Reading time: 5 minutes

Starting a sole trader business can be a tremendously rewarding experience. It allows you to use your interests or skills as a full-time job, where you can be your own boss. Many people now have online-related hobbies and skills that would translate well into a sole trader online business. This can provide outstanding work-life balance and personal satisfaction. You will need a few key documents to set up an online business as a sole trader. This article will outline three documents that sole traders will need to start an online business, including:

  • a business plan;
  • intellectual property documents; and
  • terms and conditions. 

1. A Business Plan

To make sure that your online business will be able to succeed long-term, you need to create a business plan. You must ensure that your business can operate successfully within the chosen market. Your business plan should include:

  • the nature and type of your business;
  • projected business activity;
  • any intellectual property or other assets you will create for your online presence;
  • your target market and leading competitors;
  • your financial records, tax returns, and projections;
  • how much capital you need to get your business off the ground and maintain it; 
  • your ownership structure; 
  • and key people involved in the business. 

Therefore, the primary purpose of your business plan is to ensure that you can facilitate the success of your business in an online environment. It can be challenging to track the progress of your online business, as opposed to a physical business, where you can gauge success in face-to-face interactions. While sole traders operate as individuals, this business plan will also provide information to explain your business to other people who may be interested in supplying or investing in your online business. 

Using a business plan template, you can tailor this document to meet your business needs and goals. If you find it challenging to create a business plan, this can be a great place to start.

2. Intellectual Property Documents 

If you have developed a unique business asset,  you will likely want to safeguard this as intellectual property. This could include a:

  • product;
  • service; or
  • image.

You should try to register for intellectual property rights with the Intellectual Property Office of New Zealand (IPONZ) to ensure that you protect these unique assets. Additionally, you will be able to:

  • use your intellectual property;
  • make profits off your intellectual property;
  • sell your intellectual property; and
  • prevent other people from using it without your permission. 

First, it is a good idea to make sure that no similar intellectual property already exists and is protected. If this is the case, your registration would likely fail, but you may also run into challenges for your business. Once you have established this, you can consider protecting your own intellectual property. Some things that people typically cover through intellectual property rights are their sole trader business’:

  • name;
  • logo and images;
  • social media usernames and branding;
  • domain name; or
  • product names.  

The type of intellectual property that best protects your brand will depend on your situation.

Forms of intellectual property you may want to consider can include:

  • trade marks, which protect a brand name or logo typically;
  • designs, which protect the unique appearance of a product;
  • patents, which protect a new invention, such as a product, process, or other good; or
  • copyright, which applies to any original work, including a painting, song, film, or lyric. 

3. Terms and Conditions

Your business terms and conditions outline the contract created between you and your customers when they purchase products from your online business. This document will likely cover:

  • the nature of the products or service;
  • payment details;
  • relevant laws, like fair trading and consumer law;
  • warranties; and
  • disclaimers and limited liability clauses.

This document is essential as it will protect you against possible future legal troubles if there is a misunderstanding with a customer. They will have to agree to your terms and conditions before purchasing with you so that they will apply in any situation. Ensure that your terms and conditions are comprehensive and can be clearly understood and accessed by your customers. 

Marketing Plan - Digital Business

Need help marketing your digital business? Use LegalVision’s free Marketing Plan for Digital Businesses template to create a robust marketing plan.

Download Now

Key Takeaways

Starting a sole trader business can be an enriching experience. Many people create a sole trader business to allow them to explore and profit from their passions. However, you must ensure that you have these critical documents so your business can be as successful as possible. To ensure that your sole trader business will succeed, you should have:

  • a business plan;
  • intellectual property documents; and 
  • terms and conditions. 

If you need help with starting a sole trader business, our experienced business lawyers can assist as part of our LegalVision membership. You will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today on 0800 005 570 or visit our membership page.

Frequently Asked Questions

Is a sole trader the same as a company?

Both a sole trader and a company are business structures. However, they are not the same. A company is a separate legal entity, while sole traders are effectively the individual who operates them.

Can I protect intellectual property if someone else owns it?

In most cases, anything you choose to protect with intellectual property rights must be unique and created by you. 

Webinars

Structuring Your Business For Success

Tuesday 23 August | 11:00 - 11:45am

Online
Learn the best way to structure your business to maximise its success. Register today for our free webinar.
Register Now

Redundancies and Restructuring: Understanding Your Employer Obligations

Tuesday 27 September | 12:00 - 12:45pm

Online
If you are considering making roles redundant, it is crucial that you understand your legal obligations as an employer. Learn more in this free webinar.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2019 Top 25 Startups - LinkedIn
  • 2020 Innovation Award 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Award 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Financial Times Award 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2021 Law Firm of the Year Award 2021 Law Firm of the Year - Australasian Law Awards
  • 2022 Law Firm of the Year Winner 2022 Law Firm of the Year - Australasian Law Awards