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Work Health & Safety also know as OH&S

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Prevention is better than a cure and although everyone thinks it will not happen to them, unfortunately, accidents happen! In Australia, small businesses have a duty of care for work health and safety.  This guide will help you understand how you can make your environment safer as well as what your legal requirements are to create a safe work environment.

Work Health and Safety (WHS) – sometimes called Occupational Health and Safety (OH&S) – involves the management of risks to the health and safety of everyone in your workplace. This includes the health and safety of anyone who works for you as well as your customers, visitors and suppliers.

WHY do I need to worry about Work Health and Safety?

If an employee or any type of visitor is injured while doing your business you will most likely be held liable for medical bills and lost wages. Unfortunately, some small businesses in Australia have lost their business because they did not take the proper precautions and have legislated insurance.

Benefits of having good WHS include:
  • staff retention
  • a reduction of injury and illness in the workplace
  • improved productivity and minimise disruptions
  • reduce your liability for injured workers

WHAT do I need to understand about WHS (OH&S)?

If you employ staff you need to take out workers’ compensation insurance. This insurance covers payments to workers for medical costs and rehabilitation expenses as well as lost wages if they are unable to work due to an injury or ill health. Workers compensation schemes are different by states and links for further details can be found further into this guide.

As a small business owner, you have an important role to play when it comes to championing safety. If you take the lead your employees will understand they should follow your safety procedures and raise safety issues.

You must put health and safety practices in place as soon as you start your business. Under Australian WHS laws, your business must ensure the health and safety of your workers and not put the health and safety of other people at risk. To do this you must:

  • provide a safe work environment
  • monitor the health of workers and conditions at the workplace
  • provide and maintain safe machinery and structures
  • provide safe ways of working
  • ensure safe use, handling and storage of machinery, structures and substances
  • provide and maintain adequate facilities
  • provide any information, training, instruction or supervision needed for safety
  • monitor the health of workers and conditions at the workplace

HOW do I manage Work Health & Safety Risks?

  1. Identify hazards in your workplace – look for physical (such as machinery noise), material or substance (for example, poison) and work task (like heavy lifting) hazards that may harm people.
  2. Assess risks – If an employee is exposed to one of these hazards how dangerous is it, can protection be added or controlled and should that hazard be fixed before work continues?
  3. Control Risk – look to prevent hazards when designing the process and if one is created work to remove that hazard.  The remaining risk may be minimised by using appropriate personal protective equipment and providing appropriate training and supervision.
  4. Review controls –  Schedule regular inspections to identify new hazards and ensure measures are being adopted.  Don’t wait for an issue to occur.
  5. Record and report safety issues- To begin with it identifies what is an issue and provides a record for any claims. You must keep records concerning certain hazards including:
    1. energised electrical work
    1. diving work
    1. hazardous chemicals
    1. plant
    1. equipment

A link to each state WHS laws and regulation can be found at the bottom of the page.

The WHS framework includes:
  • Act – outlines your broad responsibilities.
  • Regulations – set out specific requirements for hazards and risks, such as noise, machinery, and manual handling.
  • Codes of practice – provide practical information on how you can meet the requirements in the Act and Regulations.
  • Regulating Agency (regulator) – administers WHS laws, inspects workplaces, provides advice, and enforces the laws.

HINTS

It may be worth getting independent advice on the WHS requirements for your business.

Emergency plans and first aid – Part of WHS is being ready to respond if an accident or emergency happens. Do you have a first aid kit and someone trained to use it? If you evacuate do you know where you will safely assemble?

Extreme weather, including cold, extreme heat, hail or strong winds may affect your business. You must keep your workers safe and ensure you’re aware of the signs of heat-related illness and how to manage the risks.

You still have WHS responsibilities at a work function.  Your staff may be letting their hair down but ensure you have internal policies around acceptable behaviour, bullying and harassment in the workplace, and sexual harassment. Any alcohol should be served legally and responsibly.

Safe Work video on how small businesses can comply with WHS requirements

SafeWork NSW provides a helpful assessment tool https://www.safework.nsw.gov.au/easywhs-beta

SUMMARY – Preventative health & safety for small business

Work Health and Safety is an important consideration for your workplace including your requirement to have workers compensation insurance for your employees.

A safe environment encourages productive, happy staff.  Creating policies and plans in the event of an occurrence is a precaution that, although extra work, will help prevent and deal with any risk that may occur.  Each state has its own WHS laws and regulation.

Australian Capital Territory

Act – Work Health and Safety Act 2011 (ACT)

Regulation – WHS Regulation 2011 (ACT)

Codes – ACT Codes of Practice

Regulator – WorkSafe ACT

New South Wales

Act – Work Health and Safety Act 2011 (NSW)

Regulation – WHS Regulation 2017 (NSW)

Codes – NSW Codes of Practice

Regulator – SafeWork NSW

Northern Territory

Act – Work Health and Safety (National Uniform Legislation) Act 2011 (NT)

Regulation – WHS (National Uniform Legislation) Regulations (NT)

Codes – NT Codes of Practice

Regulator – NT WorkSafe

Queensland

Act – Work Health and Safety Act 2011 (Qld)

Regulation – WHS Regulation 2011 (Qld)

Codes – Qld Codes of Practice

Regulator – Workplace Health and Safety Queensland

South Australia

Act – Work Health and Safety Act 2012 (SA)

Regulation – WHS Regulations 2012 (SA)

Codes – SA Codes of Practice

Regulator – SafeWork SA

Tasmania

Act – Work Health and Safety Act 2012 (Tas)

Regulation – WHS Regulations 2012 (Tas)

Codes – Tas Codes of Practice

Regulator – WorkSafe Tasmania

Victoria

Act – Occupational Health and Safety Act 2004 (Vic)

Regulation – Occupational Health and Safety Regulations 2017 (Vic)

Codes – Vic Compliance Codes and codes of practice

Regulator – WorkSafe Victoria

Western Australia

Act – Occupational Safety and Health Act 1984 (WA)

Regulation – Occupational Safety and Health Regulations 1996 (WA)

Codes – WA Codes of Practice

Regulator – WorkSafe WA

Commonwealth

The Commonwealth jurisdiction covers workers for the Commonwealth Government (for example, the public service and the Australian Defence Force) and businesses licensed to self-insure under the Comcare scheme.

