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3 Legal Concepts Australian Business Owners Need to Know

Legal Concepts Australian Business Owners Need to Know

Australia ranks 14th when it comes to ease of doing business. The economy is stable (although slowing down), the people are welcoming, and the business space is brimming with opportunities.

However, it is worth noting that the Australian government has made it all possible with some well-thought-out laws and regulations. If you do not abide by these laws, you might not be able to benefit from the Australian business space.

So if you’re just starting out and know nothing about Australian business laws, this post is for you. We’ve shared the details of three of the most important legal concepts that every Australian business owner needs to know.

Let’s dive in!

Legal Concept 1: Employment Law

Employment law is a basic legal concept that all Australian business owners should know.

There are different pieces of state and federal legislation that outline the employment law in Australia. These include:

  • Fair Work Act 2009: This act ensures the establishment of a healthy relationship between the employee and employer. It safeguards basic employee rights like minimum wage, paid leave periods, compensation, and a safe work environment.

  • Work Health and Safety Act 2011: This act ensures workers’ health, well-being, and safety at work.

  • Superannuation Guarantee Law: This law ensures that employees have money to access for retirement, as businesses set aside an amount for this purpose.

In addition to safeguarding employee rights, employment law also safeguards employers' rights. For example, laws relating to the vicarious liability for employers means you can be held accountable for certain crimes committed by employees while working on your behalf.

Legal Concept 2: Business Structures

There are four types of business structures in Australia. These include:

1. Sole Trader

This is the simplest form of business structure. As a sole trader, you’ll follow a similar tax structure as an individual taxpayer. You’ll also have a registered business name, more limited establishment costs, and relatively simple compliance requirements.

However, there are a few disadvantages too. For example, you’ll have to bear the complete business liability all by yourself, and the growth potential can be more limited.

2. Partnership

As the name implies, this business structure involves two or more individuals coming together as business partners. You get to register your business officially and run it.

However, the profits are divided as per the settled percentage. There can also be potential for infighting amongst the partners.

3. Company

A registered company in Australia usually has its name ending with ‘Pty LTD’ and is capable of holding assets in its own name. Since it’s owned by shareholders and directors, the profits are divided amongst them. But the shareholders can limit their liability, and they are not answerable for the company’s debts.

4. Trust

This happens to be the most complex business structure in Australia. The trust must have its official Australian business name, tax file number, and an officially-approved trust deed that outlines how it will operate. Overall, a trust is pretty expensive to set up and operate.

Legal Concept 3: Contracts and documents

Contracts and other legal documents are the backbone of business operations. So, you must have a sound understanding of what contracts are required in Australia, how to create them, and what happens if you don’t abide by the law.

As a business, some of the key documents that you may have to execute are as follows:

Type of Document

What is it about?


When is it compulsory?

Business Contract

Business structure, business dealings

When 2+ individuals partner to run a business and sign a partnership agreement, it counts as a business contract.

When you establish business relations with another party and/or commit to frequent or recurring transactions (of money or services)

Employment Contract

Employment terms

Say you’ve just started a small business and you hire a social media marketer to market it. You’ll have to issue an employment contract when you onboard them.

When you hire someone to work for your business.

Bill of Sale

Official transfer of a piece of property

You manufacture smartphones and sell one unit to a customer.

When you receive money in exchange for an item (i.e., when you sell a product).

Licensing Agreement

Permission to use someone else's intellectual property, digital, or physical property.

You invented a software program like multi-sim. You allow people to use it after paying a certain amount. Once they pay, you let them download it with a license. This should all take place within the purview of a licensing agreement which the user consents to.

When you wish to retain ownership of your property or invention while allowing others to use it in certain capacities.

You can create these contracts with the help of law professionals. If you haven’t got the budget, consider free contract templates available online. Just make sure they comply with Australian laws and cover essential clauses, such as:

  • Payment terms and conditions

  • Termination clauses

  • Intellectual property rights

  • Confidentiality and non-disclosure

  • Dispute resolution


What are the legal requirements for a company in Australia?

There are several legal requirements for a company in Australia. Some key requirements include setting up a registered office and business name, updating ASIC on key changes, maintaining financial records, checking annual statements, and seeking professional advice when necessary.

What legislation affects Australian businesses?

We’ve mentioned these above! But to add to that, the Australian Consumer Law and the Corporations Act are two more pieces of legislation that affect Australian businesses.


Sydney Chic is not intended to provide and does not constitute health, medical, financial, legal or other professional advice.


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