What you need to know about Contracts and Insurance

As a young entrepreneur, it is easy to get flummoxed about the “legal stuff” – so Vanessa Cullen, Director of Forward Thinking Design and winner of 2010 Anthill 30 under 30 winner; has put together a Contracts and Insurance 101 piece to help you get your head around it all….

Indemnity, Business Insurance, Contracts, IP and more

Service Contracts

• If you’re in a service industry get your service contract written by the best legal counsel you can afford.

Your professional association may be able to provide you with a basic pro-forma contract template but I’ve largely found these to be deficient when it comes to the reality of what people will try to get out of paying you for your services.

By all means, draft your own contract, using such pro-formas as a basis but do invest in submitting this to a solicitor who specialises in contractual law and has experience of your industry.

Their services certainly won’t be cheap but you’ll save so much more in the long run by having a good, solid, hole-proof contract upfront.

Who’s Signing the Contract?

• Ensure that the person signing (and named in) the contract is the same person responsible for paying you.

If anyone says they’ll be paying you on the behalf of the person who signed then get it in writing, with an acknowledgement that they’ve read the contract and understand that they’ll be held accountable for late payment.

Or, better still, reissue the contract in their name and have them sign. Ensure you’re contracting with an individual or company, not a trading name or false entity.

For large contracts you’d be well advised to conduct a background credit check on the client to ensure they have the capacity to pay versus a history of defaults.

Claiming Fees

• Aside from your fees, also include costs in your contract so you can be reimbursed for travel, printing etc. Make it very clear when payments fall due.

Ensure all parties can identify the end of a stage of delivery so there’s no later argument about when your services have been deemed to be completed, your involvement in the project is in order and the account should be settled.

Licensing Intellectual Property

• Include licensing arrangements in contract terms and conditions even if project is only proposed as a one-off.

You must limit the licence to use your IP or risk it being stolen and replicated.

An example of this for us is when we design one store but the client then decides to sell our design to franchisees to roll-out subsequent stores.

We have licencing arrangements with our clients that allow them the freedom to expand and franchise but which also ensure we receive a suitable return on the replication of our design.

Public Liability and Professional Indemnity Insurance
• You must get public liability insurance and professional indemnity insurance. You’d have to be crazy to run a business without protecting yourself from litigation.

Read the paperwork carefully and ensure you’re properly covered.

Business Insurance
• I also recommend you get business insurance to protect your business from costly interruption and to protect your assets.

Be careful to enquire about ‘add on’ covers.

These are items that you’d think would be covered in the general business insurance but which your insurer has decided (in their infinite wisdom) to make separate options.

We got stung one year by not realising that business items in a business vehicle were not insured because we didn’t realise it was a separate ‘option’.

When items were stolen from a vehicle, we found we had no cover. Business items on your person or in your vehicle may not be automatically covered. Read the PDS in great detail.

Purchase Records

• Record all conversations with insurers and suppliers at purchase time, they often do and you should too. This protects you from errors in their sales process that may be difficult to prove later on.

We hope this helped!

$6 million Govt funding for tech start ups

If you have a tech start-up, or planning one – the NSW Govt wants to hear from you!

So here is the criteria to satisfy for the Collaborative Solutions-Mobile Concierge Program

Consortia-backed submissions Each submission must be backed by a consortium of at least three members. The consortia lead must be a NSW-registered business with the capability to commercialise and export the ICT solution being developed. The consortia must include at least one user organisation to participate in the development and piloting process. The remaining consortia members will provide technologies, content or capabilities to the project. Submissions by single companies or individuals will not be considered.

Developed and piloted in NSW Solutions must be predominantly developed in NSW. Submissions with minor components developed outside of NSW will be considered, but those components will not be supported by the grant if one is awarded. The solutions must be piloted in NSW.

Development has not commenced The development of the proposed solution must not have commenced before the date of submission. Any grant funding will be for the development and piloting of the proposed solution after the date of submission.

Funding applications close on March 25, with successful grants announced in early April

There is an industry briefing to provide details of this program. If you are going to check this out – you have to confirm your place by 28th Jan 2010. Click here for more details on the CS-MC Program

Best of luck folks

Practical TAX Assistance Available for Young Entrepreneurs

Do you need more practical help to manage your business?

Do you get confused by all of your tax obligations and worry if you are keeping up?

We know that when you start and run a business all you want to do is just that – run the business! But what comes with that is plenty of administrative things…..like TAX! It can be confusing and annoying – we know. But there is a whole heap of help out there from the ATO just waiting for you to use for free to keep you on track and growing your business….without getting into tax troubles.

The Tax Office’s Small Business Assistance Program provides free, practical help which is aimed at keeping businesses on track.

In a recent speech to the Council of Small Business of Australia, Tax Commissioner Michael D’Ascenzo announced new measures to help businesses that are struggling to manage their tax payment obligations in the current economic climate.

Eligible small businesses with an annual turnover of less than $2 million can apply for:

• 12-month general interest charge free payment arrangements for activity statement debts (BAS)

• deferred activity statement payment due dates – they can grant requests for deferrals of up to two months for quarterly and annual payers and one month for monthly payers.

For debts of $25,000 of less, businesses can use the ATO online calculator to work out a payment arrangement that meets your circumstances. Once you have calculated a suitable payment scenario based on your circumstances, you can use this as a guide to propose a payment arrangement.

For debts of $25,000 or less, businesses can use the ATO automated self help service to apply for a payment arrangement by calling 13 72 26. The self help service operates 24 hours a day, seven days a week.

Businesses with a tax debt or experiencing payment difficulties should visit the Tax Office website www.ato.gov.au/businessdebt or phone 13 11 42 from 8.00am – 6.00pm Monday to Friday.

The Tax Office also offers other forms of free assistance to help business. Talk to them and they can help you better understand your tax obligations. Their range of business support services gives you access to experienced tax officers who can answer your questions for free and help you get on top of your tax issues.

They offer:

- On-site visits where they come to you, nice! http://ato.gov.au/businesses/smallbusiness.asp

- Local seminars and a range of workshops

For more information:
• Free tax support
• Rates, calculators and tools
• Record keeping for small business (NAT 3029)
• Do you need financial advice about managing your business during the downturn?