Act – Work Health and Safety Act 2011 (Cwth)

Regulation – WHS Regulations 2011 (Cwth)

Codes – Commonwealth Codes of Practice

Regulator – Comcare

Record Keeping for small business

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Running a small business is about understanding what is going on and about meeting your obligations. You might have obligations to employees, suppliers, the taxman or more simply an obligation to yourself to understand if you are making any money or the ability to look up a past agreement.  This guide will look at why record keeping is important, what you need to keep records on, and how to keep good records.

Record keeping is the activity or occupation of keeping records or accounts.
Record keeping in financial terms is the process of recording transactions and events in a ledger or accounting system. Since the principles of accounting rely on accurate and thorough records, record keeping is the foundation accounting.

WHY should I care about record keeping?

Keeping good records is important for any small business. Whether that is to help manage your costs, whether it is for legal, regulatory or tax reasons, or simply to help manage and improve your business.  Collecting, storing, and effectively analysing your data is vital.

Without adequate records, it would be impossible to measure the health of your business and to keep track of your progress. It also helps avoid fines for doing the wrong thing and demonstrate your financial position if you need a bank loan.

Records must be kept by law for:
  • 5 years for Australian Tax Office purposes
  • 7 years for Human Resources time and wages records
  • 2 years after you have offset a capital loss against a capital gain (individuals & small business)

Keeping good records will make running your business easier and save you time in the long run.

WHAT should I keep records on?

The types of records you should consider keeping include:
  • Client Files
  • Contracts
  • HR required records for 7 years
    • employee details including pay, leave and work hours
    • reimbursements of work-related expenses
    • workers compensation insurance for each employee
    • pay as you go (PAYG) tax instalments
    • superannuation contributions
    • ending employment
  • HR records recommended:
    • resumes and job applications
    • contracts of employment
    • performance reviews
    • trade or registration certificates
  • Business records (for example, business registration, formal meeting minutes etc)
  • General business information (for example, job tracking, customer correspondence)
  • Accounting and tax for 5 years
  • Business expenses
  • Bank statements / credit card statements
  • Annual tax returns
  • Quarterly/Monthly tax filings
  • Payroll
  • Inventory
  • Sales
  • Revenue
  • Petty cash
  • Vehicle logs
  • Invoices
  • Cancelled cheques and cheque stubs
  • Purchase orders

HOW do I make record-keeping easy?

Under Australian law records must be:
  • readily accessible if required
  • must be unchanged and must be stored in a way that restricts the information from being changed or the record damaged (changes may be permitted for correcting an error)
  • in writing (electronic or paper)
  • legible
  • in English
  • explain all transactions
  • accurate and not misleading

A bookkeeper or your accountant can help with this process but this will not remove your need to still be involved in keeping accurate records.

Although you can keep records on paper it will be much easier if you do so electronically.  Refer to our essential guides on expense management, accounting software and payroll software to understand more. If you are concerned about outlaying funds for software you could set up a series of spreadsheets to help manage your accounts.

Other key documents like signed contracts, lease documents etc should be kept in a safe preferably fireproof storage. These documents can also be scanned and stored electronically ensuring you have back up copies.  Refer to our guide on Storage and sharing of files.

Electronic solutions and storage of records have the following advantages:
  • back up records in case of disaster
  • automated processing and provide ready-made reports
  • produces taxation and employment reporting requirements for government submission online
  • keep up with the latest tax rates, laws and rulings
  • save on physical storage space

HINTS

The Australian Tax office (ATO) provides a record-keeping evaluation tool which will help you evaluate how well you are keeping your business records. https://www.ato.gov.au/Calculators-and-tools/Host/?anchor=&anchor=RKET/#RKET/questions

The ATO provides an App for sole traders to help them record business income, expenses, and vehicle trips.  https://www.ato.gov.au/general/online-services/in-detail/mydeductions/mydeductions/

SUMMARY – keep records under Australian law

Record keeping is not just about keeping records for accounting.  Under Australian law, some taxation, superannuation and employment records must be kept for 5 or 7 years. 

Accurate and regimented record keeping will help you find the information you need, provide reporting and make running your business easier.  Modern accounting and payroll cloud-based solutions will not only streamline the process but also produce required government reporting for you.

Lack of record-keeping, false or misleading reporting can result in fines. Always ensure you have backup copies.

Australian Competition and Consumer Law

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Trust me, this widget is 10 times better than ?, environmentally friendly, and will last forever.  Reality is you cannot say this unless you can substantiate every statement. This guide will look at Australian competition and consumer law that you need to understand.

This guide is a summary of what you should consider as a small business.  It cannot be used as a definitive guide and it is strongly recommended that you further research this subject on the government websites Australian Consumer Law (ACL) and Australian Competition and Consumer Commission (ACCC). This summary does not cover every aspect.

The ACL offers consumer protections in the areas of: (1) Unfair contract terms, covering standard form consumer contracts. (2) Consumer rights when buying goods and services. (3) Product safety. (4) Unsolicited consumer agreements covering door-to-door sales and telephone sales. (5) Lay-by agreements.

The ACCC Competition and Consumer Act 2010 (the Act) is a national law that regulates fair trading in Australia and governs how all businesses in Australia must deal with their customers, competitors and suppliers. The Act promotes fair trading between competitors while also ensuring that consumers are treated fairly.

WHY should I care what the ACL and ACCC laws are?

