When we create something new, the element of design plays a significant role. Anyone can attempt design however, it takes a special professional to bring a design to the next level. Due to this, design consultants are sometimes sought after for their expertise and trained eye for details. 

So, if you’ve been thinking of starting your own design consulting business, then this can be a great way to use your design skills to help others. Before you jump into the world of business though, it’s important to understand the legal considerations of starting a design consulting business. 

That way, you can be protected while you use your design experience to assist your clients. Keep reading to know more.  

What Is A Design Consultant? 

The term ‘design’ covers a wide range of areas. When we think of design, it can mean anything from interior design, graphic design to fashion design. Therefore, a design consultant is someone who is an expert in a particular area of design. They use their expertise and skills in design to help clients alleviate the space or product they are building. 

How Do I Become A Design Consultant?

Most design consultants need to gain the relevant qualifications, such as a bachelor’s degree in a particular area of design so they can begin working in the industry. It usually takes a number of years before a designer has enough experience and knowledge before they can start doing consulting work.  

How To Start My Own Design Consulting Business 

When you decide to take the leap and start your own design consulting business, the first thing you will be faced with is a number of important decisions. You will need to think about what kind of legal structure you want your business to have, what laws will impact your business and the kind of legal documentation you will need to protect your business.

We know this can sound pretty overwhelming but don’t worry –  we’ve got you covered! As your legal structure will determine the foundations and set- up process for your business, let’s start there.  

What Legal Structure Should My Design Consulting Business Have? 

When deciding on the right legal structure for you business, here’s a few questions to ask yourself:

  • How much time and resources am I willing to invest in this process?
  • Am I okay with being personally liable for the business?  
  • Do I have any long-term business goals that will be impacted by this choice? 
  • Do I want a business structure with little upkeep or am I okay with something that’s higher maintenance? 
  • How much legal protection am I looking for in a business structure? 

Once you have figured out where you stand on these issues, you will be able to determine the kind of business structure that is right for your business. In Australia, three types of business structures are the most common: a sole trader, partnership and a company. 

Let’s take a look at them in more detail. 

Sole Trader

To set up a sole trader business, you just need to go online to the Australian Business Register and apply for an Australian Business Number (ABN). Once your ABN has been approved, you will be able to start your design consulting business as a sole trader. Keep in mind, if you plan on using a name other than your personal one for your business, then you will need to Register A Business Name

As appealing as the quick and easy set up process for a sole trader may be, there is a downside to it. As the name suggests, you will be personally liable for the entire business as a sole trader. As there’s no legal separation between you and your business, there’s very little legal protection available to you. Therefore, if you’re thinking of future growth opportunities and the expansion of your business, then a sole trader business may not be the best option. 

Partnership 

If you’re thinking of setting up your design consulting business with a partner then the process is very similar to that of a sole trader, with a few more additional steps. Once you and your partner have received your individual ABN’s, then it’s a wise idea to secure your partnership with the right documentation. As partners, there’s a number of things you will need to discuss beforehand, such as the management, responsibilities and profits of the business – we don’t recommend doing this in a non verbal agreement. Instead, having everything agreed upon in a Partnership Agreement can make sure both partners have something to look back on, if the need ever arises. 

Company  

If your design consulting business is a serious business endeavor, then a company legal structure is going to be the right way to go. Setting up a company is more work, money and time. However, at the end of it you will have a company that is a separate legal entity from you. This gives your company the ability to do things a legal person would be able to do, such as earn profits, accumulate debt, own property and have ongoing court matters. 

As a result of this, your liability will be limited – meaning what happens with the business doesn’t need to affect you personally. Furthermore, a company structure is better if you’re thinking of what options for growth you business will have in the future. 

To Register A Company, you will need to follow the requirements set out by the Australian Securities and Investments Commission (ASIC) as well as determine things like company governance, plus who your directors and shareholders will be. Running a company also means keeping up with ASIC’s ongoing obligations, such as annual reporting. Setting up a company is far more complex, so it’s best to seek the help of a legal expert when embarking on this little journey. 

