Treating the legal side of your business as a set and forget, can sometimes cause you problems. So for example, people will create a company and then not update the company details on ASIC. They may do all sorts of things, then not realize that you need to keep things up to date. Keep your company returns going, if you’ve got a trademark registered make sure your details are up to date with the intellectual property office of Australia, otherwise you won’t get reminders for renewals.
One thing that people sometimes don’t realize, especially with a company, is that if you allow the company to become deregistered, all the assets of the company are forfeited to the state. It all belongs to the government, how lovely is that? It’s a little bit of a trap for people who own companies or own shares in the company. So what often happens with a small business is you’ve got a person, they’re the sole shareholder and the sole director, they start to think of the business as theirs, and want to think of the money as theirs and the property as theirs, but it actually belongs to the company.
Once the company no longer exists, it’s like when a person dies, then what happens to the assets? Obviously if you’ve made a provision for the assets to be transferred out of the company before it’s deregistered, then that’s fine. So it’s kind of like having a will, if you carry on with that analogy of a person dying. But what happens if you die without a will? The law says the money goes to certain people, in the case of a company, if it is deregistered, then its assets go to the state.
Now I’ve had a few people who this has happened to who, they remembered to transfer things out like money out of the bank account, but then they forget about their trademark, because a trademark is valid for 10 years. So i’ve had a couple of clients actually end up losing their trademark because the company that owns it no longer exists. So that’s something to think about, your legal stuff is not just set and forget. The take-home is that it is important to get regular reviews.
So you’re doing this course, you’re going to get the risk assessment and the action plan at the end, but I actually recommend that you go through that checklist frequently, once every two or three years, to see what might have changed. The other thing that might have changed, could be laws surrounding your industry. The tanning industry for example, you could have tanning beds at one stage and then they were banned. So people went from being able to have tanning beds to not being able to have tanning beds and if you’re not keeping alert for those kinds of things then it’s something that could catch you out.
Another type of law change could be a zoning change. This affected one of my neighbors, we live on a small holding which is semi-rural and he had a sawmill which he used to build log cabins and wooden cabins. So, he had a sawmill and this machinery never caused us any problems but a new neighbor moved in and they didn’t like him, so they complained to the council. My neighbor, who had run this sawmill and hut building business for 20 years, just laughed off this new neighbor. He said “what are you talking about? We’re in a rural area, we’re allowed to do this.”
It turned out that a couple of years before the zoning had changed, and because now we were zoned as semi-rural, he was no longer allowed to run his business in that way, or on that site. So he faced a massive fine because he had been illegally operating his business, even though it was legal for about 18 years, until the zoning changed and it suddenly became illegal. Not only did he have to face massive fines, he also had to close down his business that he had had for nearly two decades. He actually ended up relocating it somewhere else but it wasn’t very successful at all, poor guy.
So when it comes to legal things in your business, if you’ve obtained advice right at the beginning when you started, that’s great, well done, good job but it is important to be aware that things change all the time. Not only do laws change, but sometimes the law stays the same but the way that judges interpret it are completely different. This causes annoyance amongst everybody, but sometimes that just happens, that one day a certain thing amounts to defamation, then the next day a judge says no that’s not defamation.
So it’s important to keep on top of that and my recommendation on one of the ways to do that, is to have your business reviewed regularly to make sure you’re complying with legal requirements. Another way is to sign up to a newsletter or legal alerts from your favorite lawyer, and of course you can sign up to my legal alerts. Sometimes the law might not even have changed but you might have forgotten, I had a client who came to me two years ago to secure her trademark. She decided the timing wasn’t right and then carried on, then I saw her post something on Facebook.
Great announcement, I’ve got this new program going. So I messaged her, “Paula, what are you doing? We haven’t done the trademark yet.” She said “ah, I totally forgot, I knew I was supposed to and I knew I had to get it done but I totally forgot.” So it’s useful just to be aware of legal requirements in your business and legal changes which may affect you. Once you start becoming aware of it, it’s not that difficult to keep up to date with what’s happening in the legal field, in respect of your small business.
The most important thing to remember though, is that once you’ve got the legalities right it is not a case of set and forget, you’ll need maintenance. It’s like when you’ve had your car serviced, or you’ve bought a brand new car. Everything’s good, or maybe not so good these days, but then, sometimes it needs a bit of a tuneup. So don’t forget to give your business a legal tuneup every now and then, all the best with it.