There is significant government legislation associated with this subject and lack of knowledge is not an acceptable defence.  Significant fines apply for breaking the rules to ensure unfair activity does not occur.

WHAT Australian Competition and Consumer Law do I need to understand?

Australia Consumer Law (ACL)
  • Unfair contract terms – This protects a business or consumer when they agree to a standard contract which is subsequently deemed as unfair. For example, terms change, you agree to a price but the price is changed without notice.
  • Consumer Guarantees – applies to a consumer or business that purchases a product for less than $40,000. The guarantee is that a good or service will meet certain minimum standards. For example, a consumer buys a washing machine for $2000 with a 1-year warranty.  After 2 years the product fails.  Under ACL the consumer can claim that this product should have lasted more than 2 years and as such should be repaired or replaced.
  • Consumer product safety – As a business owner who sells a product you must be aware of mandatory standards or voluntary rules that exist around the safety of your product.  You will also have obligations around bans or recalls. For example, you cannot sell children’s toys that have small detachable parts that could be swallowed.
  • Sales practices – The ACL prohibits businesses from using unconscionable conduct when selling, unsolicited supply of goods, unsolicited consumer agreements, harassment  and coercion, or refusing to provide proof of a transaction when dealing with their customers. For example, you cannot try to trick someone into buying your service nor threaten them or refuse to give them a receipt if they ask for one.
  • Avoiding unfair business practices – The ACL prohibits businesses from engaging in unconscionable conduct including misleading or deceptive conduct and representations. For example, you cannot do an advertisement with disclaimers that are too small to read. Nor can those disclaimers change the main meaning of that advertisement, for instance, when the ad implies the item costs $50 but a condition in fine print means the real cost is $75
Australian Consumer & Competition Commission (ACCC)
  • Treating customers fairly
    • Offering warranties. A product or service must do what it says. For example, if it has a speed of 10 it must reach a speed of 10.  If you provide a warranty against defects you must comply with that warranty. A warranty against defects is provided in addition to consumer guarantees under ACL and does not limit or replace them.
    • Unfair business practices. It is illegal to engage in referral selling, pyramid selling, unfair contract terms, and accepting payment without intent to supply
    • Rules for gift cards. Cards must be redeemable for 3 years after the date of purchase and clearly show the expiry date.
    • Debt collection. It is illegal to mislead, hassle, or use physical force on someone who owes you money.
    • Selling parallel imports or grey marketing is when you directly import a product outside of a formal manufacturer distribution network. If you do you must
      •  be aware of, and comply with, product safety and labelling requirements
      • provide accurate information to consumers about the products you sell
      • ensure that you do not mislead consumers about their refund, return and warranty rights, and
      • understand your general obligations under the ACL.
  • Advertising & promoting your business
    • False or misleading statements.  It is illegal for a business to make statements that are incorrect or likely to create a false impression. This includes advertisements or statements in any media (print, radio, television, social media, and online) or on product packaging, and any statement made by a person representing your business.
    • Managing online reviews. You will be breaching the law if you do not remove fake reviews. You must disclose commercial arrangements. It is also considered misleading if you remove or edit negative reviews.
    • Door-to-door & telemarketing sales. If selling door to door you may not approach if a do not knock sticker is present and you must leave if asked. Telemarketing must fall under the Do Not Call Register Act and specified hours.  These types of sales are bound by a 10 business day cooling-off period allowing customers to cancel for any reason.
    • Country of origin claims – It is illegal to misrepresent country of origin.  Some food products must display country of origin. Businesses wishing to display Australian-made can find more details here. https://www.australianmade.com.au/
  • Pricing & surcharging
    • Setting prices is at your discretion but cannot be done in collaboration with a competing business. You may not set a minimum price which a product or service can be sold by your retailers. Selling below cost is illegal if it is found it was done so to damage a competitor.
    • Displaying prices must be clear and accurate and display the total price.
    • Payment surcharges for EFTPOS should not be excessive.
  • Anti-competitive behavior
    Business practices that limit or prevent competition are illegal.  
    • Anti-competitive conduct. Prohibits contracts, arrangements, understandings or concerted practices that have the purpose, effect or likely effect of substantially lessening competition in a market. 
    • Cartels. Agreements made with competitors to fix pricing, share tender information, or agree to restrict production is illegal. For example, two competing businesses agree to sell their product for the same price.
    • Collective bargaining & boycotts. It is illegal to agree with a competitor to negotiate with a single supplier on terms as it is to agree to boycott a supplier.
    • Exclusive dealing.  It is illegal to force another business to comply with your conditions under the threat you will withhold supply or pricing.  This could include ceasing supply if they deal with a competitor or if they keep discounting your product.
    • Imposing minimum resale prices. Suppliers may suggest a retail price that a reseller charges but cannot stop resellers charging or advertising below that price.
    • Refusal to supply products or services. Suppliers have the right to choose who they do business with however it is breaking the law if that refusal is based on one of the above anti-competitive points.

HOW can I learn more about Australian competition and consumer law?

You must understand the rules and follow the rules. Additional details can be found:

ACL – See our Small Business Answers guide here

ACCC

For more details on how these laws are admistrated see Fair trading – The Competition and Consumer Act of 2010 is a national law administered by ACCC nationally and state and territory regulators https://www.business.gov.au/products-and-services/fair-trading/fair-trading-laws

SUMMARY – protect you and your customers

Australian competition and consumer law is designed to protect both consumers and businesses from practices that misrepresent, disadvantage, deceive, or reduce competition.  The government has large departments to police the associated laws and you should ensure you and your staff are familiar with those laws that will affect your business.

The following guide published by the ACCC explains Australian competition and consumer law in more detail. https://www.accc.gov.au/publications/small-business-the-competition-and-consumer-act

Choosing a business structure

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Right at the beginning of your Small Business journey, you need to decide which business structure is best for your situation. This will have an impact on the complexity of running it as well as taxation and personal liability implications. This guide will explain your options to help you decide which is best for you.

