Location of your business
The right location is often critical to the success of a business and is particularly important for retail businesses. Poor location decisions are difficult and expensive to overcome.
Unless you’re a home-based on online business, you’ll need to lease (or buy) a property.
There are currently more than 60,000 South Australian businesses operating from home.
If you’re planning to run a home-based business, make sure you understand the different considerations, risks and government requirements that apply to you.
Your local council may have restrictions or zoning controls imposed on home-based business. Check with them for anything that may affect you.
You may be able to claim tax deductions for a portion of your rates, energy costs and building insurance. Speak with your accountant or tax agent to find out more.
Leasing a property
Entering into a commercial tenancy agreement or lease is a legally binding contract that will affect the value of your business. When you sign a lease, you commit to paying rent and outgoings and fulfilling all other obligations in the lease for the term specified, such as repairs to the premises. Knowing what to look for in a lease is vital and you should seek legal advice before committing yourself.
Retail tenancies law
The Retail and Commercial Leases Act 1995 specifies obligations for leases over business premises at which goods or services are sold or provided to the public where the rent is below $400,000 a year. The Act covers:
- ensuring that the premises are structurally suitable for the intended business purpose
- ensuring that the lease is available in written form
- when the lease comes into effect
- reviews of current market rent
- maintenance costs.
Before entering into or renewing a lease covered by the Act, the lessor must give you a disclosure statement for the lease. This is a written document stating required information such as the permitted uses of the shop, the lettable area, access arrangements, the basis of the rent and a range of other items.
If the lease is situated in a retail shopping centre, the disclosure statement must also state further information including:
- the address of the retail shopping centre
- the number of shops in the retail shopping centre and their total lettable area
- the number of parking bays available for the use of customers of the shop
- the number of parking bays available for use by the lessee and the lessee's employees.
Some activities may not be covered under the Act, such as wholesale distribution, sporting organisations or charities. The Act also does not cover some other exclusions, such as leases of less than one month.
If in doubt, seek legal advice.
Even if you have a well-structured lease agreement, disputes may occur. First, check the disputes resolution clause in your lease and work through the procedure.
For businesses covered under the Retail and Commercial Leases Act 1995, a party to a retail shop lease (or a former party) may apply to the Small Business Commissioner for mediation of:
- a dispute arising from, or related to, the lease
- a dispute related to any other matter relevant to the occupation of the premises or to a business conducted at the premises.
To proceed, the other party must agree to the mediation process. A fee is payable on an application under this section.
Businesses not covered by the Act should seek legal advice regarding dispute resolution. Legal action in the magistrates or district court may be the only course of action. You should find out the likely cost of this action before you commence.
Small Business Commissioner
Level 14, 19 Grenfell Street
Adelaide SA 5000
GPO Box 1264
Adelaide SA 5001