To learn more about business structures, click here to access our helpful guide. 

Are There Any Laws That Will Affect My Design Consulting Business? 

As a design consulting business, there’s a number of rules and regulations that are likely going to impact your business. It’s up to you to make sure your business is legally compliant as not following the law can lead to legal penalties and a loss of your business’s reputation.  Therefore, it’s important to be informed on the legal landscape that affects your business. 

However, it can be hard to keep up with everything while running a business, not to worry though – our legal experts are always happy to answer any questions. We’ve listed some key regulations you might want to keep an eye out for when starting your design consulting business. 

Data and Privacy Laws 

When you have clients, there’s a good chance you will have access to information about them. Due to this, it’s your responsibility as a business to ensure their information is properly secured. Having systems in place like a Data Breach Response Plan can keep your business prepared in case something goes wrong. With a solid plan in place, you’ll be able to have a more effective response in an emergency and know what your obligations are, such as notifying the relevant parties of the breach. 

Moreover, if your design consulting business is going to have a website, you might need to have a Privacy Policy drafted on it. A privacy policy is legally required if you’re going to be collecting any kind of information from your website visitors (yes, even if it’s just an email!). This rule also applies to businesses that have an annual turnover of more than $3 million. If your design consulting business is going to be checking either one of those boxes, then it’s important to have a privacy policy drafted by a legal expert. 

Australian Consumer Law (ACL)  

When you offer a service or a product in the market, then you’re bound by the ACL. However, the ACL isn’t just there to set rules for businesses, it’s also there to protect small businesses. Understanding your rights and responsibilities under the ACL is essential, as it can save your business from any potential trouble. 

Foremost, it’s important to know what practices are considered harmful business practices by the ACL, such as misleading or deceptive conduct. Knowing what the standard determined by the ACL is can help you maintain a healthy relationship with your clients and stay out of trouble. 

Additionally, you may enter into contracts or arrangements. Recently, there’s been significant changes to unfair contract term laws under the ACL which can help protect you business from being taken advantage of in certain scenarios. It’s worth getting to know what these changes are and if you have any questions, our legal experts are happy to answer them.  

What Legal Documents Do I Need To Start A Design Consulting Business 

Finally, you’ll need to get the right legal documents drafted that will help protect your business. At times, business owners tend to make the mistake of thinking they don’t need professionally drafted documents or any legal agreements – this almost always ends up being a costly mistake! Strong, well drafted legal documents will help protect your liabilities, secure your revenue streams, safeguard your clients interests and a lot more, it’s worth investing in.  

Here are a few key legal documents that might benefit your design consulting business: 

Of course, the exact legal agreements you’ll need will depend on your unique situation, so get in touch with us for a chat and we’ll talk you through it! 

Next Steps 

A design consulting business can be a great way to use your passion for design to take your first steps into the world of business. However, it’s important to take care of all the legal considerations when starting your business. To summarise what we’ve discussed: 

  • Design consultants use their expertise in specific areas of design (e.g. interior, graphic, fashion) to assist clients in enhancing their projects 
  • To become a design consultant, one typically needs relevant qualifications, such as a bachelor’s degree and some years of experience
  • Starting a design consulting business involves making crucial decisions about legal structure, laws impacting the business and necessary legal documentation
  • The legal structure options in Australia include sole trader, partnership and company, each with its own implications for liability and growth
  • Legal considerations for a design consulting business include compliance with data and privacy laws, such as having a Data Breach Response Plan and Privacy Policy 
  • Understanding and adhering to Australian Consumer Law (ACL) is essential for businesses offering services or products in the market 
  • Essential legal documents for a design consulting business may include a Consultancy Agreement, Disclaimer, Website Terms and Conditions, Employment Agreement, and Shareholders Agreement 

If you would like a consultation on starting a design consulting business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.

 

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