A business structure is the legal structure in which you set up your business

WHY does a business structure matter?

The practical impacts of this decision can affect how much tax you pay, legal implications like licensing and personal liability, and the control and procedures you have in running your business.
You cannot run a business unless it fits into a business structure.

WHAT are my business structure choices?

The four most common types are:

  • Sole Trader – one owner full control
  • Partnership – 2 or more owners split income and liability
  • Company – a legal entity where liability may be limited
  • Trust – a person manages assets for the benefit of others

HOW do I decide sole trader, partnership, company or trust?

This can be a very complicated decision therefore seeking advice from an accountant, lawyer or business advisor could be a worthwhile investment.  The good news is that if you change your mind or circumstances change, you can change your business structure at some point in the future. 

Sole Trader

This is the simplest form of setting up a business and requires the least amount of paperwork but the most risk to your personal assets. If things go wrong, you could lose your house.  On a more positive note, you make all the decisions and all the reporting is rolled into your personal tax return. 

You will have to keep all records, like receipts, for 5 years and all profits and losses fall back to you and cannot be split. If you hire employees, you are still bound by any government legislation obligations like superannuation contributions and workers’ compensation.

Partnership

There are 3 types of partnership structures you can consider:

General partnership – all partners are equally responsible for managing the business, and each has unlimited liability for the debts and obligations the partnership incurs.

Limited partnership – is a great tool for partners who want to invest in a business but not be involved in the day to day.  Here liability is limited to the amount of money they have contributed to the partnership.

Incorporated Limited Partnership – Put simply one partner has unlimited liability the rest of the partners have limited liability.

Each state has slightly different laws for partnerships and details can be found here:

A partnership must have an ABN and each partner requires a tax file number.  Each partner will be responsible for the tax implications on their share of the business and must take responsibility for their superannuation.  If a partnership earns more than $75,000 they must register for GST.

Company

A company is the most expensive option to set up and run. It is a legal entity and as such can borrow money, take legal action, and be sued by someone else.  As a shareholder of a company whether it be 10% or 100% you are only liable for any unpaid money on your shares.  So in theory they cannot come after your house, however as a director of that company, if you are found to be in breach of your legal obligations, you could be sued. A company is owned by its shareholders but controlled by its directors. More information on this can be found https://asic.gov.au/for-business/running-a-company/company-officeholder-duties/ . All money a business makes is owned by the business and an annual tax return must be completed in its name.
You must register for the Goods and Services Tax (GST) if revenue exceeds $75,000.  The Australian Securities and Investment Commission requires companies to keep records for 7 years.  Directors also have an annual obligation to show a business is solvent which means you can pay your debts and have the cash to run your business.

Trust

This is an expensive way to run a business but might have certain tax benefits.  A formal trust deed must be established that sets out how the trust operates and also comes with annual formal administration tasks.

According to the Australian Tax Office:

Trusts are widely used for investment and business purposes.

A trust is an obligation imposed on a person or other entity to hold a property for the benefit of beneficiaries. While in legal terms a trust is a relationship, not a legal entity, trusts are treated as taxpayer entities for the purposes of tax administration.

The trustee is responsible for managing the trust’s tax affairs, including registering the trust in the tax system, lodging trust tax returns, and paying some tax liabilities.

Beneficiaries (except some minors and non-residents) include their share of the trust’s net income as income in their own tax returns. There are special rules for some types of trust including family trusts, deceased estates, and super funds.

The Australian government also provides a handy tool to help you decide. https://register.business.gov.au/helpmedecide

HINT

This handy guide can help you make your decision. Be sure to select I am not sure. https://register.business.gov.au/helpmedecide

SUMMARY – Research Business Structure

If unsure get some professional help deciding and possibly assisting you to set up your business structure.  It comes down to how many owners there will be and how you divide profits and liabilities.  For those of you worried about losing your house, this can be protected by insurance as discussed in a separate essential guide on Business Insurance.

Australian Consumer Law

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Australian Consumer Law (ACL) is an Australian national law that applies to all Australian jurisdictions and industry sectors. As a small business owner, you have obligations.

A more general guide on your legal obligations can be found in our guide on Australian competition and consumer law. This guide aims to look specifically at the ACL’s implications to ensure you understand your obligations and comply.

The Australian Consumer Law (ACL) includes:a national unfair contract terms law covering standard form consumer and small business contracts; a national law guaranteeing consumer rights when buying goods and services; a national product safety law and enforcement system; a national law for unsolicited consumer agreements covering door-to-door sales and telephone sales; simple national rules for lay-by agreements; and penalties, enforcement powers and consumer redress options.

WHY should I care about my legal obligations?

The ACL covers general standards of business conduct, prohibits unfair trading practices, regulates specific types of business-to-consumer transactions, provides basic consumer guarantees for goods and services, and regulates the safety of consumer products and product-related services.

There is significant government legislation associated with this subject, and lack of knowledge is not an acceptable defence. Significant fines apply for breaking the rules to ensure unfair activity does not occur.

WHAT ACL laws do I need to understand?

Australia Consumer Law (ACL)
  • Unfair contract terms – This protects a business or consumer when they agree to a standard contract that is subsequently deemed unfair. For example, terms change, you agree to a price, but the price is changed without notice.
  • Consumer Guarantees – applies to a consumer or business that purchases a product for less than $40,000. The guarantee is that a good or service will meet certain minimum standards. For example, a consumer buys a washing machine for $2000 with a 1-year warranty. After 2 years, the product fails. Under ACL, the consumer can claim that this product should have lasted more than 2 years and should be repaired or replaced.
  • Consumer product safety – As a business owner who sells a product, you must be aware of mandatory standards or voluntary rules around your product’s safety. You will also have obligations around bans or recalls. For example, you cannot sell children’s toys with small detachable parts that could be swallowed.
  • Sales practices – The ACL prohibits businesses from using unconscionable conduct when selling, the unsolicited supply of goods, unsolicited consumer agreements, harassment and coercion, or refusing to provide proof of a transaction when dealing with their customers. For example, you cannot try to trick someone into buying your service nor threaten them or refuse to give them a receipt if they ask for one.
  • Avoiding unfair business practices – The ACL prohibits businesses from engaging in unconscionable conduct, including misleading or deceptive conduct and representations. For example, you cannot do an advertisement with disclaimers that are too small to read. Nor can those disclaimers change the main meaning of that advertisement, for instance, when the ad implies the item costs $50 but a condition in fine print means the real cost is $75.

