As The Design Dept grows and morphs into something I’d never expected or anticipated it is time for me to make some big decisions around how I want to be running my business. For some context I’ve been a Sole Trader for the last 10 years with no official contracts or insurances. Whoops.

This hadn’t been a problem because I started off doing logos for $500 and free coffee but as the business grows and the quotes get bigger it's now in my best interest to protect myself and my family's assets. To be honest at this stage our ‘asserts’ aren't a lot, we have a tiny bit of land here in Ballarat that we are going to build a house on this year - that’s it! 

I started having a few conversations with friends and fellow designers to see what others are doing and it was a mixed bag. This week I wanted to talk about what I’ve discovered as a way to process the information I’ve gathered and hopefully offer some insight for anyone who may be in a similar totally naive black hole about their legal obligations as a business owner!

Please note these are my musings and should in no way or form be considered as professional advice! I have included links where possible to help with your own research otherwise please consider this me thinking out loud! I’m also based in Australia so other countries will have different requirements as well.

Let's start at the beginning with some definitions. 

A Sole Trader is an individual who runs a business. You are legally responsible for all aspects of the business. In Australia you need an ABN (Australian Business Number) which is free and it costs $37 to register a business name if you're so inclined (I have ‘The Design Dept’). You should open a new bank account to separate personal and business expenses. All the money you earn is treated as your individual income.

Companies are run by directors. You used to need two directors to start a company but now one director will do. You still have to get an ABN (free), register your company through ASIC for $509 and register your business name $37. You’ll need to open separate bank accounts in the company name. All money earned belongs to the company - not you!

Contracts are a visual representation of the relationships between two parties. Contracts are where you can explain the conditions of engagement and clarify expectations. I recommend going to a lawyer for this - I did and got a simple client contract drawn up for about $1K. I also recommend asking around. Recommendations are always helpful.

Public Liability Insurance protects you (if you’re a sole trader) or your company if a customer, supplier or member of the public is hurt or their property is damaged as a result of something your business has done. 

Professional indemnity Insurance protects you (if you're a sole trader) or your business against claims of negligence or breach of duty by a client as a result of receiving advice or services from your business. This has normally resulted from a break in the terms of the contract.


Regardless of whether you are a business or a sole trader you should have a contract and Professional indemnity insurance as a bare minimum. If you employ subcontractors then you should have a contract for subcontractors as well. 

If you have an office or a dedicated space for working in, you should have public liability insurance in case someone gets hurt or you damage someone else's property. 

There are pros and cons to being a sole trader or a business. Personally I’ve opted for The Design Dept becoming a company. My main reason is I’m about to go on a commercial lease for the first time and feel more comfortable signing as The Design Dept rather than Jess Kelly.  

Becoming a company was incredibly easy - I used a company called e-companies. They took the required details and submitted the application on my behalf. It cost $590 which included $35 fee + $509 ASIC fee + $46 for setting up my TFN (Tax File Number). I rather unceremoniously got sent some poorly designed certificates via email to confirm that The Design Dept Py Ltd was now a company! I already owned the business name ‘The Design Dept’ which I'm in the process of transferring, otherwise I’d have to write the full name plus ’Pty Ltd’ whenever I mentioned the business.

I had set up a new bank account in the name of The Design Dept to show a clear division between Jess the Sole Trader and The Design Dept as a company. I am now an employee of The Design Dept and have to pay myself a wage, superannuation and taxes. 

I went down a rabbit hole with the business bank account and landed on Airwallex - a relatively new FinTech company that is changing the way you spend and receive money internationally. I have a few clients in NZ and spend stacks on US based courses for personal development. Airwallex lets me set up a US bank account so I can trade in US dollars with them taking a tiny margin (like 0.03%) rather than the big banks that take 3% on average. So far their customer service has been impeccable with “Anna” ringing me up once I’d opened the account asking if I had any questions. She is now my direct contact if I have any concerns - pretty impressive for a ‘bank’. Only downfall at the moment is they don’t have real cards - you create digital cards that act just like a dept Visa card (you can set up 250 of these by the way and in different currencies). Most of my transactions are digital. I might just have to ‘click and collect’ my insatiable Officeworks stationary habit.

If you're interested in Airwallex they have a referral program that means I get $200 once you reach $2000 worth of deposits into your account! Email me and I’ll send you the link!

So there you have it - how I became a company by Jess Kelly. It has been quite overwhelming with people discussing how serious being sued can be. When they start to mention losing the family home and being prosecuted it makes me feel nauseous. We have however already been sued before so I know it's survivable! If we had Professional Indemnity Insurance we wouldn’t have had to pay the outstanding amount ourselves but I’m sure our rates would’ve gone through the roof! 

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