There’s no straightforward answer to whether or not you can run your business from home in Australia. Even though running a business from home has its perks, not every business will be suited to a home set up. 

There’s a number of things that need to be taken into consideration when thinking about running your business from home. This includes matters like the size of your business, the industry it belongs to and the specific business operations it will be engaging in. What’s more, if you do end up running your business from home, there’s a number of additional legal factors you need to consider. 

Let’s discuss this in more detail below. 

Can You Run A Business From Home?

Running a business from home is becoming increasingly popular. Entrepreneurs are seeing the benefits of ditching the traditional office set up for the convenience and cost effectiveness of working from home. However, not all businesses will be able to operate from home. Factors like zoning regulations and industry rules will have an impact on whether or not it’s appropriate to run a business from home. 

For instance, if you’re running a catering business, then your home may need to meet certain standards and requirements for it to be suitable enough to take orders. Likewise, if your business of choice is a childcare business, then your home space will need to take industry requirements into consideration.

Before you start the process of building your home business, it’s important to research whether or not your business can actually be run from home and see if there are any regulatory requirements that need to be met. Take a look at zoning requirements and see if there are any local council permits or certifications you need to attain. Next, make sure you read up on your industry guidelines to see what regulations you might need to follow. 

Finding the right information can be difficult – it’s always a wise move to book in a chat with a legal expert. They can help you determine what rules need to be followed if you plan on running your business from home. 

Is It Illegal To Run A Business From Home? 

In a lot of cases, it won’t necessarily be illegal to run your business from home as long as you meet certain requirements. However, there are some types of businesses that simply cannot be run from home. For example, there’s a good chance you can’t legally run a large pharmaceutical manufacturing business from home. 

Therefore, if you plan on running your business from home – ensure you’ve picked a business type that can reasonably be run from home and won’t break any laws in the process. 

Can I Run A Business From My Rented Home? 

If you’re renting your property, then we suggest taking a look at your rental agreement and having a chat with your landlord. Your rental agreement may have details regarding what activities can and cannot be done on the property, so it’s best to start by looking there. If you don’t get a clear answer in your rental agreement, then it’s  a good idea to get in touch with your landlord and let them know about your business plans.

If your landlord is on board with it, then make sure you get their confirmation in writing. This could help you avoid some trouble later down the line, in case something goes wrong. 

How Do I Start My Business From Home? 

If you want to start your business from home, then your first step will be the same as starting any other business – by registering it. 

Registering your home business can be done online however, you’ll need to make a few important decisions first. To register your business, the first thing you need to determine is the legal structure your business will have. In Australia, the three most common types of legal structures are:

  • Sole trader
  • Partnership
  • Company 

These three are pretty distinct from one another, with their own advantages and drawbacks. As a business owner, you’ll need to assess the structure that works best for your business before you begin the registration process. We’ve broken down a few of the key things you need to know about registering as a sole trader, in a partnership or as a company for you below. 

Sole Trader

A sole trade means exactly what the name suggests. It means that one person (in this scenario, it will be you) is responsible for the entirety of the business. If you become a sole trader, your home business will be attached to you personally, as this legal structure doesn’t allow for any legal separation between you and your business. This can be a bit risky, as if something goes wrong then you can be held personally liable for it. 

With that in mind, one of the main advantages of becoming a sole trader is the ease of setting up. To start business as a sole trader, you simply need to apply for an Australian Business Number (ABN), which can be done online and if you’re using a name other than your personal one, then you will have to register your business name. After that, you’re all set to run your new business from home. 

It’s important to consider the risks and the future goals you have in mind for your business before registering as a sole trader. Even though the quick set up process can be attractive, we don’t recommend it for serious business endeavours. If your home business is part of a long-term plan, then we suggest registering it as a company (more on that later). 

Partnership 

A partnership is another way some might choose to enter the business world. To register your partnership business, all partners will need to get their own ABN’s. The business will also need to register a business name, however that’s only if you’re using something other than the names of all the partners as the business name. 

Partnerships also have the relative ease of a convenient set up, as the process is pretty similar to a sole trader registration. However, the risks remain the same. If something goes wrong with the business, then all partners will be personally liable. This can arguably be even more tricky in a partnership structure, as you obviously won’t be able to control the actions of another individual. It’s always a good idea to enter into a partnership by having a solid legal agreement drawn up, such as a Partnership Agreement. This way, all partners can be on the same page, reducing the potential for disputes or misunderstandings. 

Company

As we noted (see above) a company structure is best for all serious business ventures. A company is somewhat more complex and expensive to set up when comparing it to the registration process of a sole trader or partnership. However, unlike a sole trader or partnership, a company offers far more legal protection. 

When you register a company, the company becomes a legal entity on its own. Companies enjoy some of the legal rights of a person, such as owning and selling assets, being involved in court matters as well as earning money (or even working up a debt). Therefore, the company is legally separate from you which better protects your liabilities, minimising some of the risks of entering into business. 

When it comes to registering a company, we suggest seeking the expertise of a legal professional. Companies can be complicated and if you don’t know what you’re doing, the whole process might seem overwhelming. Choosing the type of company you want to register, directors, shareholders and company governance is much easier when you have a legal expert walking you through the process. 

What Do I Need To Run My Business From Home?

Running a business from home does not mean it gets a free pass from the legal obligations of an office based business – in fact, you’ll find there’s a few extra things to consider! For example, as you’ll be working from home, so might any employees you may hire. Therefore, your workplace policies will need to include some additional considerations for employees that work remotely, such as making sure they have a proper home set up.

As such, running your business from home still means you’ll need to have the right legal agreements in place to make sure your business runs smoothly and remains protected. Some legal agreements you may want to consider getting include: 

The exact legal agreements your business is going to need while you run it from home will depend on your unique business itself. Get in touch with our legal experts to determine what legal agreements will be the best for safeguarding your business, so you can secure your businesses future. 

Next Steps

You can run your business from home in Australia, however it’s important to properly prepare for all the legal factors. To summarise what we’ve discussed: 

  • Running a business from home in Australia is not a straightforward decision and depends on factors like business size, industry, and specific operations
  • Consider zoning regulations, industry rules, and legal factors before deciding to run a business from home
  • The legality of running a business from home varies, and certain businesses may not be suitable for a home setup
  • For renters, check your rental agreement and discuss your business plans with the landlord to ensure compliance
  • To start a home business, register it online and choose a legal structure (sole trader, partnership, or company) based on your business goals and risks
  • Sole traders and partners have a quick setup but come with personal liability risks, whereas companies offer legal protection but involve more complexity and expenses
  • Legal obligations for a home-based business include having the right agreements in place, such as Website Terms and Conditions, Privacy Policy, Service Agreement, Supply Agreement, and Copyright Disclaimer

If you would like a consultation on running a business from home in Australia, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.

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