HOW do I comply with Australian Consumer Law

Unfair contract terms

A contract can include two parties signing a document, agreeing over the phone, clicking an “I agree” button on a web page, or acting according to a contract after indicating acceptance of the contact.

As a small business, you are responsible for upholding contracts and ensuring that the contract is not unfair. Very simply, you cannot change the terms after an agreement is made just because it suits you. A contract could be classed as unfair if you have not balanced the terms between you and the customer. This could be everything is in your favour, or you are abusing your customer’s interests, or the contract could cause detriment to your customer.

Consumer Guarantees

Suppose you sell a product or provide a service for personal, domestic or household purposes. In that case, you are obligated to ensure that product is fit for the purpose it was bought. The important implications of the law is that a warranty end date does not end your obligations. You cannot replace consumers rights, for example, a ‘No refunds’ sign is unlawful, and you cannot have a customer sign a document waiving their rights, nor can you have them sign or agree they will not claim consequential losses from you.

Goods sold to a customer must be of acceptable quality. You must guarantee this to the point that it is considered reasonable that the good should last. Say you bought a TV with a 2-year warranty and after 3 years, it stops working. The TV should have lasted longer than 3 years so a customer could claim repair or replacement under ACL. This period is not set in stone and would be reviewed by the court based on each circumstance. Note a consumer loses those rights if the product failure was caused by commercial use or malicious damage. As a product seller, it may be cheaper for you to repair or replace an item rather than being taken to court by the ACCC.

If a consumer orders a product based on a sample or model, you are obligated to deliver goods that match that sample and specifications.

You have an obligation to provide repairs and spare parts for a reasonable time after a good is sold. Alternatively, you are obligated to provide a replacement.

Suppose the product or service does not meet the consumer guarantee. In that case, they have the right to demand resolution from the supplier (retailer). Note, although the manufacturer is also obligated, it is the selling party’s responsibility to resolve. Thus, you cannot simply expect the manufacturer to handle this for you if you sold it.

From a services perspective, there must be a level of skill or technical knowledge when providing a service and all necessary care must be taken to avoid loss or damage when providing that service. The services must be fit for purpose and delivered within a reasonable time. If you fail to provide this, the consumer can cancel the service and get a refund for work not already done or keep the contract and get compensated for resolution.

Consumer product safety

Under the ACL, Australian ministers can regulate unsafe consumer goods and product-related services by:

  • issuing safety warning notices
  • banning products, either on an interim or permanent basis
  • imposing mandatory safety standards; and
  • issuing compulsory recall notices

These rules relate to personal, domestic or household use or consumption. More information on product safety can be found here.

Your obligations are to sell something that is safe and not banned. This may include how it is made, what it contains, how it is designed, tests it needs to pass and whether warnings or instructions need to accompany the goods. If you do not comply, you may be required to recall your goods at your cost if a consumer suffers loss or damage. As a result, a court can award compensation to cover the losses.

Sales practices

Your business cannot issue an invoice or request payment for good and services that have not been requested. For example, you can not send an advertising invoice to a customer who has not requested advertising, nor can you send someone a book unprompted then demand payment. The maximum fine is $220,000 for an individual and $1.1 million for a body corporate.

If you decide to engage in unsolicited consumer agreements, including door to door selling, cold calling on the telephone, or approaching people in the shopping centre, you must observe certain conditions. These include limited hours for contact with consumers, disclosure requirements when making an agreement, criterion for the sales agreement, including that it must be in writing, supplying goods above $100 value, and on requesting payment during the cooling-off period. The customer has a 10-day cooling-off period to change their mind and cancel the contract. If you do not meet your obligations as part of the contract, the customer has right to cancel in a 3- or 6-month period. Unsolicited consumer agreements can lead to maximum civil and criminal penalties of $50,000 for a body corporate and $10,000 for an individual.

Pyramid selling is illegal in Australia. A Pyramid scheme is where people make money from recruiting participants who pay a fee, and all those in the chain above receive a share of that payment.

If you are selling, you must sell a good at the lowest displayed price or withdraw the product from sale until rectified. Mistakes made in advertising can be fixed by publishing a retraction with similar circulation. You may also not quote a price that is a component or only part of its cost. For example, if a lounge is priced at $500, but the customer is also charged a $20 fee to pick the lounge up at the store they have just purchased from.

You cannot convince a consumer to buy goods or services by promising benefits dependent on other events. For example you can’t offer a customer a discount on the condition that they help you find other customers. The maximum fine is $220,000 for an individual and $1.1 million for a body corporate.

You cannot use physical force, coerce or unduly harass someone for the supply of or payment for goods or services, this includes verbal intimidation. The maximum civil and criminal penalties for harassment and coercion are $1.1 million for a body corporate and $220,000 for an individual.

If you sell goods or services to the value of $75 or more, you must prove that transaction. This could take the form of a GST invoice, cash register receipt, credit card statement, handwritten receipt or receipt number for a telephone transaction. The customer has the right to ask you for an itemised bill, including how the price was calculated, including hours and materials if relevant. The maximum civil penalties for failing to provide consumers with proof of a transaction or not providing it within the required time are $15,000 for a body corporate and $3,000 for an individual.

