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Everybody needs to wash clothes however, not everyone has access to a washer and dryer. Students, people living in high density areas, tourists and many more turn to laundromats to do their weekly washing.
If you’ve been thinking about starting your own laundromat business, then you could be at the cusp of a stable business venture that is relatively easy to maintain. However, before you get to that part – it’s important to set up your laundromat business so it’s got the right legal foundations for success.
Read on to know more.
What Is A Laundromat Business?
A laundromat business is an establishment where people go to wash and dry their clothes using self-service machines. Typically, once a customer pays to use a washer or dryer, they are free to operate that machine. While older laundromats required customers to insert coins into the machines, many modern laundromats have adopted cashless payment systems for convenience.
Generally, laundromats offer washer and dryer services. However, some laundromat businesses opt to provide their customers with additional services. This includes, professional dry cleaning, clothing alterations and anything else they feel their customer base might be interested in. When starting your own laundromat business, it’s a good idea to think about whether you’ll be offering additional services or sticking with the basics.
Is Starting A Laundromat Business Expensive?
Starting a laundromat business can be costly, as expenditures can rise upwards of $100, 000. Finding a suitable place of business, renovating the premises, gathering the right equipment, sorting out legal matters, installing payment systems and training staff all add to the cost of starting a brand new laundromat business — you will need to properly manage your finances to ensure everything stays within budget.
Keep in mind, expenses are just one concern when starting your laundromat business. Factors such as marketing, regulations, operations strategies, long-term business goals all need to be thought about when starting your laundromat business. It’s always a good idea to create a business plan when starting your business – it’s much easier to stay on track when everything is organised in a single document.
How Do I Start My Laundromat Business?
Starting your laundromat business requires getting it properly registered. In Australia, all businesses, no matter how big or small, need to be registered. How you will register your business depends on the business structure you choose for it. The most commonly registered business structures are: sole trader, partnerships and company.
Sole traders and partnerships have the simplest registration process however, they offer little to no legal protection. To register as a sole trader or partner, you just need to apply for an Australian Business Number (ABN) which can be done online, for free. In a partnership, the business will need to have its own ABN. You will also need to register a business name, unless you meet the exception. The only time a business name doesn’t need to be registered is when the full personal name(s) of the business’s owner(s) will be used to operate the business.
Registering as a sole trader or in a partnership business can be a bit risky, as the business will be attached to you personally. The business cannot exist without you, so there’s no legal separation between you and your laundromat business. If something happens with the business, you could be personally affected.
For more legal protection, it’s better to register your laundromat business as a company. Granted, a company set up is somewhat more complex and costly. However, the legal protection it provides is extremely valuable. A company is a legal entity on its own meaning, a company is able to exist separately from you. As a result of a company’s separate legal status, you can enjoy limited liability, giving you certain protections from whatever happens with your company. Moreover, a company structure is more suitable for growing your business as well as potential business sales – if your laundromat is a serious business endeavour then we recommend registering it as a company.
As we noted above, registering a company can be a little complicated. It involves navigating the Australian Securities and Investments Commission (ASIC), understanding your ongoing obligations, setting up the right company governance methods and appointing company officeholders – a legal expert can help guide you through this process. That way, your laundromat company can get registered in a way that aligns with your future goals and vision.
For more information on the process of setting up a company, you can check out our article, Steps To Incorporate Your Small Business In Australia.
Do I Need Any Legal Documents For My Laundromat?
Running any kind of business comes with risks – your laundromat business is no exception. One of the best ways to manage risks is to have the right legal documents in place. Legal documents can limit your liabilities, secure your revenue streams, protect your ownership and determine the rights of each party.
In order for legal documents to work properly, it’s important to have them catered to your laundromat business and drafted by a legal expert. Here’s a few legal documents you may want to think about:
Employment Agreement: If you hire staff to help run your laundromat, it’s important to be clear on matters such as leave, pay, breaks, responsibilities and rights – an employment contract is a necessary step in communicating this.
Customer Contracts: When customers agree to use your laundromat, it’s a good idea to set boundaries and determine the rights and responsibilities of each party. This way, you can prevent unnecessary disputes, limit your liability and help protect your business as well as your customers.
Non-Disclosure Agreement (NDA): Sometimes, your business may need to engage third parties, such as contractors or potential investors. In these situations, a Non-Disclosure Agreement (NDA) is an effective way to protect your business’s confidential information.
Privacy Policy: If your laundromat business is going to be collecting the personal information of its users, such as emails and phone numbers, then you will need to have a privacy policy on the website to be compliant with Australian privacy laws.
What Laws Do I Need To Look Out For?
Following the relevant laws and regulations plays a significant role in building a successful laundromat business. To have a good reputation in the community, avoid disputes and legal penalties, knowing your legal obligations and abiding by them is key. We’ve listed a few regulations you may want to keep an eye out for below.
Australian Consumer Law
Every consumer in Australia has rights under the Australian Consumer Law (ACL). As a laundromat business, it’s your responsibility to uphold these rights. The ACL covers various aspects such as consumer guarantees, the quality of services, pricing, advertising, and more. It’s crucial to ensure that you meet these standards and stay up to date with any changes in the law.
Local And State Regulations
When starting a laundromat business, local and state regulations are crucial in determining what can and cannot be done. Zoning laws, licences, permits, and environmental regulations are typically governed by state and local laws. Conducting thorough due diligence and complying with these regulations is essential to keep your business running smoothly and avoid legal issues.
Employment Law
When people work for your laundromat business, you have legal obligations as an employer. This includes ensuring that their employment rights are upheld under the Fair Work Act and providing a safe work environment in accordance with the standards set out by Safe Work Australia.
Data And Privacy Law
If your laundromat has security cameras or keeps a record of customer information, it’s essential to ensure that your practices comply with Australian privacy regulations. These laws govern what kind of data you can collect, whether you need to provide notice, and how that data can be used. Customers trust your business when they use your services, so it’s crucial to maintain that trust by adhering to privacy rules.
Key Takeaways
Starting your own laundromat business in Australia requires careful planning and consideration of legal factors. However, if this is done properly then you could be running a profitable business venture – getting the help of a legal expert is always a smart move. To summarise what we’ve discussed:
- Starting a laundromat in Australia involves significant upfront costs, including property, equipment, and legal setup
- Registering your laundromat business is essential, with options like sole trader, partnership, or company structures offering varying levels of legal protection
- Legal documents such as employment agreements, customer contracts, NDAs, and privacy policies are crucial for managing risks and ensuring compliance
- You must adhere to Australian Consumer Law, local and state regulations, employment law, and data privacy laws to operate legally and maintain customer trust
- Consulting a legal expert can help ensure your laundromat business is set up correctly and positioned for long-term success
If you would like a consultation on starting a laundromat business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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