AOS1 unit 2 Legal requirements

Where must a business name be registered?

With ASIC (Australian Securities and Investments Commission).

When is business name registration compulsory vs optional?

Optional if trading under the owner's personal name; compulsory if adding words like 'Pty Ltd', 'Motors', 'and Associates', 'and Co'.

What does an owner need before applying for a business name?

An ABN or ACN, and should first search ASIC's website to check the name isn't taken.

Does registering a business name protect it?

No — for real legal protection it must also be registered as a trademark.

What is a domain name?

The address of a website on the internet.

What should a domain name be, and what does it cost?

Unique and easy to remember/spell; costs $10–$100/year to register (hosting/building the site can cost thousands).

Who administers and collects federal tax in Australia?

The ATO (Australian Taxation Office).

What tax rate do companies pay?

A flat 30% (or 27.5% if turnover is under $50 million).

How are individuals taxed differently to companies?

Individuals pay a progressive rate — the rate increases as income increases.

What are the 3 main federal taxes for a business?

PAYG withholding (from employee wages), GST (10% on most goods/services once turnover ≥ $75,000), and Fringe Benefits Tax (FBT — tax on non-cash benefits e.g. a company car).

What are the 2 main state taxes?

Stamp duty (on transaction documents e.g. property purchase) and Land tax (annual, on landowners).

What is a BAS?

Business Activity Statement — submitted to the ATO by any business registered for GST to report tax obligations.

Which federal act sets WHS obligations, and what must the owner do?

The Work Health and Safety Act 2011 (Cwlth) — the owner must ensure the health/safety of workers, so far as reasonably practicable.

What is Victoria's principal OHS legislation?

The Occupational Health and Safety Act 2004 (Vic).

What is WorkCover and who provides it?

Compulsory insurance for Victorian employers (via WorkSafe Victoria) covering lost income replacement, medical/rehab costs, legal costs, and lump sum compensation for serious injury.

What is the Competition and Consumer Act 2010 (Cwlth)?

Federal law covering acceptable business behaviour — product safety, pricing, and competing fairly.

Name 3 prohibited/restricted competition practices

Cartels, misuse of market power, exclusive dealing (also resale price maintenance, mergers & acquisitions).

Name 4 illegal consumer practices

Misleading/deceptive conduct, unconscionable conduct, unfair contract terms, false representations (also bait advertising, pyramid schemes, referral selling).

Name 2 lawful consumer practices.

Unsolicited consumer agreements and lay-by agreements (also itemised bills/proof of transaction).

What happens if a consumer guarantee is breached?

The consumer has the right to a repair, replacement or refund.

What must a business do before trading from premises/land?

Get local council approval BEFORE trading.

What do local councils control? (5 things)

Land zoning, development applications, fire regulations, parking regulations, health regulations, and business signage.

What is zoning?

Keeping incompatible activities apart (e.g. factories away from residential areas) via each council's local planning scheme.

Which act governs food business health regulations in Victoria, and what does it require?

The Food Act 1984 (Vic) — food businesses need a licence, and health officers conduct (often unannounced) inspections; non-compliant businesses can be closed down.

What is a freelancer?

An independent worker paid per job (e.g. photography, design, copywriting, web design).

What does a bookkeeper do, and what's the average pay?

Keeps/processes financial records; ~$40/hr average.

What does a recruiter do and how are they typically paid?

Finds staff for the business; often charged a fee based on the salary of the role.

What does a sales professional do and how are they typically paid?

Finds and persuades customers to buy; often paid commission per sale.

What does a marketing consultant do?

Runs campaigns to raise brand/product awareness.

What does an IT technician do?

Sets up/maintains servers and software, and troubleshoots issues.

What is the separate entity principle?

The owner's finances must be recorded separately from the business's finances.

Why should a business use a separate bank account from the owner's personal account? (3 reasons)

Easier to apply the separate entity principle; easier to monitor financial performance/position; easier/cheaper to calculate expenses/revenue and prepare tax returns.

What 5 factors should be considered when selecting a bank account?

Bank fees, interest rates, overdraft facility, credit cards, convenience & support.

What are financial control systems?

The processes, methods and tools that allow a business to accurately monitor and manage its financial performance.

What are the risks of NOT having financial control systems?

Poor systems, mismanagement, theft/fraud, poor debt management, lack of cash flow, damage to assets, incorrect pricing.

What is budgeting

Predicting financial performance for a future period; sets benchmarks to compare against actual results (monthly/quarterly/yearly).

Name 3 cash flow management strategies

Chase outstanding debts, hire accounts staff, offer early-payment discounts (also withhold supply from late payers, arrange short-term loans/overdrafts).

What is accounts receivable, and how is it controlled?

Money owed to the business by customers; controlled with clear credit terms (typically 30–90 days) and early-payment rewards or late fees.

What is inventory control, and name 3 methods

Minimising the cost of holding stock — via bar-coding/computerised records, regular stocktakes, or Just-In-Time (JIT) systems.

What is JIT?