Avoiding unfair business practices

You must not make statements that are misleading or deceptive as part of your sales or marketing activities or are likely to mislead or deceive. Failing to disclose information also falls into this. A disclaimer cannot be used to counter any of this conduct. If you do mislead or are deceptive, the court may order you to make remedies.

You cannot make false or misleading representations about goods or services when supplying, offering to provide, or promoting those goods or services. For example, this vitamin will extend your life by 20 years. Making false or misleading representations is an offence. The maximum fine is $220,000 for an individual and $1.1 million for a body corporate.

You must not engage in unconscionable conduct within societies norm and expectations. For example, you cannot explain the conditions of a contract and get an agreement in English to someone who does not speak English or might have a disability. The maximum civil penalties are $220,000 for an individual and $1.1 million for a body corporate.

If you decide to make a country of origin claim about your product as either words or an image, it must not be false or misleading. Made in Australia must be made in Australia. The definition of made in Australia is the goods must be substantially transformed in Australia, and 50 per cent or more of the total cost of producing or manufacturing the goods must be in Australia.

HINTS

For more details available directly from the Australian Government, see this page for resources and guides.

SUMMARY – Australian Consumer Law

This document is a Summary of Australian Consumer Law to help you understand the implications. It should be used as informational only. You should read the guides made available by the Australian Government to fully understand its impact. ACL must be adhered to and being in business, you could find yourself in court and subsequent penalties if you do not do the right thing.

Temporary full expensing

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Following the COVID support instant asset write off available for small business in 2020, the Australian Government announced in October 2020 Temporary Full Expensing which allows a business to temporarily write off business assets in full.

The Australian Government has announced a temporary measure to allow businesses to claim an immediate deduction for the full cost of eligible capital assets.

WHY should I care?

This means you can write an eligible asset off in one year versus over the useful life as deemed by the Australian Tax Office. For example, a bar refrigerator in a restaurant normally would need to be written off over 10 years, under this measure the fridge’s cost can be written off against your business assets in one financial year.

WHAT do I need to know about temporary full expensing?

The eligible period is for the 2020-2021 and 2021-2022 taxation years and is for assets first held between 6 October 2020 and 30 June 2022. Thus, it is currently scheduled to end June 30th 2022. Your business must have an aggregated turnover of less than $5 billion, and you cannot make any other claim under other depreciation rules.

You may deduct the business portion of the cost of eligible new depreciating assets and the cost of improvements to existing assets. This measure also is available for 2nd hand assets if your turnover is below $50 million.

Suppose your business makes a loss for the financial year after claiming a full expensing deduction. In that case, you can carry your loss forward to use in future taxation years.

If you wish to depreciate a vehicle, you have a limit for a car of $59,136 in the 2021 financial year. Commercial vehicles with either the ability to seat 9 people or more or have a load capacity of 1000kg or more have no limit.

HOW do I fully expense a capital item

You will be able to fully expense an asset within your 2021 tax return via forms that will be available from July 1st 2021.

From our earlier example, if the new bar fridge bought in March 2021 cost $3,000 and was used 100% for business, the $3,000 cost could be included in the 2021 tax return as an expense versus only $300 if temporary full expensing was not available.

Small businesses that elected to apply simplified depreciation rules have been given an amnesty allowing them to take advantage of temporary full expensing.

HINTS

More information is available from the tax office here.

Your accountant can assist with the process.

More information can be found about completing a tax return in our guide on a small business tax return.

SUMMARY – Temporary full expensing

This is a great initiative by the Australian Government, which not only benefits your expense deductions but may also have a flow-on effect of increasing your sales if you sell items likely to be depreciated by other businesses. This temporary measure allows your small business to expense a capital item in the current financial year rather than over several years. You can claim this simply through your end of a financial year tax return.

Grants for Small Business

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Unfortunately, there is no magic pool of money to help start-ups or existing small businesses. However, some grants for small business are available with a lot of hard work and most likely a long waiting period. This guide will look at what you need to know about Grants and how you might go about getting one.

A grant is an amount of money given especially by the government to a person or organisation for a special purpose.

WHY might I apply for a grant?

A grant:
  • can take your business to the next level which could benefit not only you but society as a whole.
  • may encourage research or development of a solution that without the grant would unlikely have been funded.
  • might come in the form of training rather than money to build your business skills and knowledge.
  • may keep your business afloat during times of hardship.

WHAT do I need to understand about grants for small business?

A grant is normally associated with a specific goal.  That goal may be as varied as helping find a cure for cancer, supporting a minority group such as Torres Strait Islanders or developing groundbreaking technology.

Examples of grants include CSIRO Kick-Start, Biomedical Translation Fund, Research & development Tax Incentive, and Export Market Development Grant.

It is unlikely you will get a grant to open a café!

Obtaining a grant is a competitive process and many other businesses are also likely to apply.

If you are successful in obtaining a grant it is likely there will also be some sort of assessment panel which will review your progress and decide how the grant will be administered. Thus, your funds must be spent as you outlined in your application.

If you accept a grant, you will need to sign a contract and submit a range of reports.  It is also likely that you must acknowledge the grant agency in any advertising or PR activity you undertake on the project.

Any business-related expense in applying for a grant can be claimed as a tax deduction.

HOW do I apply for grants?

The method in which you submit your grant application will depend on the instructions provided on the grant and in documentation by the granting agency. You must consider carefully the prescribed submission process.

If you wish to discuss aspects of a particular Grant, you will need to contact the granting agency using the contact details as provided by the agency.

