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Cosmetics trace back to the earliest known civilisations. From the ancient Egyptians using kohl as eyeliner to the ancient Chinese applying safflower petals for cheek and lip colour, cosmetics have been a part of human culture for millennia. Currently, the cosmetics industry is one of the largest and most influential, amassing billions in revenue globally.
If you’ve been considering starting your own cosmetics company, you could be at the start of something awesome. You’ll need a great product – and we’re confident you’ve got that covered. However, to protect your business and ensure it remains legally compliant, you’ll also need strong legal support.
Keep reading to learn more about the legal side of starting a cosmetics company.
Starting Your Own Cosmetics Company In Australia
A good way to start your cosmetics company is by creating a business plan. The plan should cover matters such as your company goals, values, financial plans, marketing strategy and much more. A business plan isn’t a strict guide – as you start operating your cosmetics company there’s a chance you will need to adjust to better flow with the circumstances. However, a business plan is a great way to put all your research in one place and keep a clear vision of your goals.
Once you’ve got a good business plan in place, you can move on to registering your cosmetics company.
How Do I Register My Cosmetics Company?
You will need to register your cosmetics company through the Australian Securities and Investments Commission (ASIC). In order to do this, you will need sort a details such as:
- Shareholders
- Directors
- Company governance
- Legal structure
When registering your company, it’s important you be clear on these matters as they will determine the foundations for your cosmetics company. Needing to change course later on can be difficult and at times, not possible. Therefore, it’s a good idea to have a legal expert guide you through the set up process and help you set up your company in a way that lines up with your vision.
As the owner of a cosmetics company, your relationship with ASIC doesn’t end once you’ve registered your company. In fact, there’s a number of ongoing responsibilities when it comes to ASIC such as informing them of company changes, paying annual fees, mandatory audits etc. Talking to a legal expert can help you better understand your legal obligations with ASIC so you can stay on top of everything at all times.
What Legal Considerations Are There For Starting A Cosmetics Company?
As you start and run your cosmetics company, legal considerations will be one of the primary factors in defining your success. Therefore, it’s important that the legal aspects are a priority rather than an afterthought. Make sure you have the necessary knowledge, systems, instruments and most importantly, legal help when starting your cosmetics company.
We’ve listed some legal considerations you will need to think about when starting your cosmetics company.
1. Regulatory Compliance
When creating and selling a cosmetics product, there’s a number of regulations you will need to follow to ensure your product is safe to use for consumers. Regulatory compliance measures you should be looking out for include:
- Following the Therapeutic Goods Administration (TGA)
- Registration with the National Industrial Chemicals Notification and Assessment Scheme (NICNAS) to import or manufacture chemicals
- Ensuring there are no prohibited substances being used and all chemicals are safe
- Compliance with Australian Consumer Law (ACL) labelling requirements by including ingredient lists, usage instructions and safety warnings where necessary
- Adherence with the Australian Packaging Covenant Organisation (APCO) guidelines for sustainable packaging
- Proper disposal of hazardous waste materials
Following the relevant laws is essential when starting your cosmetics company. Non-compliance can result in serious harm to consumers and have disastrous consequences for your company. To navigate the exact legal requirements, we highly recommend consulting with a legal expert who can provide professional guidance tailored to your cosmetics company.
2. Intellectual Property
Another legal consideration to think about when starting your cosmetics company is protecting your intellectual property (IP). Your cosmetics company’s IP will form an important part of business operations, whether it’s the branding of your company or the product itself. Give thought to matters such as patenting your formula or getting your brand name or logo trade marked. That way, there’s legal protection for your IP and you’ll have clear legal rights if someone tries to misuse what is rightfully yours.
4. Employment Laws
If you’re going to be hiring employees to work in your cosmetics company, then it’s important to fulfil your legal obligations as an employer. This means, making sure your employees are receiving the correct entitlements and their employment rights are being protected.
As an employer, it’s also your duty to provide a safe working environment. Doing so involves anything between providing safety equipment such as gloves to drafting Workplace Policies to encourage professional conduct.
5. Marketing and Advertising
To get your product noticed, you will naturally need to do some marketing and advertising. This is another exciting part of starting a cosmetics company. However, it’s crucial to make sure all your marketing and advertising strategies are in line with the Australian Association of National Advertisers (AANA) Code of Ethics for marketing practices.
6. Data and Privacy
Securing information is an important legal obligation for any company. Protecting the data and privacy of your cosmetics company involves implementing the right security measures and consistently reviewing them to stay on top of matters. Consider engaging legal instruments such as a Data Breach Response Plan to have that extra measure of security.
Will I Need Any Legal Documents To Start My Cosmetics Company?
To help your cosmetics company stay legally compliant, certain legal documents are necessary. Moreover, legal documents don’t just help with legal compliance, they also offer legal protection to your cosmetics company.
Remember, there’s usually a fair amount of risks when it comes to starting a company. Legal documents can help you manage these risks by protecting your rights and limiting your liabilities. We’ve listed a number of legal agreements to consider getting below.
Supply Agreement: Being on the same page as your suppliers is necessary for smooth business operations – a clear and concise contact can help with this.
Distribution Agreement: When you engage with a distributor you’ll need to define matters such as exclusivity, marketing, payment, performance standards and much more.
Employment Agreement: When hiring employees, a contract stating the rights and obligations of both parties is essential for a professional, productive relationship.
Non-Disclosure Agreement: If you don’t want certain information getting out, then it’s necessary to have an NDA signed by all involved parties.
Disclaimer: Cosmetics products can have risks, so it’s important to have a professionally drafted disclaimer detailing what you cannot be liable for.
Privacy Policy: To collect information from visitors to your company website, you will need to have a privacy policy visible on it.
Next Steps
To successfully start and run a cosmetics company, legal preparation is essential. To summarise what we’ve discussed:
- To start a cosmetics company, register your company with the Australian Securities and Investments Commission (ASIC), detailing shareholders, directors, governance, and legal structure
- Ensure regulatory compliance with Therapeutic Goods Administration (TGA) guidelines, NICNAS registration, and Australian Consumer Law (ACL) labelling requirements
- Protect intellectual property by patenting formulas and trademarking brand names or logos
- Adhere to employment laws, ensuring correct entitlements and a safe working environment for employees
- Follow the Australian Association of National Advertisers (AANA) Code of Ethics for marketing and advertising
- Secure data and privacy by implementing measures like a Data Breach Response Plan
- Obtain essential legal documents, such as supply agreements, distribution agreements, employment agreements, non-disclosure agreements, disclaimers, and privacy policies
- Seek legal guidance to ensure compliance and protect your business interests
If you would like a consultation on starting a cosmetics company, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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