Starting a micro-business? Here are the legalities you need to consider

micro-business

Many people have hobbies or ideas that they want to pursue on a commercial basis, which is where micro-businesses come in. Distinct from the more widely known side hustle, a micro-business is a fully functioning business which operates at a smaller scale. This is often an ideal option for business owners who work in another capacity, or who want to build up their business gradually over time. In this guide, we’ll explore the legal aspects of starting a micro-business.

Licenses and certifications 

It’s likely that you’re already an expert in the type of micro-business you want to start, but it’s worth checking that you won’t need any additional licenses or certifications. For example, if you’re starting a remote cocktail-kit delivery business, you will need to hold a valid liquor licence.

This also applies in professional services, for example if you want to work as a financial advisor you will need to be accredited through the Financial Adviser Standards and Ethics Authority (FASEA).

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Business structure

If you intend for your micro-business to act as a ‘commercial enterprise’ you will need to apply for an Australian Business Number (ABN). This will allow you to operate your business as a sole trader, with your business’s earnings being taxed on your personal income. If you want to start your business on a larger scale or you want to avoid being legally or financially liable, then registering your business as a company is your best option. It’s also worth noting that you can restructure your business to suit your circumstances better at a later date.

Ensuring you get paid 

It’s important to protect your interests and ensure you get paid when customers start coming through the door. This is especially true if you’re working as a freelancer and are getting paid for each project you complete. A good way to set this out is with a services agreement, which will outline fees, cancellations and deadlines. Further, if customers fail to pay you for your work, you’ll be able to take legal action.

Data and security 

Most businesses these days have an online presence, whether this be a listing on Google, a website or selling your products through an online marketplace. However, this also means that you’ll be collecting sensitive personal information about your customers. In many jurisdictions (such as the EU) it’s a legal requirement to have a privacy policy on your website. Some third-party providers such as Google and Facebook won’t let you list or sell products through them unless you have one.

Beyond this, you should have a publicly accessible terms and conditions document to inform customers about your terms of trade and acceptable use of your website.

Branding 

Even if your business is starting out small, it’s never too early to protect your creative assets. The risk is that if you start using a great name or logo for your business, you may find later down the track that it’s already in use by another business. If this happens, not only will you not be able to register it as a trademark, the other business may commence legal action against you for infringing their trademark.

Simply put, no matter how small your business is it’s always worthwhile protecting the assets which make it unique.

NOW READ: Flexible working is here to stay: Here’s how to introduce a working from home policy to suit your business

NOW READ: How to start an online business: Legal requirement checklist

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