Unit of competency details

BSBSMB401A - Establish legal and risk management requirements of small business (Release 1)


Usage recommendation:
Is superseded by and equivalent to BSBSMB401 - Establish legal and risk management requirements of small businessUpdated to meet Standards for Training Packages 24/Mar/2015

ReleaseRelease date
1 1 (this release) 18/Apr/2008

Training packages that include this unit

CodeSort Table listing Training packages that include this unit by the Code columnTitleSort Table listing Training packages that include this unit by the Title columnRelease
LMF02 - Furnishing Training PackageFurnishing Training Package 6.0-8.1 
FNS10 - Financial Services Training PackageFinancial Services Training Package 1.0-5.1 
SIT12 - Tourism, Travel and Hospitality Training PackageTourism, Travel and Hospitality Training Package 1.0-2.0 
CPC08 - Construction, Plumbing and Services Training PackageConstruction, Plumbing and Services Training Package 6.0-9.9 
PSP12 - Public Sector Training PackagePublic Sector Training Package 1.0 
MSF - Furnishing Training PackageFurnishing Training Package 1.0-1.3 
ICT10 - Integrated Telecommunications Training PackageIntegrated Telecommunications Training Package 1.0-3.0 
SFL10 - Floristry Training PackageFloristry Training Package 1.0 
SIS10 - Sport, Fitness and Recreation Training PackageSport, Fitness and Recreation Training Package 1.2-3.1 
CPP07 - Property Services Training PackageProperty Services Training Package 7.0-14.3 
AUR05 - Automotive Industry Retail, Service and Repair Training PackageAutomotive Industry Retail, Service and Repair Training Package 3.0-4.0 
BSB07 - Business Services Training PackageBusiness Services Training Package 5.0-9.0 
WRH06 - Hairdressing Training PackageHairdressing Training Package 2.2 
CUA11 - Live Performance Training PackageLive Performance Training Package 1.0 
CHC08 - Community Services Training PackageCommunity Services Training Package 3.0-4.2 
CUV11 - Visual Arts, Crafts and Design Training PackageVisual Arts, Crafts and Design Training Package 1.0 
PSP04 - Public Sector Training PackagePublic Sector Training Package 4.1-4.2 
CUA - Creative Arts and Culture Training PackageCreative Arts and Culture Training Package 1.0 
CUS09 - MusicMusic 1.1-1.2 
CUV03 - Visual Arts, Craft and Design Training PackageVisual Arts, Craft and Design Training Package 3.0 
SFI11 - Seafood Industry Training PackageSeafood Industry Training Package 1.0-2.2 
LMT07 - Textiles, Clothing and Footwear Training PackageTextiles, Clothing and Footwear Training Package 3.1-4.1 
FDF10 - Food ProcessingFood Processing 1.0-4.1 
SIR07 - Retail Services Training PackageRetail Services Training Package 1.3-3.3 
CUF07 - Screen and Media Training PackageScreen and Media Training Package 1.2 

Qualifications that include this unit

CodeSort Table listing Qualifications that include this unit by the Code columnTitleSort Table listing Qualifications that include this unit by the Title columnUsage RecommendationSort Table listing Qualifications that include this unit by the Usage Recommendation columnRelease
SIT50312 - Diploma of HospitalityDiploma of HospitalitySuperseded1-3 
CUA40313 - Certificate IV in Dance Teaching and ManagementCertificate IV in Dance Teaching and ManagementSuperseded
WRH40209 - Certificate IV in TrichologyCertificate IV in TrichologyDeleted
AUR50105 - Diploma of Automotive ManagementDiploma of Automotive ManagementSuperseded1-2 
CPC40808 - Certificate IV in Swimming Pool and Spa BuildingCertificate IV in Swimming Pool and Spa BuildingSuperseded1-4 
FDF40811 - Certificate IV in Advanced BakingCertificate IV in Advanced BakingSuperseded1-2 
FDF40210 - Certificate IV in Pharmaceutical ManufacturingCertificate IV in Pharmaceutical ManufacturingSuperseded1-3 
SIT40412 - Certificate IV in Commercial CookeryCertificate IV in Commercial CookerySuperseded1-2 
AUR40105 - Certificate IV in Automotive ManagementCertificate IV in Automotive ManagementSuperseded1-2 
SIT40613 - Certificate IV in Catering OperationsCertificate IV in Catering OperationsSuperseded
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Accredited courses that have this unit in the completion mapping


SchemeCodeClassification value
ASCED Module/Unit of Competency Field of Education Identifier 080301 Business Management  

Classification history

SchemeCodeClassification valueStart dateEnd date
ASCED Module/Unit of Competency Field of Education Identifier 080301 Business Management  25/Jul/2008 
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Modification History

Not applicable.

Unit Descriptor

Unit descriptor 

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.

Application of the Unit

Application of the unit 

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.

Licensing/Regulatory Information

Not applicable.


Prerequisite units 

Employability Skills Information

Employability skills 

This unit contains employability skills.

Elements and Performance Criteria Pre-Content

Elements describe the essential outcomes of a unit of competency.

Performance criteria describe the performance needed to demonstrate achievement of the element. Where bold italicised text is used, further information is detailed in the required skills and knowledge section and the range statement. Assessment of performance is to be consistent with the evidence guide.

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 and Knowledge


This section describes the skills and knowledge required for this unit.

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 Guide


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:

  • company
  • cooperative
  • corporation
  • government owned enterprise
  • partnership
  • profit or not-for-profit legal structure
  • sole trader
  • trust

Options for the business legal structure  may be influenced by:

  • confidentiality
  • contractual requirements
  • family/community/cultural expectations
  • ownership transfer
  • partnership considerations
  • preferences of owners/stakeholders
  • protection of stakeholders and assets
  • requirements of financial backers
  • superannuation
  • taxation

Appropriate sources  may include:

  • business advisers
  • financial planners
  • government agencies
  • industry/trade associations
  • mentors
  • 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:

  • environmental
  • financial
  • OHS
  • personnel
  • taxation

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(s)

Unit sector 

Competency field

Competency field 

Management and Leadership - Small and Micro Business

Co-requisite units

Co-requisite units