This is the 4th instalment in a series of 10 articles where we attempt to categorise chronologically and thematically the list of things you will need to start your architecture practice, and furnish it with the glimpses of insight we’ve accrued during the first three years of our architecture practice, Mihaly Slocombe.
4. The law
When: Immediately
Importance: Critical
Cost: Moderate
Difficulty: Moderate
Boring but important, to get started in your new architecture practice you will need to address a number of legal requirements. Many architects skip elements of this step, possibly judging that the legalities are time consuming and obstruct true creativity. Be wary of anyone who tells you to “just start working and worry about the law later”. The whole point of the law is to have it set up right from the beginning: we take the view that true creativity flourishes when we’re not worried about being uninsured, having a poor client agreement or getting sued.
The following list is only relevant for Australian readers; for everyone else we recommend you check your local tax, registration and insurance legislation:
- You need to incorporate a company, create a partnership or at the very least register as a sole practitioner with an Australian Business Number. We opted to set up our practice as a company. It was more expensive but offered the greatest financial flexibility and legal protection: its very purpose is to protect its directors and staff from being sued. A simple company will cost in the order of $2,000 to establish.
- You need to be a registered architect in the State or Territory where you are practicing. Registration as an individual costs around $200 a year.
- You need to have professional indemnity insurance. It is a requirement for registration and is designed to protect you in the case of professional negligence. We use M and R Insurance Brokers and pay $1,350 a year, though for comparison’s sake, Architeam offers an interesting cooperative insurance package that is cheaper but requires you to donate some time each year to various activities.
- Public liability insurance is also a good idea and protects you in the event that a guest hurts herself in your studio or if you and your staff damage something outside your studio. It costs around $400 a year. If you have staff, you will also need WorkSafe insurance, which is designed to protect you and your staff should you or they get hurt.
- You need to have templates for contracts with clients, employees and builders. We have gradually and continuously refined ours to reflect the way we work and embody the lessons we’ve learnt from past mistakes. The Australian Institute of Architects have very good contract sets available for purchase, along with a vast array of useful practice notes available to members. The awkwardly named Blue Turtle Management and Consulting, whom we have discussed previously, also offers some useful contracts and templates tailored to the architecture profession.
Additional insurances and legislation requirements, of which there are many, can be addressed when you need them. There’s no need to pay for director’s insurance, register for GST or register to practice in other States and Territories any earlier than necessary.