Running a small business means you’ve got to wear many hats. Your primary goals are of course generating revenue and ensuring your business makes a profit, but every so often you’ll have to deal with areas a little out of your comfort zone. One of those areas involves legal issues. Every successful small business relies on a good lawyer for advice and legal support, but you don’t necessarily want to bear the expense of hiring a lawyer every time a legal related issue emerges. This quick checklist is designed to assist small business owners avoid some of the most common legal mistakes the LegalVision team regularly see made.

1. Don’t enter into Verbal Contracts

Many non-lawyers don’t realise that they can enter into a legally enforceable contract without actually agreeing to anything in writing. A verbal contract is binding, and the reality is that most small business owners enter into verbal contracts on a regular basis. This is generally a mistake. If a contract is worth entering into, it’s worth documenting correctly. In particular, if you’re entering into a contract with customers or suppliers, you should make sure the terms are clearly set out in a written contract. This greatly reduces the chance of a subsequent dispute, as both parties can refer back to the written agreement; there’s much less room for misinterpretation.

2. Make Sure a Lawyer Reviews your Written Contracts

Perhaps the only thing worse than a verbal contract is a written contract drafted by a non-lawyer. Drafting a good contract is a skill developed over many years, and if you try and draft your own business contracts you will invariably miss out important clauses, leave the document open to misinterpretation and/or fail to protect the interests of your business. Even if you want to save on some legal costs and create the first draft yourself, get your document signed off by a lawyer, preferably a contract specialist. You will save yourself a great deal of future pain and expense.

3. Always Read a Contract before Signing It

This one seems obvious, but you’d be surprised at the number of clients the LegalVision team assists who come to us having signed a contract they haven’t read! Put a bit of effort in and review any contract you’re entering into before signing it.  Make sure it says what you want it to say and make the effort to understand it.

4. Act in Accordance with your Governing Documents

Companies all have governing documents (a constitution, and sometimes a Shareholders Agreement). These documents set out rules that management and the board of directors must obey during the course of running the company. If, for instance, you’ve decided to borrow money, or offer a guarantee to another entity, you need to check the process you’re required to take to do this. Often you’ll need a board resolution to be executed, and in some cases you’ll need a special resolution of shareholders.

5. Employees – Act in Accordance with Fair Work Act

Small businesses often get into legal trouble for breaching their obligations under the Fair Work Act. If you want to terminate the employment of an employee, or make an employee redundant, make sure you’re acting in accordance with the law. You should work with an employment specialist to ensure you’re covering yourself and your business.

6. Taxes

Finally, perhaps the most common legal issue that small businesses make relates to the payment of taxes. Not paying your taxes is against the law! Make sure you understand your obligations, and make sure you’re working with an accountant who can give you solid, sound advice.


Running a small business is tough. It can be hard to stay on top of all the legal issues. The 6 mistakes we’ve described in this article are some of the most common issues we see on a day to day basis, but they’re only the tip of the iceberg! Make sure you work with a good lawyer to save yourself long term issues.

COVID-19 Business Survey
LegalVision is conducting a survey on the impact of COVID-19 for businesses across Australia. The survey takes 2 minutes to complete and all responses are anonymous. We would appreciate your input. Take the survey now.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. For just $199 per month, membership unlocks unlimited lawyer consultations, faster turnaround times, free legal templates and members-only discounts.

Learn more about LVConnect

Lachlan McKnight
Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • By submitting this form, you agree to receive emails from LegalVision and can unsubscribe at any time. See our full Privacy Policy.
  • This field is for validation purposes and should be left unchanged.
Our Awards
  • 2019 Top 25 Startups - LinkedIn 2019 Top 25 Startups - LinkedIn
  • 2019 NewLaw Firm of the Year - Australian Law Awards 2019 NewLaw Firm of the Year - Australian Law Awards
  • 2020 Fastest Growing Law Firm - Financial Times APAC 500 2020 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review 2020 AFR Fast 100 List - Australian Financial Review
  • 2020 Law Firm of the Year Finalist - Australasian Law Awards 2020 Law Firm of the Year Finalist - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer
Privacy Policy Snapshot

We collect and store information about you. Let us explain why we do this.

What information do you collect?

We collect a range of data about you, including your contact details, legal issues and data on how you use our website.

How do you collect information?

We collect information over the phone, by email and through our website.

What do you do with this information?

We store and use your information to deliver you better legal services. This mostly involves communicating with you, marketing to you and occasionally sharing your information with our partners.

How do I contact you?

You can always see what data you’ve stored with us.

Questions, comments or complaints? Reach out on 1300 544 755 or email us at

View Privacy Policy