• BSBSMB401A - Establish legal and risk management requirements of small business

Establish legal and risk management requirements of small business

This unit describes the performance outcomes, skills and knowledge required to identify and comply with the regulatory, legal, taxation and insurance requirements, and risk management needs of small business.Specific legal requirements apply to the management of a small business.


This work is undertaken by individuals who operate a small business.

The unit is suitable for existing micro and small businesses or setting up a new business or a department in a larger organisation.

Elements and Performance Criteria



1. Identify and implement business legal requirements

1.1. Identify and research possible options for the business legal structure using appropriate sources

1.2. Determine legislation and regulatory requirements affecting the operations of the business under its chosen structure

1.3. Develop and implement procedures to ensure full compliance with relevant legislation and regulatory requirements

2. Comply with legislation, codes and regulatory requirements

2.1. Establish systems to ensure the legal rights and responsibilities of the business are identified and the business is adequately protected, specifically in relation to occupational health and safety (OHS), business registration and environmental requirements

2.2. Identify taxation principles and requirements relative to the business and follow procedures to ensure compliance

2.3. Identify and carefully maintain legal documents and maintain and update relevant records to ensure their ongoing security and accessibility

2.4. Monitor the provision of products and services of the business to protect legal rights and to comply with legal responsibilities

2.5. Conduct investigations to identify areas of non-compliance with legal and regulatory requirements and take corrective action where necessary

3. Negotiate and arrange contracts

3.1. Seek legal advice on contractual rights and obligations, if required, to clarify business liabilities

3.2. Investigate and assess potential products/services to determine procurement rights and to ensure protection of business interests where applicable

3.3. Negotiate and secure contractual procurement rights for goods and services including contracts with relevant people, as required, in accordance with the business plan

3.4. Identify insurance requirements and acquire adequate cover

3.5. Identify options for leasing/ownership of business premises and complete contractual arrangements in accordance with the business plan

Required Skills

Required skills

communication, reporting, record keeping and consultation skills to operate the business

literacy skills to interpret legal requirements, to develop policies and procedures and to analyse compliance information

research skills to investigate legal structures, and taxation and insurance requirements

time management skills to prioritise tasks and to meet key dates.

Required knowledge

business registration and licensing requirements

commonwealth, state/territory and local government legislative requirements relating to business operation, especially in regard to OHS and environmental issues, equal employment opportunity, industrial relations, anti-discrimination, taxation

creation and termination of relevant legal contracts

cultural differences and legal implications

duty of care imposed by Law of Torts

legal rights and obligations of alternative ownership structures

record keeping to meet minimum legal and taxation requirements

relevant consumer legislation

relevant industry codes of practice

relevant insurance requirements and products.

Evidence Required

The Evidence Guide provides advice on assessment and must be read in conjunction with the performance criteria, required skills and knowledge, range statement and the Assessment Guidelines for the Training Package.

Overview of assessment

Critical aspects for assessment and evidence required to demonstrate competency in this unit

Evidence of the following is essential:

implementation of a systematic approach to identifying, managing and meeting legal and business requirements within culturally appropriate contexts

interpreting compliance data and formulating appropriate action

knowledge of relevant legislation.

Context of and specific resources for assessment

Assessment must ensure:

access to relevant documentation

candidate's individual circumstances and work in the context of establishing or running a small business, are the basis for assessment.

Method of assessment

A range of assessment methods should be used to assess practical skills and knowledge. The following examples are appropriate for this unit:

portfolio of evidence including contracts negotiated and arranged

oral or written questioning to assess knowledge of relevant consumer legislation

review of procedures developed and implemented to ensure full compliance with relevant legislation and regulatory requirements

review of insurance cover acquired.

Guidance information for assessment

Holistic assessment with other units relevant to the industry sector, workplace and job role is recommended, for example:

BSBSMB402A Plan small business finances

BSBSMB404A Undertake small business planning.

Range Statement

The range statement relates to the unit of competency as a whole. It allows for different work environments and situations that may affect performance. Bold italicised wording, if used in the performance criteria, is detailed below. Essential operating conditions that may be present with training and assessment (depending on the work situation, needs of the candidate, accessibility of the item, and local industry and regional contexts) may also be included.

Options for the business legal structure may include:




government owned enterprise


profit or not-for-profit legal structure

sole trader


Options for the business legal structure may be influenced by:


contractual requirements

family/community/cultural expectations

ownership transfer

partnership considerations

preferences of owners/stakeholders

protection of stakeholders and assets

requirements of financial backers



Appropriate sources may include:

business advisers

financial planners

government agencies

industry/trade associations


professional advisers (e.g. solicitors, accountants)

Legislation and regulatory requirements may include:

local, state/territory, commonwealth and international legislation, regulations and codes of practice affecting business operations such as:

relevant Acts and regulations

industry and OHS codes of practice

business registrations and licences

planning and other permissions

environmental legislation

industrial law, agency law, property law, consumer legislation and standards, Torts Law and duty of care

equal employment opportunity (EEO) and anti-discrimination legislation, anti-competition regulations

Legal rights and responsibilities may include:

culturally appropriate processes and protocols

marketing the business in accordance with consumer legislation

obligations imposed by choice of business structure

operating the business with a duty of care (Law of Torts)

Occupational health and safety and requirements must include:

complying with relevant OHS codes of practice

establishing and maintaining a system for managing OHS

establishing hazard management arrangements to assess and control the risks associated with workplace hazards including development of written safe operating procedures

establishing OHS record keeping arrangements in accordance with regulatory requirements

OHS duty of care responsibilities

registering with state/territory workers compensation authority if applicable

Taxation principles and requirements may include:

relevant taxation requirements/obligations for business

tax file number, Australian Business number, goods and services tax registration, PAYG and withholding arrangements

Legal documents may include:

appropriate software for financial records

certificate of incorporation

constitution documents

franchise agreements and financial documentation

partnership agreements

statutory books for companies (register of members, register of directors and minute books)

Records may include:






OHS records may include:

accident reports and investigations

first aid and medical

hazardous substances register

instruction and training

manufacturers' and suppliers' information

material safety data sheets

OHS audits and inspections

plant maintenance and testing

workers compensation and rehabilitation

Procurement rights to products and services may include:

any form of licensing

royalties, copyright, patents, trademarks, registered design and applications, intellectual property, software licenses, franchises, agencies

Contracts with relevant people may include:

any person with whom the business has, or seeks to have, a performance-based relationship

owners, suppliers, employees, landlords, agents, distributors, customers

Insurance requirements may include:

comprehensive insurance for vehicles/property

professional indemnity insurance

public liability insurance

third party insurance on motor vehicles

workers compensation

other insurance cover as required by state/territory or commonwealth legislation, contractual obligations or as recommended for the industry/type of business


Unit sector

Competency Field

Management and Leadership - Small and Micro Business

Employability Skills

This unit contains employability skills.

Licensing Information

Not applicable.