Just-In-Time — materials arrive exactly when needed.

What is auditing, and what are the 2 types?

Testing/evaluating the business's accounting processes and internal controls; can be internal (staff) or external (contracted — more costly but independent).

How long must a business legally keep financial records?

At least 5 years, for tax purposes (invoices, receipts, bank statements, employee contracts).

What are source documents? Give 2 examples.

Original paper/electronic documents that provide evidence of a transaction (date, parties, nature, amount) — e.g. cash register dockets, EFTPOS vouchers, purchase invoices.

What is a cash book?

A summary of all cash receipts and payments, compiled from source documents; receipts on the left, payments on the right.

What is an income statement (profit & loss statement) and what does it show?

Shows revenue earned, expenses incurred, and whether a profit or loss was made over a period.

What is a balance sheet and what does it show?

hows a business's assets and liabilities (its financial position) at a point in time.

Name 4 good record-keeping strategies.

Use bookkeeping software, hire a bookkeeper if needed, keep a good filing system, keep records simple but complete (also: never mix business/personal finances, collect documents at time of transaction, seek help from the ATO or a registered tax agent).

What is procurement?

the process of researching and selecting suppliers, establishing payment terms, negotiating contracts and the purchasing of resources that are vital for maintaining the production of the business’s good or service

What are the 5 factors for choosing a supplier?

(ppcqc) Price, Quality, Reliability, Proximity, CSR.

Why does price matter when choosing a supplier?

Keeps costs low so the business stays profitable; can be a deciding factor for price-competitive businesses.

Why does quality matter when choosing a supplier?

Determines the quality of the end product; imported goods must meet Australian quality/safety standards.

Why does reliability matter when choosing a supplier?

Ensures timely delivery so the business doesn't lose sales/reputation.

Why does proximity matter when choosing a supplier?

Closer suppliers = less time/cost to transport goods, more environmentally friendly, supports the local economy (CSR).

What does sustainable procurement consider?

The environmental, social and economic (cost) impacts of materials/suppliers — avoiding suppliers that exploit labour or damage the environment.

What are the benefits of using socially responsible suppliers?

Lower costs via green initiatives, improved reputation, more customers/investors attracted.

What are the limitations of using socially responsible suppliers?

Higher supplier costs passed on to the business; time-consuming/expensive to vet and maintain; quality must still match competitors.

What is a policy?

A written set of broad guidelines followed by all employees when making decisions in important areas.

What is a procedure?

A step-by-step set of instructions that puts a policy into practice, and can help resolve disputes from a breach of policy.

Name 4 common business policies

Recruitment, OH&S, privacy, anti-discrimination/equal opportunity/harassment (also: dispute resolution, drug & alcohol, customer service, anti-bribery/corruption, risk-management, supplier, environmental, accounting).

What are the advantages of policies and procedures? (4)

Clarify expectations of behaviour/performance, consistent decision-making, help resolve complaints, prevent legal/compliance problems (also: communicate info to new staff).

What are the disadvantages of policies and procedures? (4)

Time/money to research and write, difficult to communicate across a large business, can be seen as a substitute for good management, may restrict innovation/flexibility.

What are the steps to develop a compliant policy? (7 steps)

Identify issue → research/analyse business environment → consult stakeholders → draft policy → revise → approve & distribute → monitor & evaluate.

What is a risk of ignoring technological/global trends?

Falling behind competitors.

What is Social Media Advertising (SMA) and its pros/cons?

Marketing via social media. Pros: inexpensive vs traditional advertising, easy to use/monitor. Cons: business can't control what consumers/bloggers say; hard to measure success accurately.

What is 3D printing?

Producing physical objects from a digital design.

What is the trade-off of 3D printing and robotics in manufacturing?

High upfront cost/maintenance vs long-term labour savings — but risk of job losses.

How has technology changed administration?

Smartphones enable remote monitoring/communication; software development costs have fallen, and work can be outsourced to cheaper international IT contractors.

What are the pros of remote work?

Lower office overheads, access to an international talent pool, flexibility for staff, potential productivity gains, no travel time.

What is a customer database?

A bank of info on customers (contact details, buying habits, preferences).

What are the pros and cons of customer databases?

Pros: better communication/service, builds loyalty. Cons: time-consuming/costly to build, must protect data from hackers (consider the Privacy Act 1988).

What has globalisation given Australian businesses access to?

A wider range of overseas suppliers, resources, customers and retailers — as well as more competitors.

What are the pros and cons of overseas suppliers?

Pros: cheaper materials (lower overseas labour costs/taxes/tariffs), access to materials unavailable locally. Cons: hidden costs from different cultures/time zones, longer lead times, time to find a suitable/reliable supplier.

What are the benefits of overseas retailers/exporting?

Can increase profit, spread risk, reduce reliance on the local market.

What should an owner do before exporting/entering an overseas market?

Meet prospective customers, see the market first-hand, investigate local pricing, understand how business is conducted there.

What is Austrade?

A body that supports Australian businesses entering overseas markets.