When applying for a grant you should:

  1. ensure you meet the eligibility criteria

  2. know exactly what you’re applying for and why

  3. know what the funds will be used for and how they’ll be used

  4. complete the grant application. This process will vary in time and detail depending on what you’re applying for

HINTS

The following site allows you to search for available grants based on your location, industry, and the type of assistance you are looking for. https://www.business.gov.au/grants-and-programs

Grant opportunities can also be found at www.grants.gov.au and they provide a help desk on 1300 484 145

 State Specific Grants:

SW https://www.service.nsw.gov.au/find-grants-and-financial-help
VIC https://www.business.vic.gov.au/support-for-your-business/grants-and-assistance
QLD https://www.grants.services.qld.gov.au/#/
SA https://www.sa.gov.au/topics/care-and-support/concessions-and-grants/grants
WA https://https://www.wa.gov.au/service/business-support/industry-assistance-schemes
NT https://nt.gov.au/industry/start-run-and-grow-a-business/grow-your-business/business-grants-and-funding
ACT https://www.grants.act.gov.au/
TAS https://www.stategrowth.tas.gov.au/grants_and_funding_opportunities

SUMMARY – What grants are available for small business? 

Applying for a grant could enable your business to grow or achieve what might not have been possible.  However, note they are hard to get and take time to complete so consider the effort versus the likely success.  Ensure you follow grant instructions both when applying and if successful after receiving one. Key is to understand what grants are available at both a local and national perspective for your industry and need.

Privacy and Protecting Personal Data

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It may seem harmless that in the process of doing business you collect customer data to transact business or communicate with them.  However, if that data is used without the user’s permission, or worse stolen, you may find yourself breaking the law. This guide will help you understand Privacy and Protecting Personal Data and what you should or must do.

Data protection is to secure data against unauthorised access. Data privacy is about authorised access — who has it and what you can do with it. Data protection is essentially a technical issue, whereas data privacy is a legal one.

WHY should I protect my customers’ personal data?

Apart from the fact that a customer will not be very happy with you, it is the law. You must comply with the Australian government Privacy Act 1988 if your annual turnover exceeds $3 million.

You are responsible for protecting your customers’ personal information from:
  • theft
  • loss
  • unauthorised access
  • modification
  • interference
  • misuse
  • disclosure
If your small business turns over less than $3 million you must comply with the act if you are a:
  • private-sector health service provider
  • business that sells or purchases personal information
  • contractor providing services under a contract with the Australian Government
  • credit provider/credit reporting body
  • residential tenancy database operator

All other small business operators are exempt from the Act however protecting your customer’s data is good business practice.

WHAT types of information are considered private?

Any information that can identify a person and could include:

  • name
  • signature
  • address
  • email
  • telephone number
  • date of birth
  • medical records
  • bank account details
  • place of work
  • photos
  • videos
  • information about their opinions

If you do have a breach of personal information you need to notify both the person it has affected and the Office of the Australian Information Commissioner (OAIC).

HOW do I protect customers personal information?

The following actions will assist with your compliance of the Privacy Act:

  1. Do not collect personal information you do not need
  2. Develop an internal policy to handle and process personal information
  3. Take ownership yourself or delegate to a senior member of staff
  4. Do not share this data with anyone else
  5. Sensitive information like race, religion, health etc can only be collected with individual consent
  6. Ensure unauthorised staff members do not have access
  7. Take reasonable steps to protect personal information from unauthorised access, modification, or disclosure and against misuse, interference, and loss
  8. Destroy or de-identify personal information when it is no longer needed
  9. Develop a plan for a data breach

HINTS

If processing credit card transactions by EFTPOS or e-commerce store you should ensure your network/equipment is secure and encrypted. You should restrict who has access to that data and preferably do not store the card information. A security assessment of cardholder data can be done here.

If you plan to contact customers via direct marketing like an email, phone call or text, post, social media or web advertising you should enable a customer to opt-out (request not to be communicated with).  If the Privacy Act covers your organisation (> $3m turnover) legally you are required to allow a customer to opt-out.

Australian privacy law gives a consumer the right to access their personal information. This includes their health information. This right does not extend to commercial information.

Be sure to read our guide on internet security.

Additional information on privacy and protecting personal data can be found here.

SUMMARY – Privacy and Protecting Personal Data

If your small business has a turnover less than $3 million it is unlikely you will have a legal requirement however for both your customer and your sake it is good practice. If possible don’t keep personal data like credit card details but if you do, ensure it is protected from theft or abuse. It is worth familiarising yourself with the intent of the Privacy Act and taking the necessary actions in your business.

Contractor – using or being one

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Your small business may not be ready to take on an additional employee so a contractor may be a better solution or perhaps you would like to start your own business as a contractor.  This guide will look at both sides and help you understand the implications of using or being a contractor.

A contractor or sub-contractor, freelancer or consultant is a person that provides goods or services under a written contract or a verbal agreement. Unlike employees, contractors do not work regularly for an employer but work as required. Contractors are usually paid on a freelance basis and often work for themselves using their own tools and processes.

WHY should you use or consider becoming a contractor?

By Using a contractor, you can:
  • Increase or decrease workers based on business needs
  • Get fast access to skilled workers for different tasks
  • End contacts quickly with no reason
  • Normally no payments for Superannuation, holiday or sick pay and payroll taxes
  • Save on liability insurance, as contractors must have their own
By Becoming a contractor, you can:
  • Be your own boss
  • Earn more money if your skills are in demand
  • Work the hours that suit you including part-time
  • Test out a company before committing to a full-time job

WHAT do you need to understand about contractors?

Contractors have workplace rights and protections but have different responsibilities relating to insurance, taxation, and superannuation. In Australia, the Independent Contractors Act 2006 in conjunction with the Fair Work Act 2009 protect the rights and entitlements of independent contractors.

