For local business owners, productivity isn’t just about being new and different; it’s also about mitigating risks. Often overlooked as fine print, the legal documents that underpin your business can significantly impact your risk and bottom line. Understanding these areas helps you to ensure your enterprise stands on solid ground.
One significant area often overlooked by business owners and managers is employment law. As your workforce grows, so do your obligations. The absence of compliant, written (and signed) employment agreements and job descriptions can lead to costly disputes. The law sets out key information that must be included in agreements, and your agreements should be supported by good workplace policies. Failure to do so leads to big headaches when managing non-performance or misconduct; regular review against current legislation is essential.
Premises are central to most businesses, yet a surprising number operate without adequate lease documentation, or fail to fully understand their existing lease terms. A lease is a binding legal contract detailing tenant and landlord rights and responsibilities, and cover key elements like rent review schedules, maintenance obligations, and renewal options. Neglecting this crucial document can lead to unforeseen financial burdens or operational disruptions. Proactively review your lease, or take steps to formalise your lease if you haven’t already.
Protecting your revenue stream is paramount, and robust terms of trade serve as your primary defence against defaulting debtors. These stipulations govern every customer transaction. Do yours clearly outline payment terms, interest on overdue accounts, and dispute resolution mechanisms? Do your customers sign your terms of trade? Well-defined terms of trade are indispensable for any business, ensuring timely payment for services rendered and providing a clear framework for debt recovery.
Finally, for incorporated entities, two fundamental documents—the company constitution and the shareholders’ agreement—are often underestimated. While the constitution sets out the governance rules of your company and is a public document, a shareholders’ agreement is a private document between owners. Either can play a vital role in establishing decision-making processes, addressing shareholder departures, and resolving internal disputes. If neither of these documents is in place, your company will be bound by the default provisions of the Companies Act. This statutory framework offers significantly less flexibility when it comes to resolving disagreements or facilitating an exit from the business, potentially leading to costly and protracted conflicts. A well-drafted constitution or shareholders agreement provide clarity and minimise the risk of protracted future conflict, so you can focus on core business activities.
Addressing these legal aspects is a strategic investment in the longevity and efficiency of your business. Building a relationship with your local lawyer will help you to stay on top of your legal compliance, reduce your risk over the long term and plan your next steps.
How can we help?
WRMK Lawyers experienced team of business lawyers will be happy to discuss your business with you and help you identify the areas where you can improve your business’ legal compliance.
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