When starting a business you are typically cash and time poor, which can lead to shortcuts when setting up, registering and protecting your assets. But if an investor comes knocking, or things start to take off, it’s time to get your house in order. Here’s how.

As a business owner, there are so many things to know and sometimes you don’t have time to properly research what you need to do to prepare your business for sale or investment.  You are not alone.

We did a tally of our own Legal123 clients which revealed the following:

•    8 out of 10 of our clients did not have their website registered to their company name.
•    9 out of 10 business owners were using an unregistered business name without realising it.

So we compiled the top 5 most common asset issues that business owners should review.

Ask yourself these questions to see if your business passes these tests:

1. Have you registered your business name?

If you are using a name other than your own personal name or your Pty Ltd company name, you need to register it with ASIC. Just having the website name registered with your domain registrar does not give you legal rights to have or use the business name.  For example, if your website name is FunkyFrocks.com.au, then you need to register the name ‘Funky Frocks’ as a business name. You don’t need to register the business name if it is the same as your Pty Ltd company name.

You may also have a Pty Ltd company but the name is different to your business and website name. If so, you will still need to register your business name with ASIC. To ensure your business has the protection of a Pty Ltd company, you should register the business name in the name of your company, as the owner of the business name, rather than registering it in your personal name. Also make it clear on your website that the company owns the business name and website.

You may also have a Pty Ltd company but the name is different to your business and website name. If so, you will still need to register your business name with ASIC. To ensure your business has the protection of a Pty Ltd company, you should register the business name in the name of your company, as the owner of the business name, rather than registering it in your personal name. Also make it clear on your website that the company owns the business name and website.

2. Have you registered your website in your personal name?

If you are running your business under the protection of a Pty Ltd company you should register the website under this company name, not your personal name.  Websites must be registered to a legal entity so it can only be registered to a Pty Ltd company or an individual, which means you cannot register your business name as the owner. You can always change the registration if you have put it in the wrong name or want to change it to your Pty Ltd company name by contacting your website domain registrar.

3. Have you registered your brand as a trademark?

Trademark registration is the best way to protect your brand. Even if you have registered your business name and/or company name with ASIC, it is not enough to protect someone else from using your brand name and running a similar business. Registration of your company name or business name with ASIC is registration of the name only. ASIC does not know what type of business you are running under your business or company name. By registering your Trademark with IP Australia, you will protect your business name and logo as a brand for the business activities you do using that name. Otherwise someone may come along and register similar business activities using the same name before you do!

4. Are your assets protected?

Many new business owners spend more money than expected on building their website and have no funds left for their own protection.  There is little point in having a website if it means your personal assets are exposed to a claim from your business! You need to ensure you have strong legal terms for your website and potential clients. This, at minimum, should be your first step. [The Legal123 website has some good inexpensive legal templates and online legal assistance is available for custom terms and advice].

Do not copy or try to write your own, especially you are not familiar with consumer law, privacy, copyright protection and other legal requirements.

If you running a ‘service’ business such as coaching or consulting, you may want to check into professional indemnity insurance with an insurance broker.

And finally, one of the best forms of protection is setting up Pty Ltd company as soon as you can afford to do so. There are ongoing costs for company compliance so some website owners wait until their business is making money to afford the company setup and costs. You can always change your structure at a later date but need to have the minimal protections in place to start out.

Although your website development is ultimately important to your business and selling your products or services, it is not worth much if you end up with incorrect content, being penalised by regulators or worse, being sued by a visitor or customer. Without appropriate terms and protections, your business and your own assets could be at risk.

5. Do you have a customer database in one place?

Can you find a complete list of your customers in under 60 seconds? Each of your social media accounts, client lists, and payment processes may have ‘some’ of your customer details. Depending on how you sell your products or services, you may have multiple lists with customer details. They may be in Paypal, Stripe, a shopping cart, or on your own computer filing system if they have purchased direct from a social media account order or ordered over the phone or via email.

You should ensure you have compiled a complete list of your customers as this list is the single most important asset of your business. It is also a requirement of Australian Privacy Law to know exactly who is your customer and what information you may be holding on them.

So, did you meet all five of these requirements?

If so, you are one of a few startups who do so and you deserve a gold star! It is a vital requirement that you can answer all of these questions for a strong business model and if you intend to sell or invite investors to join your business at any time.

It is a good compliance practice and important for tax purposes to have these steps addressed in any case. Whether you are cleaning up your ‘shop’ for legal, sale, investment or tax purposes, this list is a great place to start!

How does your business stack up?