event that things go bad.

Be Careful When Buying a Used Car

buying a used car

The Office of Fair Trading has warned consumers to beware of discrepancies between what they are promised by salespeople and what is stipulated in the contract.

A story was reported by a man who decided to buy a second-hand car at a dealership and was told by the salesman that a new car stereo would be installed at no extra cost.

The buyer signed the contract, which did not list the stereo as an extra, but was assured by the salesman that the stereo would be added to the contract later.

When he went to collect the car a few days later, he found that the stereo had not been installed as promised.  He was told that the salesman he had dealt with was unavailable and the dealership manager told him, that there were no extras listed in the contract and so he was not entitled to the free installation of the car stereo.

Verbal agreements can form part of a contract but are often impossible to prove. There are also other considerations to take into account when signing a contract to buy a motor vehicle.

If you buy a car privately, you are not entitled to the normal protection of:

 the cooling-off period,

 you will not get a statutory warranty,

 the seller is not obliged to give you a REVS certificate or Vcheck nor are they bound by the same laws and code of Conduct as licensed dealers, and

 you cannot access the compensation claim fund if anything goes wrong.

Buying from a licensed motor dealer can be more expensive than a private sale, but it is often safer. All motor dealers selling used cars in Queensland must be licensed.  Licensed motor dealers who sell cars privately may actually be breaking the law, and they must disclose to all intending buyers that they are licensed and provide a cooling-off period and statutory warranty.

When you buy a used car from a licensed dealer, you are entitled to:

 A one business day cooling-off period,

 A statutory warranty;

 A guarantee of clear title on the vehicle;

 Protection by the motor dealer’s Code of Conduct;

 Access to a claim fund which may compensate you if you have suffered a financial loss because of the motor dealer’s actions.

When the Going Gets Tough

when the going gets tough

When times are tough (and for 90% of businesses its tough right now) then you have to get tough yourself.  When times are good businesses have a tendancy to get fat and lazy.  Just like a person who has been living the highlife businesses can become unhealthy.  The wake up call (and the first and most worrying sign for a business) is cash flow problems.

It’s not rocket science.  When revenues/sales fall below what your monthly overheads are you are deemed to have a cash flow problem.  When that occurs, you as a business owner have to get tough.  Sometimes that means being tough on yourself, your suppliers, your customers, your business.

Businesses that successfully practice good cash management generally survive and prosper during downturns; those that don’t are likely to be undone by the weight of increasing debt and the inability to pay employees and suppliers.

Here are 11 tips that you can action immediately:

1.  Take the maximum time to pay your suppliers whilst remaining within their normal payment terms. Essentially this amounts to an interest-free line of credit, and gives you more time to use your working capital.

2. Check to see if your suppliers offer payment incentives. Some businesses offer a discount for paying early. Even if your business regularly purchases a substantial amount from another company, you’re in a good position to negotiate  favourable payment terms. In addition to early payment incentives, ask for special terms that accommodate your cash flow requirements. For example, negotiate to make payments after your busiest time of the month.

Many suppliers are willing to offer incentives in order to speed up their own receivables and cement long-term relationships with good customers.

3.  On your end, consider offering customer discounts to early payers. Consider providing a small discount when bills are paid within ten days of delivery. It may cost you a little, but it can also light a fire under slow payers – and have a positive effect on your cash flow. However, before taking this step, consider whether you could borrow money you need at a lower cost.

4. Examine payment terms and your billing schedule. If possible, send an invoice with your shipments, not after delivery is made. Waiting until the end of the month can add as many as 30 extra days to your cash flow conversion period. If your business provides a service and it is appropriate, ask customers for a deposit before work begins.

Remind customers of your credit terms. Check your invoices or statements to ensure there is a clear indication of when payment is due. Encourage customers to pay with fund transfers or Internet payments.

5.  Closely track and collect overdue accounts. Have your accounting department prepare fast, accurate reports on overdue payments. Monitoring accounts can reveal early warning signs. Act immediately on past-due accounts and use a collection agency if necessary. Telephone tardy customers and obtain a payment commitment by a specific date.

Don’t keep delivering services or shipping goods when payments are far behind. Put problem customers on a COD system or stop shipments altogether.

