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Ready to start your side hustle? Here is the Legal 101

Updated: May 31, 2023

So you have a creative side and want to build up a secondary income stream. Good on you! Starting a side hustle can be a really rewarding experience, but it can also be a little overwhelming with all of the boxes to tick. This is why we have summarised the key legal obligations for you to think about when starting your own business.

If it is a side business, you are most likely either selling goods online, or freelancing your services. We will look at both contexts.


6 Tips for Starting A Side Hustle

Check your employment contract

Before registering anything, you need to check your employment contract or other contractor agreements to make sure you don't have any restrictions around operating your own business. A lot of time employers put a non-compete clause in employment contracts, or a restraint of trade might also prevent you from going out on your own.

Register for an ABN

Before you can begin trading you’ll need to register for an Australian Business Number (ABN). You will need an ABN for tax purposes and to register a domain name. The registration process is free and takes around 15 minutes. You can learn more and register here.

Once your ABN is set up, you will be able to trade as either a sole trader or an independent contractor.


Register your business name

In order to both protect and trade under the perfect business name for your business, you must register it with the Australian Securities and Investments Commission.

You can register your business name online at http://asic.gov.au. and costs $39 for one year and $92 for three years.

Register for GST

If your business generates more than $75,000 in a year you are required to register for and charge GST. So consider what your annual forecast looks like to see if this will impact you. You can apply for GST online: https://www.ato.gov.au/business/gst/registering-for-gst/.

It is best to speak to your accountant before registering to make sure you are getting the right financial advice.


Licenses & permits

You need to consider what licence or permits you may need to operate. For example, businesses in the food industry will need a licence to operate. Every state across Australia has different requirements for licensing and permits, and they differ across industries. For a comprehensive look at what is required in your state and for your industry visit https://ablis.business.gov.au


Hire professionals

Don't be afraid to ask for help. Somethings are best left to the experts. A great accountant can help you navigate the complicated tax laws and possibly save you some tax. Some questions to run by your accountant are:

· What are my income tax options; and

· Will I need to make contributions to my super fund?

Lawyers are another invaluable resource, obviously. Don’t be afraid to outsource to a professional as it can save you time and money in the long run


I’ve got my ABN and checked off the above, what next?

Now it is time to get those clients coming in. Once you have identified your clients, it is crucial that you put a contract in place. A good contract benefits both parties as it sets out the clear expectations of both parties, gets you paid and helps prevent and navigate disputes.

What type of contract will depend on the goods or services you are selling and the industry you are in. Here is a summary of the contracts you will need as either an online shop or freelancer.


Selling Goods Online

Starting an online business is both a common and exciting step to take. An online presence allows you to reach more customers and gives you a lot more flexibility in how you deliver your goods or services.

In an online store, your clients are your customers. It is important to have contracts in place that not only protect your right to payment, cover your returns policy, but also set out your warranty and other obligations required by law. Here are the key contracts/legal documents you will want to have in place before you start trading:

· Terms and conditions for sale of goods

· Privacy policy

· Agreement with your suppliers

· Website disclaimers


Freelancer Life

When engaging various clients who require your freelancing skills it is important you have a contract to ensure that everything is set out clearly! This contract is called a Contractor Agreement.

Having all of the finer details of your working relationship set out in writing can make sure that you and your customers are on the same page. Even if you think you have a great relationship with a client, having a clear agreement in place ensures that any disagreements remain strictly professional – this may save some upset if a dispute happens to arise.


Here are some of the essential components of a good Contractor Agreement:


- Scope of services: Sets out exactly what you will be doing so there can be no doubt about what exactly is included for the price.

- Liability: A contract should be clear on who is responsible if something goes wrong and also put an upper limit on how much you can be sued for.

- Intellectual property ownership: If you’re creating work for someone i.e. social media posts, do you own that intellectual property after it is created? Your contract should be clear who owns the IP, it is important!

- Payment: What are your payment terms and what are the consequences for late payment of invoices?


Still need help?

Contracts and legal documents can be daunting, but we love them. Speak to Law by Design to get the right contract in no time.

Otherwise if you need any assistance with structuring, registering and applying for any of the above, please do not hesitate to reach out.

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