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As a business owner, taking important decisions is part of your day-to-day life. One of the biggest choices you will make is deciding whether or not your business will be run from home. A home-based business is convenient and cost effective, even if it’s not necessarily for everyone.
Although, just because a business is being run from the comfort of your own home, it doesn’t mean you should go ahead and get super comfortable. In fact, running a business from home requires the same discipline, knowledge and compliance as running a ‘regular business’ (even if you are working out of your PJ’s).
So, before you turn your living room into a workspace, keep reading to get some insight on the legal requirements of starting a business from home.
How Do I Start A Business From Home?
Starting a business from home is no different to starting an office-based business. Every business owner needs to go through the process of registering their business. This means, you’ll need to decide on the legal structure of your business. A sole trader or a company structure are the more common routes people tend to take when it comes to business setup.
It’s a good idea to make a Business Plan and figure out your long term goals for your business. From there, you’ll have a better idea of what legal structure will best suit your home business. Once you’ve made a decision, you can go ahead and start the registration process.
How Do I Register My Home Business?
Registration depends on the legal structure you’ve selected for your business. If you’re opting to function as a sole trader, you just need to attain an Australian Business Number (ABN) online and Register A Business Name (if you’re using something other than your personal name). Setting up as a sole trader is pretty simple and the business structure requires very little upkeep. However, it does mean you will be personally liable for the entire business, as your business doesn’t not exist separately from you.
A company on the other hand, is a legal entity on its own. Even though Registering A Company is a little more time consuming and demanding, a company is better able to protect your interests and liabilities due to its separate legal status. At times, the convenience of setting up a sole trader business outweighs the need to set up a company, however if you’re thinking of growing or expanding your business long-term, then you may want to consider setting up a company right from the start. Our legal experts are happy to help, so get in touch to further discuss your options.
Contracts And Other Legal Agreements For A Home Business
After getting your business legally set up and registered, it’s time to think about how you’ll protect your business. The best way to safeguard your business’s interest is through having the right legal agreements in place. The exact contract you’ll need to get will depend on your business and it’s operations, though here’s a few to consider:
- Customer Contracts
- Business Terms and Conditions
- Employment Agreement
- Cookie Policy
- Supply Agreement
- Shareholders Agreement
Talking to a legal expert can help you get a clear idea on the right legal documents for protecting your business. It’s important to get this done as early on as possible, so your business can be secured right from the start.
What About Protecting My Home Business’s Intellectual Property?
Along with contracts, you’ll also need to think about having the right legal instruments in place to protect your business’s intellectual property (IP). It is essential to protect your business’s IP as it is likely to play a crucial role in your business’s success. Due to this, it’s best not to take any chances.
There’s no one way to protect IP, as IP differs greatly. Protecting your IP can look like:
- Registering your logo as a Trade Mark
- Getting a Copyright Disclaimer written for your original work
- Ensuring you have an IP Licence Agreement in place
- Having a third party sign an NDA to protect the confidentiality of your IP
Talking to an expert in IP law is always beneficial, as they can help determine the risks surrounding your business’s IP and the best way to combat those risks.
Do Employment Laws Apply To Home Businesses?
Yes, employment laws still apply to home businesses, just as they would in an office space. If you decide to hire employees to help out with running your business, even if they work from home they are still entitled to their rights and protections as an employee.
This means, you’ll be responsible for providing a safe and positive work environment. As an employer of remote employees, you may need to conduct these responsibilities a little differently. For example, ensuring your employees have a proper work set up or monitoring online channels used by your employees for appropriate conduct.
You can’t control everything that happens with your employees but it is important to make sure you’ve taken reasonable steps to prevent them from being harmed physically or mentally while at work. A good way to do this is by having the right documents in place that clearly outline employee rights and responsibilities. Look into getting a Workplace Policy drafted that is specific for your workplace and making sure your staff have access to Staff Handbooks. This way, you can clearly lay everything out and there’s no room for misunderstandings, which can go a long way in fostering a positive work environment.
Are There Any Data and Privacy Laws I Need To Consider?
As a home business, there’s a strong chance you’ll be depending on the online world for a lot of your business activities. This is great! The internet allows for not only more convenience but the ability to reach out to a customer base that isn’t limited by location.
However, the perks of being online come with some additional responsibilities. As the owner of a business, you will need to make sure you adhere to any privacy and data regulations, as well as managing the risks that come with being online.
For starters, you’ll want to look into getting a Website Terms and Conditions. This will help you keep things regulated on your website, as well as secure your level of control and protect your liabilities. Along with your T&C’s, having a Privacy Policy visible on your website is essential if you plan on collecting any kind of information from your website visitors. As this is a strict legal obligation for Australian Businesses, it’s best to get a legal professional to help you draft this.
For more information on what data and privacy regulations will apply to your business, it’s important to chat with a legal expert in data and privacy laws.
Any Other Laws I Need To Be Aware Of?
A couple of other things you need to keep an eye out for are local laws that may impact your business. For example, zoning regulations are likely to determine what business can be open and where, as well as what permits or licenses you may need. Get in touch with your local council to know more or chat to one of our Regulatory Compliance Experts and they’ll be happy to help you out.
As an Australian business, you’re also going to want to familiarise yourself with the Australian Consumer Law (ACL). The ACL is there to protect both consumers and small business, so you have both rights and responsibilities under it. For example, engaging in conduct that is detective or practices that are unfair could lead to legal penalties. Understanding what’s required of your business can help you navigate the ACL successfully while you run your business.
Moreover, the ACL has made changes to unfair contract term laws, which will take effect from 9th November 2023. These changes are likely to impact small business owners- to learn more about them click here.
Next Steps
Starting a business from home is an exciting step, however it’s paramount to be aware of your legal obligations and abide by them properly. This way, you’ll give your home-based business the best chance to swim and not sink in the business world. To summarise what we’ve discussed:
- Starting a home-based business is a significant decision that requires compliance with legal requirements
- Registering your home-based business involves choosing a legal structure, such as sole trader or company, based on your long-term goals
- Sole traders need to obtain an Australian Business Number (ABN) and may need to register a business name
- Companies require more time and effort to set up but offer legal protection and separation from personal liabilities
- Legal agreements, including customer contracts, terms and conditions, employment agreements, cookie policies, supply agreements, and shareholders’ agreements, are crucial to protect your business
- Intellectual property protection methods vary and may include trademark registration, copyright disclaimers, IP license agreements and non-disclosure agreements
- Employment laws apply to home businesses, obligating you to provide a safe and positive work environment for remote employees
- Implementing workplace policies and staff handbooks can help clarify employee rights and responsibilities
- Online home businesses must adhere to data and privacy regulations, including creating website terms and conditions and a privacy policy
- Seek legal expertise to understand specific data and privacy laws applicable to your business
- Be aware of local laws, zoning regulations, permits and licenses that may impact your home-based business
- Familiarise yourself with the Australian Consumer Law (ACL) to understand your rights and responsibilities as a small business owner
- Stay informed about upcoming changes to the ACL, particularly the unfair contract term laws effective from November 9, 2023
- Starting a home-based business is exciting, but it’s crucial to be aware of and comply with legal obligations to ensure your business’s success
If you would like a consultation on starting a business from home, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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