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Running any business involves various costs and other considerations. One major expense is the rental price for a commercial property.
As the property market skyrockets and the idea of working remotely becomes more of a norm, it is natural to wonder whether or not you can run your business from home. This way, you can save your business from rent and commuting costs.
It is possible to run a business from a residential property. However, the answer also depends on a lot of different factors mainly relating to where you live and the kind of business you run.
Keep reading to learn more about whether or not your business can be run from home.
Running A Business From A Residential Property
Generally speaking, running a business from a residential property means that a business owner runs their operations from home rather than going to an office. The definition of a ‘home business’ may differ based on the Australian state you live in.
For example, in NSW, holiday accommodations such as an Airbnb or a bed and breakfast cannot be considered a home business.
If you’re thinking of running a business from home, you will need to decide whether a home set up is suitable for your business.
For example, a business that sells clothing online might find it easier to run a business from home as opposed to a business that manufactures medical equipment. A number of questions you should ask yourself before committing to a home business set up include:
- Do I have the necessary space to carry out business operations?
- What about matters such as storage?
- If I’m running a food business, can I meet the necessary hygiene requirements?
- Is my home environment safe for others to come into? (such as a day care centre business)
- Will it be possible for staff and employees to come and work from here?
- Does my state or the government have any laws I need to follow?
- Do I need to make any adjustments or renovations to my space before setting up my business?
Finally, one of the most important questions you will need to consider is, “How will council regulations impact my business plans?”.
Council Regulations For Running A Business From Home
Council regulations are one the the major factors that determine what kind of business can be run from home and how. Every council has their own set of rules and regulations therefore, it’s important for you to find out which ones apply to you and check them out.
Certain councils will allow certain business practices while others may have more rules and restrictions. For example, a local council may require certification, approvals or inspections prior to opening a local cafe.
You can find out the kind of business registrations or licences that apply to your business (whether they are federal, state or local) on the business licence search. We also recommend contacting your local council for more information regarding your specific locality.
Zoning regulations will contain a lot of the information you need. It’s a good idea to check out the local environment plan for your residential area and look up the zoning area. This way, you’ll be able to see what kind of commercial activities are permitted and whether or not there are any restrictions.
From there, you can make a more informed decision about whether or not you should run your business from home.
Register Your Home Business
It doesn’t matter if you decide to run your business from home or opt for a separate commercial property lease. You are required to register your business all the same.
Every business that operates in Australia must have an Australian Business Number (ABN). This is attained by registering your business. It’s a fairly simple process that can be done online (we can help as well!).
When you are registering your business, you can also apply for taxes and register your business name (note that registering your business name does not necessarily mean you get exclusive ownership – you’ll need to register a trade mark for that extra level of protection!).
It’s also worth understanding which taxes will be relevant to you and if the name you have decided on is available- use the Business Name Check to see what names are already taken.
If you’re thinking of setting up a company, then you will also need to file for an Australian Company Number (ACN) by registering as a company with the Australian Securities and Investment Commission (ASIC).
Registering a company comes with additional obligations, such as drafting a Company Constitution and a Shareholders Agreement. Our expert lawyers can assist you with this process and ensure your documents are in line with the Corporations Act 2001.
What Legal Documents Do I Need?
Setting up a business from home means you still need to comply with the relevant business laws in Australia.
A big part of legal compliance is getting the right legal documents in place. These documents can minimise risks and protect your business in case things get a bit rocky.
We’ve noted down some common legal documents for business owners.
Non-Disclosure Agreement
Privacy and confidentiality are cornerstones of any business. Whether you’re simply selling handmade goods as a side hustle or providing a health service, a Non-Disclosure Agreement (NDA) is important when it comes to keeping matters private.
NDAs are particularly important if your business is collecting any personal information from users, as this attracts the Privacy Act 1988. In other words, you are under an obligation to have a Privacy Policy that informs users of how you are collecting, using, storing and distributing their data.
Having a strong NDA in place can ensure that any party you disclose private information to is legally bound to not share or disclose that information to any unauthorised third party, protecting both your users and your business from liability .
Employment Agreement
Hiring employees and expanding your team is always a positive step for any business. However, it’s important to be careful when setting out expectations and responsibilities with employees.
Having an Employment Contract is the safest way to ensure both parties are aware of what is required of them, including their rights and potential liabilities.
Employment Agreements can be catered to fit your needs. They usually include the following terms:
- Pay rates
- Leave, entitlements
- Breaks
- Hours of work and days of work
- A description of the role
- Duties and responsibilities
- Length of employment
- Termination
- Dispute resolution
- Confidentiality
Employment Contracts are also a good opportunity to include Non-Compete Clauses where you want to minimise the risks associated with old employees working with your competitors. However, you want to make sure this clause (along with the other clauses in your contracts) are not unfair or unreasonable, as this may not stand in court.
Website Terms and Conditions
It’s not uncommon for business owners that operate from their place of residence to run an online business. Having an online business is great! In a lot of ways, it’s more convenient and can open you up to a much larger customer base.
As exciting as it can be, running a business online also requires legal documentation that can aid in making sure you’re being protected while you’re on the web.
A set of Website Terms and Conditions is a contract between you and people that use your website. It sets out the rules around what can be done on your page, what is inappropriate, any requirements your business has and can even be written to give you the authority to remove anything harmful.
Terms and Conditions are also useful in limiting your liability for what happens on your platform – we recommend getting one written by a legal professional prior before going live.
Laws On Having Remote Workers
As we mentioned, running a business from home still has the same legal requirements as a traditional business set up. This means that as a business owner and an employer, you are obligated to provide your employees with a particular standard of care.
Workplace health and safety obligations set out the kind of responsibilities you owe your employees and are largely overseen by Safe Work Australia.
When you have remote workers, you still owe them a standard of care that reflects your workplace health and safety obligations, you will just be conducting this responsibility differently.
Looking out for your employees physical and mental health when they are remote can include:
- Making sure all channels of communication are monitored for inappropriate behaviour
- Having a set space, time or meeting where employees can freely express their concerns
- Sending any equipment employees will require to do their jobs from home
- Scheduling regular breaks away from the screen
- Checking in with employees regularly and taking any suggestions they make seriously
- Providing employees with mental health resources
What Else Should I Know?
Another thing you need to keep in mind are your legal obligations to your customers, particular those under Australian Consumer Law (ACL).
The ACL was established to protect consumers from unfair business practices. As a business, you’ll be interacting with customers so it’s important to make sure that your communication and conduct are all in line with the ACL’s regulations.
This is not only better for protecting consumers when they are in an unfair bargaining position, but also helps you maintain a healthy and transparent relationship with customers and users who interact with your business.
For example, under the ACL, you cannot engage in any advertising practices or conduct that could mislead or deceive consumers about what you’re selling. You could face heavy penalties under the ACL if you do so, and this could also be damaging to your business’ reputation.
If you would like guidance on your obligations under the ACL, contact our legal team for more information.
Key Takeaways
A business can be run from a residential property, however, there are a number of things you need to assess to determine whether this is the right path for you. To summarise what we’ve discussed:
- Running a business from home depends on whether or not your business is suited to being run from home
- You will also need to check local council regulations and see how it may impact your business
- Be sure to register your business and get the right legal documentation
- If you are going to be hiring employees that work remotely, take care of your workplace health and safety obligations
- Be aware of your other legal duties, such as ACL requirements
If you would like a consultation on running a business from a residential property, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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