U2AOS1 - LEGAL REQUIREMENTS Flashcards
External professionals
Highly skilled individuals that businesses hire to provide expertise in a particular area of operation
Accountant
Manages, updates, analyses, and reports a business’s financial information.
Financial advisers
Provides expert advice in relation to monetary matters, personal finances, and potential investments.
ICT specialist
Develops and maintains the technology that businesses use to store and retrieve data.
Legal advisers
Provides expert advice to businesses regarding their legal responsibilities.
Marketing adviser
Provides expert advice to businesses in relation to promoting and selling their products.
Why a business should fulfil legal requirements
Can avoid any negative consequences to its operation, such as fines, suspensions, or even forced closure.
The 5 legal requirements
- Business name
- Website domain
- Trade practices legislation
- Tax compliance
- Worksafe insurance
Business name
The title that a business operates under and what customers use to identify the business.
Website domain
A website address that identifies a business’s online site.
auDA stands for…
.au Domain Administration
Trade practices legislation
The law that governs how a business interacts with customers and competitors.
2 rights and obligations stated within the CCA
- Commit to guarantees and warranties.
- Do not falsely advertise goods or services.
ACCC stands for…
Australian Competition and Consumer Commission
The ACCC is a government agency that
Governs business operations and enforces punishments if a business breaches legislation
Business tax compliance
The extent to which an individual or business meets tax obligations.
4 tax compliance obligations
- Paying tax and collecting income tax
- Having a tax file number
- Collecting GST
- Submitting a BAS (business activity statement)
Work safe insurance
Compulsory insurance that assists employers to meet their obligation of financially compensating employees who become injured or ill because of their work.
Entity principle of accounting
States that personal and business transactions should be kept separate
According to the ATO, a business must store their records for…
5 years
Why a business should ensure financial considerations:
Allows them to achieve business objectives, prevents financial losses, and stay compliant to tax requirements.
3 financial considerations:
- Bank account
- Financial control system
- Record-keeping strategies
Bank account
An arrangement made with a bank where a business or individual can deposit and withdraw money.
Why a business bank account should be established:
Enables a business to separate personal and business spending and allows a business to accurately lodge tax returns.
Financial control systems
Processes and procedures used to direct and monitor a business’s finances.
2 common financial control systems
- Budgeting
- Auditing
4 things a business can avoid through financial control systems:
- large financial losses
- fraud
- financial mismanagement
- low cash flow.
Record-keeping strategies
Methods used to document and keep track of the financial transactions of a business over a period of time.
Corporate socialresponsibility (CSR)
The ethical conduct of a business beyond legal obligations, and the consideration of social, economic, and environmental impacts when making business decisions.
2 disadvantages of generating contacts with overseas retailers
- May gain a bad reputation if overseas retailers engage in unethical behaviour.
- May lose some control over marketing and how goods and services are perceived overseas.
What policies and procedures are for:
Helps a business and its employees abide by legislation.
Policies
Written statements that outline the expected performance and behaviour of employees.
Purpose of policies
Inform and guide employees to make decisions that meet the business’s expectations and legal requirements.
Procedures
A series of actions that employees must follow in order to abide by the business’s policies.
Purpose of procedures
To provide employees with a step-by-step guide on how to act in specific situations or event
Customer database
A collection of information about existing and potential customers.
2 advantages of customer databases
- Predicts the desires of potential customers and produce goods and services that satisfy these needs, increasing sales.
- Allows a business to maintain relationships with existing customers
2 disadvantages of customer databases
- Poor management can lead to private customer information being hacked or leaked, negatively impacting the business’s reputation.
- May be time-consuming to gather and record customer information.
Overseas suppliers
Businesses that sell resources in a country overseas.
2 advantages of generating contacts with overseas suppliers
- Wider range of suppliers to choose from.
- Reputation may improve if overseas suppliers provide ethically-sourced inputs
2 disadvantages of generating contacts with overseas suppliers
- May face negative public perception if its overseas supplier engages in unethical behaviour.
- Cheaper inputs may be of a lower quality, which can decrease customer satisfaction.
Overseas retailers
Individuals or businesses that sell goods and services directly to customers overseas.
2 advantages of generating contacts with overseas retailers
- Can save time associated with establishing a store overseas to build relationships and sell to customers.
- Can improve its sales by providing goods and services to a larger customer base.
The importance of a business protecting its customer database:
A well-managed customer database enables a business to effectively identify and satisfy customer needs.
4 examples of personal motivation for starting a business
- Personal independence
- Financial independence
- To make a profit
- To fulfil a market or social need.
Personal independence
Involves a person being in control of their own decisions and actions.
Cash books
Manual or electronic books where all cash transactions within a business are recorded (a record keeping strategy)
Inputs
The resources used by a business to produce goods and services.
Outputs
The final goods or services produced that are delivered to customers.
Factors to consider when choosing suppliers
- Price
- Quality
- Reliability
- Location
- Socially responsible suppliers
2 advantages of choosing socially responsible suppliers
- A business’s reputation can be improved
- Employees may be more motivated to work at a socially responsible business
2 disadvantages of choosing socially responsible suppliers
- May have less choice of suppliers that meet their CSR objectives.
- Inputs may be more costly due to increased wage costs compared to less ethical suppliers.
Employment laws and regulations
Rules that govern the relationship between employers and employees.
Grievances
Issues that may come up in a workplace and give rise to formal complaints being made.
