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A 2020 study recorded that 25% of Australians have a tattoo. The growing demand for tattoos in Australia is being driven by popularised cosmetic tattooing, increased accessibility and rapid advancements in laser-removal technologies. With these advancements, there has also been an increase in legislation surrounding tattoo and body-piercing studios. Consequently, consumers can be more confident regarding safety and hygiene conditions in the industry. If you are looking to open up a tattoo studio, you want to consider which business structure is best. You must be confident in the business structure you choose, as it will determine how your business operates. Likewise, you should have a business plan in place for your body art tattooing business before deciding upon a structure. Therefore, having a basic understanding of a range of structures available to your business will hold you in good stead.

Setting Up Shop as a Sole Trader

A sole trader business structure will provide you with total control over the way your body art tattooing business will run. However, as a sole trader, you will also incur all your business’ financial and legal liability. 

Additionally, Australian law does not distinguish between a sole trader and an individual business person, which provides many benefits. The first benefit is that any profits made by your body art tattooing business will go straight into your pocket. This will allow you to maintain a healthy work-life balance. For example, you can choose to put money back into your body art tattooing business or spend it on personal items.

Contrarily, the lack of protection from financial liability is a significant drawback for some business owners. Ultimately, any business decision will have an impact upon your entire life, not just your business. Therefore, if you were to choose a sole trader structure for your tattoo artist business, you need to be fully aware of all potential risks that you are exposed to. This is why it is essential to have a business plan in place to protect your finances.

Have a Business Partner? How About a Partnership

If you are looking to open a body art tattooing business with one or more partners, you may consider a partnership business structure to be a suitable choice.  

Like sole traders, a partnership business structure allows you and your business partners to maintain total control over the body art tattooing business. A partnership also allows you and your business partners to utilise and pool together each other’s skills to improve the business’s functioning. Likewise, you can split the partnership according to your choosing and reflect your goals in a written partnership agreement

Similarly, Australian law does not distinguish between the partnership and the individual partners running the business. Again, you and your partners will be exposed to all financial and legal liability. So, it is essential to have a:

  • good understanding of a partnership structure;
  • solid business plan in place; and
  • written partnership agreement to fall back on. 

Starting a Tattoo Company

The Tattoo Parlour industry is highly fragmented, with a large number of small players servicing the market. However, you may choose to set up a tattoo studio as a company. A company business structure can be good for your body art tattooing business if you want to promote growth and hire employees. However, setting up a company will require you to have the capital to invest in the setting up of the company.

The main benefit of a company structure is that the company is a separate ‘legal person’. What this means is the company will enter into contracts and hold all the legal and financial obligations instead of you

As a result, as the director of a company, you can take risks that you may not consider should you choose an alternate business structure. Since the directors of a company are generally free of liability for its financial debts, there are stringent requirements at law regarding how you set up and run your company in Australia.

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Key Takeaways

Suppose you are looking to start your own body art tattooing business or expand an existing body art tattooing business. In that case, you may wish to consider which business structure you will use and which structure is suitable for you. In addition to setting up the business structure, you need to ensure your tattoo studio follows the tattooing and body piercing laws and regulations of the state you are practising in. 

For more information on the best business structure for your tattoo studio, contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.

Frequently Asked Questions

I’m looking to open a tattoo studio. What business structure options are available to me?

There are three popular business structures to choose from when starting a business. Firstly, you can open a shop as a sole trader, which is ideal if you are an individual looking to open a business on your own. Secondly, you can choose a partnership structure if you have a suitable business partner. Thirdly, a company structure may be the best option if you have plans for growth in your business. 

Can I change business structures in the future?

You have many options available to expand your business in the future. As a sole trader, you can expand to a partnership or company. Likewise, you can also change business structures from a partnership to a company. Note, there are commercial and legal requirements involved in the process of changing business structures. Hence, it is best to engage a commercial lawyer who can assist you with your options. 

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