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As a makeup artist in New Zealand, there are many elements to consider when you want to go into business. First, there are commercial considerations, such as how you want to specialise and sell your services. Second, there are also financial considerations like whether your business will be financially sustainable. Finally, an important legal consideration that will affect your business’ direction is the business structure you choose. Different structures offer different advantages and disadvantages depending on your goals with your makeup business. This article describes three of the most common structures and what they mean in the specific context of makeup artists: 

  • sole traders; 
  • partnerships; and 
  • companies. 

Sole Trader Structure 

One structure you might consider is structuring your makeup artist business as a sole trader. In that case, you are going into business with a straightforward and flexible arrangement to develop your services and take full responsibility for the business, including profits and any debt. Sole trader structures are common for makeup artists to opt for, particularly for freelance artists and makeup artists. In addition, structuring your business as a sole trader allows you to gain some experience first and possibly set up a company in the long run. 

Unlike other structures, sole traders maximise the control that you have over your own affairs. This is both a good and a bad thing. As a sole trader, there is nobody to share the load with, so to speak, in the early stages of your makeup artist venture. However, at the same time, you have sole control of your business and can benefit from all of the profits. 

Partnership Structure With Other Makeup Artists

By contrast, a partnership structure lets you join with other makeup artists to launch a venture together. Like a sole trader structure, partnerships are straightforward and easy to set up. Whether friends, family or strangers, you and your partners should detail your arrangement in a partnership agreement. In this agreement, you can set out roles, responsibilities, and other crucial details of how the makeup operation will work in practice and who is responsible for what. 

One detail to note with partnerships is that you will be personally responsible for any debt or liability in the business. This liability is similar to sole traders, except that in a partnership, you are also responsible for any debts or liability that other partners incur in the business. Likewise, this liability can put you in a challenging position when managing disputes with a partner or if one of your partners is fraudulent or financially irresponsible. For that reason, think carefully about who you want to launch your makeup business alongside. 

Makeup Studio as a Company

If you are keen to grow your makeup business quickly, set up a studio in full, or attract investment, a company will be the best structure for you. A company can be a good structure for launching your venture on your own or with others. However, a company is its own legal entity, thus, creating one is more time-consuming and costly than a sole trader or partnership structure. However, there are benefits, such as limiting your liability in some situations and allowing the company to hold assets in its own name.

Additionally, all companies have shareholders and directors. As the founder of your business, you will usually be both a shareholder and a company director. Typically you will have other shareholders and directors as well who can contribute to your company’s growth. For example, if you want to set up a studio, you may require extra finance than a freelance makeup artist. As such, a company may be the optimal structure for you. Companies allow for more growth by allowing you to raise money from shareholders. Likewise, banks and other financial institutions generally trust company structures more than other structures. This can be beneficial when seeking financial assistance, such as a loan. 

You can always turn your sole trader business or partnership into a company at a later date. For example, many makeup artists start as sole traders and eventually create companies when they gain experience and grow their businesses. 

Key Takeaways

As a makeup artist, different business structures can offer different advantages, depending on your vision for your business. For instance, if you are looking to do some part-time or casual work as a freelancer, a sole trader structure may be all you need. It is cheap and quick to set up. Additionally, partnerships are great if you have a team of friends with whom you want to share the pressure and possible liability. Finally, companies are good for growth and formalising a larger business like a makeup studio. 

If you would like more information about which business structure might be right for your makeup business, contact LegalVision’s business lawyers on 0800 005 570 or complete the form on this page.

Frequently Asked Questions

Should makeup artists set up as sole traders?

Sole trader structures offer flexibility and low costs. Hence, it can be great for makeup artists who want to try out a new career or venture or are happy working as freelance artists and are not concerned with investment or external finance.

Should makeup artists set up as a partnership?

Partnerships are great when you have multiple makeup artists wanting to go into business together. You can share the profits and liability between you and divide roles through a partnership agreement.

Should makeup artists set up as a company?

Companies are more expensive and time-consuming to set up but offer their own benefits, including more industry credibility and some ease of raising money. They can also protect you from liability if your company assumes debts.

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