6. Consider establishing an interest penalty for late payments. Once a bill becomes seriously overdue, you may have to resort to penalties. While you can, and should, sympathise with hard-pressed customers for a reasonable amount of time, don’t let their problems become your problem by dragging your cash flow down.

7.  Don’t extend credit without taking the proper precautions. Require all new customers to fill out credit applications. Request and check credit references.

A written agreement at the onset of a business relationship can help avoid misunderstandings later on. Spell out the terms of the arrangement on your credit application. You might want to go one step further and have customers sign a separate statement or contract identifying not only when payments are due but also that the other party is liable for any legal or arbitration costs if a bill is not paid.

If your business is extending credit to a financially troubled business, insist on securing personal guarantees from the owners, as well as their spouses.

8. Trim expenses and cut unnecessary spending. Look for ways to reduce waste in office supplies, business-owned vehicles, mobile phones and land lines, utilities, business travel, overtime pay, insurance, and more. Ask your employees for cost-cutting suggestions. They are likely to come up with ideas management hasn’t even considered.

Dispose of unused vehicles, vacant real estate, and machinery you don’t need. You could be paying insurance, maintenance and storage costs on them. Selling idle assets can result in a cash flow boost, while donating to a qualified charity can be smart tax move.

9. Keep your inventory lean. As a rule of thumb, the expense of maintaining stock in inventory averages about two percent of the cost of those goods for each month not sold. If your business carries an item for a year, you’re down 24 percent. It’s hard to overcome this kind of cost handicap – especially in hard times.

Don’t fall into the trap of hanging onto slow-moving inventory in order to avoid admitting you made a mistake. Cut your losses on old and outdated inventory items. Or donate them and claim a charitable tax deduction.

10. Free up cash by leasing rather than buying. Leasing computer equipment, cars, facilities, tools and other equipment generally costs more than buying, but you avoid tying up cash. You can also limit your exposure with short-term leases.

11. Examine prices. Many business owners and executives won’t consider increasing prices in a tough economy because they’re afraid customers will head to the competition. But it may be necessary if your prices aren’t keeping pace with expenses. If you do raise prices, explain the reasons to your customers, and if possible, give them notice.

Emphasise the value of your products or services.

Should you wish to discuss any matters regarding the matters raised in this article please contact Mr John McLaughlin McLaughlin & Associates on 3808 7777.

What is an Office Syndicate

office syndicate
Many workplaces have the traditional office syndicate where everyone chips in a few dollars every week to buy a Gold Lotto entry.  No one expects to win but shock horror you actually win a substantial prize.  This is where things can turn ugly and there are lessons to be learned.
We were recently involved in such a case.  8 staff were in an office syndicate for Gold Lotto.  They won $250,000 however one member was on holidays at the time and hadn’t paid their money.  The “leader” of the syndicate and a few others then argued that the holidaying employee wasn’t entitled to a share of the prize because she wasn’t paid up.
Don’t think it could happen at your workplace? Well think again.  Where money is involved, especially a substantial sum, people have a habit of reacting in an unusual and sometimes nasty manner.  So my advice is:
1. Have some clear cut rules as to membership and eligibility of the syndicate.
2. Make sure someone is responsible for running the book on who has paid and who hasn’t and what the rules are around payment and more importantly non-payment of dues.
3. Post your rules on the noticeboard or on the fridge in the staff kitchen or some other prominent place at work where everyone has access to them.
4. Register a syndicate with Golden Casket.

Leases

leases

Whether you are a Landlord or Tenant, you want certainty. You don’t want to risk being thrown out or having your tenant vacate on a months notice. The following are some of the key points:

1. Is your Lease current?

2. Is it the right Lease for your situation eg a Commercial or Retail Shop Lease?

3. Is it properly executed by the all parties (including Guarantors)?

4. When does the Lease expire?

5. Is there an option to renew?

  • How and when is notice to be given to exercise the option?