Under the Fair Work Act 2009, independent contractors are protected from:
  • adverse action – for example, a business cannot terminate a contract with an independent contractor because they make a complaint to a regulator about their workplace rights
  • coercion – for example, a business cannot threaten to take action against an independent contractor to coerce them not to exercise their workplace rights
  • abuses of freedom of association – independent contractors are free to join, or not join, a trade union or employer group
The Independent Contractors Act 2006 allows independent contractors to ask a court to review a contract because it is ‘unfair’ or ‘harsh’. The court may consider:
  • the terms of the contract when it was made
  • the relative bargaining strengths of the contract parties and, if applicable, anyone acting on their behalf
  • whether there was any undue influence or pressure, or any unfair tactics used against, a party to the contract
  • whether the contract provides remuneration that is less than that of an employee doing similar work
  • any other matters the court thinks is relevant
The court may order:
  • the terms of the contract to be changed (for example, they may be added or removed)
  • the whole contract or part of the contract be ‘set aside’ (that is, have no effect)

All workers in Australia are entitled to a safe and healthy workplace. This means that employers — including self-employed contractors — must comply with the relevant state or territory’s workplace health and safety laws.

Sham contracting is illegal and is when an employer attempts to disguise an employment relationship as a contractor relationship. This is usually done to avoid responsibility for employee entitlements.

HOW do you hire a contractor or become a contractor?

In Hiring a contractor, you should be careful in checking their credentials to ensure they have the right experience, attitude and skills.  You will need to carefully plan how they will integrate into your workflow and ensure you pay them promptly or they may not continue to turn up.  A contractor may not be an employee but you need to treat them as part of the team to get the best result.  Make sure you engage a contractor in a legally binding way in writing and consider what other documents may be required like a Non-Disclosure Agreement. Ensure you keep accurate records of their hours and or completion of set tasks.

In Becoming a contractor, you essentially start your own business. See our guide on starting a business. This process will include writing a business plan which will help you be realistic about things like future income. You will need to keep track of your business so read our guide on Record Keeping as well as considering setting up a separate bank account.
Insurance is important as you most likely will not be covered by your employer so consider taking out liability, income protection and asset (protect your tools) insurance.

If as a contractor you are paid wholly or principally for your labour your employer must pay for your superannuation, if not you should consider making voluntary personal contributions. Be sure to review our guides on Business structure and GST as you may need a separate tax file number and your services will be subject to GST if your business turnover is above $75,000.   If you do not have an Australian Business Number (ABN) your hirer may legally withhold tax at the top rates.

HINTS

Unsure if someone is an employee or contractor? See the Fair Work Table here https://www.fairwork.gov.au/how-we-will-help/templates-and-guides/fact-sheets/rights-and-obligations/independent-contractors-and-employees

If your business engages contractors, it’s a good idea to have a Contractor Agreement in place with each contractor you engage. This sets clear expectations about the scope and standard of services to be provided, fees and payment, confidentiality, IP ownership and termination processes. A lawyer can draft a contractor agreement for your business.

Keep track of your contractors’ hours and how much they’re costing you. Use your accounting software to produce reports so you can see whether you are getting value for money. Over time you will discover the right mix of employees and contractors that works for your small business.

SUMMARY – skilled supply of labour and materials

Contractors work for themselves and offer other businesses and individuals a skilled supplier of labour and possibly materials.  Both the contractor and the hirer have flexibility around hours and hirers do not have to provide for holiday and sick pay or payroll taxes. Contractors have workplace rights and protections but have different responsibilities relating to insurance, taxation, and superannuation.

Register a Company

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In our guide Choosing a business structure, we listed the various choices including starting a company.  In this guide, we will look at the process to register a company which is more complicated than the other business structures.

A company is a legal entity with higher set-up and administration costs. Companies also have additional reporting requirements.
A company is run by its directors and owned by its shareholders.
While a company provides some asset protection, its directors can be legally liable for their actions and, in some cases, the debts of the company.
Companies are regulated by the Australian Securities & Investments Commission (ASIC).
Australian Tax Office

WHY set your business structure as a Company?

There is less personal liability to its owners.

A company is its own legal entity and as such can borrow money, take legal action, and be legally sued by someone else.  As a shareholder of a company whether it be 10% or 100% you are only liable for any unpaid money on your shares.  So in theory they cannot come after your house, however as a director of that company if it is found you are in breach of your legal obligations to that company you could be sued. A company is owned by its shareholders but controlled by its directors.

WHAT you need to understand to register a company

A business name is not the same as registering a company name, they indeed can be identical bar the abbreviation but don’t need to be the same.  See our separate guide on Registering a Business name. However in the case of a company you must register its name as well.  For example you may have a company name “Your Town Fruit Pty Ltd” trading with your registered business name called “Your Town Fruit Shop”.  We recommend you go through the process to determine your company name listed on the ASIC website. https://asic.gov.au/for-business/registering-a-company/steps-to-register-a-company/company-name-availability/.  A company’s name must show its legal status and include an abbreviation at the end, for example, “Your Town Fruit Pty Ltd”.  The abbreviation relates to the liability of its members.

Full WordAbbreviation
No LiabilityNL
ProprietaryPty
LimitedLtd

HOW to Register a Company?

At this point it is our strong recommendation that you get assistance from a professional. You can easily find them by Googling “registering a company”.  For a minimal fee they will do all the hard work for you based on you answering some questions and providing information. These are usually accountants or solicitors and are known as Private Service Providers.  More details can be found  https://asic.gov.au/for-business/registering-a-business-name/before-you-register-a-business-name/private-service-providers/

One thing you cannot escape as a company director (assuming you make yourself a director) is your obligations to keep details up to date, maintaining records and details on a register and paying the annual fees. Australian companies also require 1 or more directors to reside in Australia depending on the structure.

HINT

The fees to register a company can be found here. https://asic.gov.au/for-business/payments-fees-and-invoices/asic-fees/fees-for-commonly-lodged-documents/starting-a-company/

If you do not go down the Private Service Provider route be prepared to understand and decide on a constitution or replaceable rules, share structures, etc.

SUMMARY – Company means less personal liability

A company structure will reduce your risk of personal liability but is more complicated to establish and maintain.  Using a private service provider is an economical and pain-free way to do the setup.