The Key Business Documents

It’s crucial for every business to realise that having five essential documents is vital for SMEs. These documents, including those related to intellectual property, act as a protective shield for assets. They help the business owner not just safeguard what they have, but also add value, build wealth, and ensure a secure future. By keeping these documents handy, you’re not just covering your bases; you’re gearing up for growth and prosperity. So, dive in and uncover these hidden secrets that can truly transform your venture’s path.

Essentially these documents are:

1. The structure documents

When we set up a business operation it is important that the operating entity is separate from any person or entity owning the assets. For further protection we would recommend that the shareholding is held by a family trust for and on behalf of each shareholder. A license agreement can be put into place whereby the asset holding entity licenses the assets to the operating entity for a commercial fee with discretionary termination rights.

2. A shareholders and/or unit holders agreement

Where you have an SME which has two or more families or partners involved and where a company is the operating entity, even though the families or partners might be the best of friends, this may not always be the case and to avoid dire consequences including expensive litigation if there is a dispute or one party wants to exit from the business, it is essential that the SME has in place a shareholders/unit holders agreement to create rules by which disputes, management, decisions and exits are dealt with.

3. Terms of trade or terms and conditions

Many businesses operate without proper or adequate terms of trade conditions in place. This can be a recipe for disaster if a dispute arises with a client or customer. To ensure that everyone is aware of the rules governing the supply of goods and services, it is key to a business to ensure that proper terms of trade are prepared and used by the business at all times. Matters such as payment terms, delivery, security, retention of title, releases, indemnities and exclusions should be dealt with in terms of trade in a manner which favours the business.

4. Employment Agreements

A business conducted by an SME is only as good as the quality of the employees available to undertake the work required to make business profitable. However, never a day goes by when some business is facing the prospect of an unfair dismissal claim or a claim for wages and conditions from a disgruntled employee. If you want to avoid some of the risk and pain associated with such an action, it is essential that the business has available and in place employment agreements signed by the employees which should cover such matters as wages, salaries, terms and conditions of the employment arrangement, termination confidentiality and restraint of trade matters.

5. Intellectual property and branding

One of the ways that the business can grow wealth and value is by ensuring that any intellectual property it develops is protected. Ideally a business will have an inventory of such property which may include such IP as trademarks, copyrights, patents, designs and trade secrets. Essentially applications need to be made to register some IP including your brand if you believe that it is possible for a competitor to take advantage of your creative endeavours by adopting your brand and therefore attracting your customers to it. Applications are made through IP Australia for this purpose.

If you read this article and do not have any one of the 5 key business documents in place we would highly recommend that you seek advice from this firm before going any further. You can contact us on 4305 3500.