What you must do to protect your business
How to protect your name
Company registration gives you the right to use the name to conduct business. Nothing else.
It does not stop someone using that name for other purposes [e.g. as a brand name].
It does not stop someone using a similar name for their business.
It does not stop someone who already has a similar name from taking legal action to stop you using your name (even after you have registered it!).
You therefore need to check to see if there are any similar names registered which could cause a problem for you. It is also wise to consider protecting your name (whether it is the name of your company or a brand) by registering a trademark – TM registration.
Protection against legal and consumer problems
One way to prevent problems, and one of the most important, is to have well thought out terms and conditions of business.
Most people don't realise the risk they are taking by not having EFFECTIVE written customer contracts, by copying them from another business or by using an online template.
Send us a copy of your terms of business and we will let you know (free of charge) if they are OK – free terms of business evaluation. Another thing that you may not be aware of. Many people use a company or trust to avoid the risk of trading in their own name, not realising that they are often exposing themselves to the personal risk of being a director and other risks, such as personal liability for misleading conduct by the business.
Protecting company assets
If you have any valuable intellectual property (IP) or tangible assets, whether they are valuable now or you expect them to be valuable at some time in the future, it is wise to takes steps to keep them safe.
Effective legal documentation and business insurance are both important to protect assets, but neither are foolproof. Therefore, it is sensible to take steps to separate valuable assets from the trading activities of the business so that they will not be lost if the company gets into financial difficulties.
The way this is done is to have the valuable assets owned separately and then license the use of those assets to the trading company.
Most people think a company will protect them against personal liability. It is a good start, and a lot safer than operating as a sole trader or in partnership, but it is not enough.
A company director in Australia is personally liable for many debts of a company such as superannuation payable to employees, tax on wages payable to the ATO and any debts incurred at a time when the company cannot pay invoices when they become payable.
In addition, directors can be personally liable for other things the company does, such as misleading a customer. You don’t actually have to say or write something which is misleading. An omission to do something or say something is enough, and directors are often liable for this (even if they are not personally involved).
There is no need to be alarmed or put off by these things – they just need to be taken into account in the way your company does business and in the legal agreements which are so important for your protection.