Setting up a ‘side hustle’; have you considered the legalities of your passion project?

Recent events have forced the world to assess what ‘normal life’ looks like, particularly with so many of us currently unable to work for a variety of reasons.  Most people are keen to remain productive during this time, causing many individuals to set up ‘side hustles’ or additional business venture to pass the extra time.

Let’s take, for example, someone who is great at baking cakes, but due to the constraints of normal life, can’t invest as much time into baking as they would like. Lockdown may just have opened up a window of opportunity for them to turn their hobby into a money-maker. For those on extended leave from work, these hobbies are proving to be a great way to make extra cash, while waiting for their normal working lives to resume.

Converting a hobby into a business is an extremely exciting prospect, but it’s not enough to simply set up an Instagram page and start selling your products and services. There are legal elements to be carefully considered when committing to your side hustle, which will help to ensure you don’t get stung further down the line.

Melissa Welch, Corporate and Commercial Associate at Primas, has given some insight into the legalities you may need to consider when exploring an additional revenue stream.

Q: Are there any laws, regulations or rules that you need to comply with?

A: It’s essential to consider the rules and regulations that apply to your specific side hustle and do some thorough research around this.

For example, if you have chosen to set up your own baking business during lockdown, there will be several health and safety considerations to think about including:

• Do you have a food hygiene certificate?
• Are you complying to the rules and regulations laid out by the Food Standard’s Agency?
• Have you adequately displayed allergen information on your products?
• Are you covered if someone has a negative reaction to one of your bakes?

These simple steps keep both you and your customers safe. While the example used here is for an at-home baking company, there will be health and safety regulations to consider no matter what sort of goods you’re planning to sell. It is worth researching the relevant governing body of the sector to see what advice and recommendations they provide to ensure you are fully compliant.

Q: Should you consider insurance?

A: At the beginning of your journey, it’s really valuable to consider all the things that could go wrong. Only by considering a worst-case scenario can you implement ways to potentially mitigate this.

For example, you’ll need public and product liability insurance in case you’re sued by one of your customers for injury or damage. This could be anything from giving somebody food poisoning to accidentally knocking over one of their possessions when delivering one of your bakes.

This is really crucial when setting up a new business, no matter how small you anticipate the side hustle to be. You don’t want to be slapped with a liability before you’ve even got your project off the ground.

Q: Do you need permission to start your business from home?

A: With all of us staying at home as much as possible lately, it’s likely you’ll be starting your side hustle from your kitchen/home office/dining room. However, it isn’t as straight forward as it may first seem.

You may need to get in touch with your mortgage lender or landlord to see if you need their permission. In the majority of circumstances, you will need permission to set up and run a business from a residential dwelling.

It’s also worth noting that, if you are using a domestic dwelling as your business ‘premises’, you will need to register these premises with the local environmental agency 28 days prior to the day you start trading.

Q: Are you complying with GDPR regulations?  

A: Although it may seem harmless to take a person’s home address, email address or phone number (or even all three!) to deliver a product or service, you need to ensure you are effectively communicating what you’re intending to do with that data, how you’ll be storing it and what your customer’s rights are.

If you use their email address to then send a mailer about your business offering but haven’t obtained their consent, you could be in breach of GDPR guidelines.

Again, it is good sense to check all of this before taking any action to avoid awkward conversations in the future.

Q: Have you set out the Terms and Conditions of Sale?

A:  If you’re going to be selling products and goods to customers, you need to have your Terms and Conditions of sale (more commonly known as T&Cs) set out and in writing.

This should cover key elements including orders, delivery, pricing, payment, risks, warranties, defects, liability and confidentiality. Provided you have an official T&Cs to refer to, you will be able to provide a legally sound response to any customer queries regarding any of the aforementioned elements of your terms.

Q: Am I breaching the terms of my furlough leave by setting up another source of income?

A: In many furlough letters, it is set out by employers what is and isn’t allowed by the employee during their furlough leave and this may include the requirement to tell your employer if you have a new revenue stream. As such, you should triple-check that you would not be in breach of your furlough terms before setting up a home business.

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Although these may sound like time-consuming nuisances that will hinder your chances of building your side hustle business quickly, you will thank yourself in the long run. Even in these unprecedented times, it is important to speak to professionals and do your research thoroughly before putting plans into action.

If you’re prepared and focus on future-proofing your business strategy, you could look at making your ‘side hustle’ a full-time job.

At Primas, we love to support entrepreneurs and SMEs to help them grow and flourish. We are always happy to provide the legal advice required to help make that happen – get in touch today to see how we could help you.