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A brick and mortar store refers to any physical store offering face to face services or products to customers, as opposed to online shopping. Examples of brick and mortar stores include clothing stores in your local shopping mall, convenience stores, supermarkets and other physical locations. Although opening a physical shopfront can have higher overheads than starting an online business, having a physical presence may draw in more customers and increase your sales revenue. This article will set out some important considerations when opening a brick and mortar store.

Business Structure

One of the first things to consider when starting a new business is how you want to structure it. The structure you choose can have implications on tax, asset protection, set up costs and flexibility. Common business structures include:

Sole Trader

Registering as a sole trader is relatively cheap and straightforward to set up. As a sole trader, you would own all of the business’s assets personally, meaning you would take all the profits but also be responsible for all of the debt.

Partnership

If you have a business partner, you may consider entering into a partnership. A partnership is very similar to setting up as a sole trader, except the profits and debts will be split between partners.

Company

A company is a separate legal entity, and therefore your liability is limited, and your personal assets are protected. However, a company can have higher setup and maintenance costs than being a sole trader or in a partnership.

Each business structure has tax implications; it is important to seek tax and accounting advice before deciding which structure is right for you.

Premises

Rent can be one of the most significant overheads for any brick and mortar business. Therefore, you must pick the right space for your business. You should take time to select a location for your store that is going to be convenient for your customer base and bring in a lot of foot traffic. Once you have chosen the ideal location, you will need to ensure that you can get the correct licences to run your business. These include approvals to:

  • conduct commercial business on those premises;
  • carry out development work; and 
  • certify that the development meets council requirements.

You should contact your local council to determine which planning permissions you need.

If you are leasing the premises, you should also make sure you are doing thorough due diligence before signing. You should look to make it a condition of the lease that you can get the correct licences to run your business.

Insurance

If you open up a brick and mortar store, you will need to understand your legal obligations when it comes to insurance. Common types of insurance include:

  • Public Liability Insurance;
  • Workers Compensation Insurance; and
  • Revenue and Assets Insurance.

The exact types of insurance you will require will depend on the type of business you are running. You should speak with an insurance broker to determine your specific insurance needs.

Licences

Depending on the type of business you run, you may need to apply for additional licences and permits before opening your store. The licences you need will depend on your location, and you should check your state or territory’s requirements before commencing operations.

Common licences for brick and mortar stores include:

  • food licences for eateries;
  • liquor licences for bottle shops or bars;
  • tobacco licences for convenience stores; and
  • poison licences for pharmacies.

If you are unsure which licences your business needs, you should contact the Australian Business Licence and Information Service (ABLIS). ABLIS assists business owners in finding the relevant government licences and permits concerning the services they are offering.

Employees

If you are hiring people to work at your store, you must ensure you understand your legal obligations to your employees. The Fair Work Act sets out your rights as an employer, including: 

  • pay rates; 
  • allowances; 
  • overtime; and 
  • penalty rates.

Your employees may be covered by a modern award which sets out the minimum terms and conditions that must be met within the employment contract. The award your employees are covered by will depend on the industry you work in and the employee’s role. If you are unsure which award your employees are covered by, you should visit the Fair Work website or seek legal advice.

Key Takeaways

Setting up a brick and mortar store is an exciting venture but can take a lot of planning and work at the beginning. Understanding your obligations as a new business owner can be overwhelming and confusing. If you would like assistance with understanding your legal obligations, contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.

Frequently Asked Questions

What is a brick and mortar store?

A brick and mortar store is any business with a physical presence, offering face to face products or services to customers. Examples of brick and mortar stores include retail stores, coffee shops and supermarkets.

What are the business structures for a brick and mortar store? 

The most common business structures include registering as a sole trader, entering into a partnership or creating a company. Each business structure has varying tax implications, asset protection, set up costs and flexibility, so it is essential to choose the one that is most suited to your circumstances. 

What are the considerations when opening a brick and mortar store? 

There are a few key considerations when opening a brick and mortar store. Firstly, your choice of premises is important as the location should be easily accessible. Secondly, you must examine the types of insurance available. Thirdly, you need to consider any licenses that may be required.

What is the benefit of opening up a physical store?

There may be higher overheads when opening a physical store, compared to an online business. However, having a physical presence may increase your sales revenue by drawing in more customers through foot traffic.

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