7. Have you made a note of that date in your diary?

8. Does the Lease need to be registered?

Director’s Penalty Notice (DPN)

Directors penalty notice
In recent months there has been an increase in activity by the ATO against businesses who are behind in the lodgement of their Business Activity Statements (BAS) and Returns.  This recent crackdown means that many companies and their Directors face the possibility of prosecution or fines if they do not comply with their statutory obligations.
Consequences for not lodging Activity Statements and Returns
If you are late in lodging your Returns or Activity Statements you will incur penalties and be charged a daily interest rate currently 9.59%  on any unpaid monies.
Once a company has received an ATO Compliance Notice and still fails to lodge their returns, they could face the following repercussions:-
• An audit and face further investigation from the ATO
• The ATO may estimate their net assessable amount or taxable income and the tax they owe without further warning
• A business or individual could be referred for prosecution without  further warning
• If prosecuted and convicted, an individual could be fined up to $8,500.00 or imprisoned for up to 12 months, for a company the maximum fine is $42,500.00.
Advice to clients
You should :-
• Ensure all outstanding BAS and PAYG returns are lodged as soon as possible
• Pay all PAYG superannuation charge amounts within the relevant time frames
• Keep all BAS and PAYG returns up to date and lodged within 3 months of the due date
If a BAS return is lodged or a PAYG is not paid, the ATO may issue a Director Penalty Notice.  At the expiry of the 21 day notice period, personal liability can apply.  Director’s personal liability for a company’s unpaid PAYG will be avoided if a company enters into voluntary administration or has a liquidator appointed before the expiry of the Director Penalty Notice.  If unpaid PAYG is not recorded within 3 months of the due date the Director will automatically be personally liable for any unpaid amounts even if the company is placed in voluntary administration or liquidation after this date.
If you have any overdue paid BAS and/or PAYG returns and/or overdue PAYG superannuation charge payments contact us immediately to discuss your options.

National Business Names Register

national business names register

Business names used to be registered in the state or territory where the business was located and each state and territory kept its own register. The national register of business names replaces the existing state and territory registers.

The Australian Securities and Investments Commission (ASIC) now administers the new national business names register.

Benefits of the new national register

The national register offers Queensland businesses many advantages:

  • The national system eliminates the need for businesses who trade across state borders to register their name in multiple jurisdictions.
  • Businesses will be able to register and renew their national business name online.
    Online payment options will also be available.
  • Business name registration will be combined into a single online transaction with
    the registration of an Australian Business Number.
  • Queensland businesses will benefit from reduced registration fees (details below).

Transition to the new national register

The Queensland register ceased operation at 5pm on Friday 25 May.

As a business name holder in Queensland, you do not have to do anything during the transition. All existing Queensland business names automatically transition to the national register in preparation for its commencement on Monday 28 May.

All of your business name details transitioned to the national register, including your existing expiry date. So if your Queensland business name is due to expire on 1 December 2012, this is the date that ASIC will record as the expiry date of your new national business name.

Duplicate names

If you have registered the same business name in multiple jurisdictions, all of your business names will have transitioned to the national business names register, meaning that you may have multiple identical business names registered to you.

Under the new system, you can choose to keep one of your business names and let the rest expire. If you prefer, you can speed up this process by cancelling any business name that you no longer require. There is no fee to cancel a business name.

If the same business name has been registered by different businesses in different jurisdictions, all of the business names will still have been transitioned to the national business names register. An additional identifier (such as the word ‘Queensland’) will appear on the register to assist in differentiating between identical business names.

This additional identifier will not form part of your business name, meaning that you can continue to trade using the business name you have always had.

Renewing your business name

If your business name was due for renewal before 28 May 2012, you should already have received your business name renewal form from the Office of Fair Trading. You will need to renew your business name in Queensland, prior to the transition to the national register. If you haven’t already done so, please ensure that you lodge your form and appropriate fee as soon as possible.

If your business name is due for renewal on or after 28 May 2012, ASIC will send you a business name renewal form and you will renew on the national register.

If your business name is due for renewal between 28 May 2012 and mid to late June 2012, you may receive your renewal notice from ASIC a bit later than you would normally expect it. If you do, you will get an extension of time in which to renew, so that you are not disadvantaged.

Fees

Once the transition to the national register is complete, fees for Queensland businesses will be cheaper. Online payment options such as BPay and credit card payment will be available. Registering an ABN will remain free.

  • New application for registration of a business name for 1 year – $30
  • Application for renewal of a business name for 1 year – $30
  • New application for registration of a business name for 3 years – $70
  • Application for renewal of a business name for 3 years – $70

Note: Fees are current as at 23 June, 2012. They are subject to change at the start of each new financial year.