So, you’ve decided to dive into the glamorous world of beauty and skincare.
And it’s all fun and games when you’re dreaming up that perfect perfume scent or creating the perfect booty cream, but there’s a whole lot of legal stuff you need to know before you can build a thriving brand.
Well, buckle up, because we’re about to embark on a journey to set up a legal foundation that’s as flawless as your favorite foundation 🙂
Firstly, before diving in, most personal care, skin care, beauty, make-up and cosmetic products may be described as ‘cosmetics’.
A cosmetic is defined in our legislation as a substance or preparation intended for placement in contact with any part of the human body, including the mucous membranes of the oral cavity and the teeth, with a view to:
- altering the odours of the body
- changing its appearance
- cleansing it
- maintaining it in good condition
- perfuming it
- protecting it
Cosmetics include soap, shampoo and conditioner, moisturiser, ‘bath bombs’, hair dye, perfume, lipstick, mascara, nail polish, deodorant and many other products.
What laws and regulations govern the beauty and skincare industry?
The regulation of cosmetics in Australia is administered by three government regulators – the Therapeutic Goods Administration (TGA), the Australian Government, Department of Health under the Australian Industrial Chemicals Introduction Scheme (AICIS) and the Australian Competition and Consumer Commission (ACCC).
The Therapeutic Goods Administration (TGA) is responsible for regulating chemicals in personal care, skin care, make-up and cosmetic products that are medicines or marketed as having therapeutic effects.
This includes most skin-whitening lotions, primary sunscreens, disinfectants, complementary medicines and blood products.
The second regulatory body is the Australian Industrial Chemicals Introduction Scheme (AICIS). AICIS is a regulatory scheme that regulates chemicals that are imported or manufactured (introduced) for ‘industrial’ use and it’s part of the Australian Government, Department of Health.
It’s basically responsible for regulating the chemical ingredients in personal care, skin care, make-up and other cosmetic products that are not medicines or marketed as having ‘therapeutic effects’ and are considered to have an ‘industrial’ use.
The final body, the ACCC, regulates cosmetic product labelling or product safety in accordance with the Consumer Goods (Cosmetics) Information Standard 2020. The ACL also provides for penalties for false or misleading claims and representations about products.
So remember: one of the most important first steps is figuring out whether your products are cosmetics or therapeutic goods.
Here’s a (non-exhaustive) list of laws and regulations you should pop on your radar if you’re operating a skincare business:
- Therapeutic Goods Act 1989 (Cth)
- Therapeutic Goods (Excluded Goods) Determination 2018 (Cth)
- Australian Consumer Law (Competition and Consumer Act 2010 (Cth))
- Consumer Goods (Cosmetics) Information Standard 2020
- National Measurement Act 1960 (Cth)
- National Trade Measurement Regulations 1989 (Cth)
- Industrial Chemicals Act 2019 (Cth)
- Fair Work Act 2009 (Cth)
- Good Manufacturing Practice (GMP)
- Agricultural and Veterinary Chemicals Act 1994
- Privacy Act 1998 (Cth)
- Spam Act 2003 (Cth)
- The Poisons Standard (also known as the Standard for the Uniform Scheduling of Medicines and Poisons (SUSMP)
- The Mandatory Standard for Labelling Cosmetics (regulated by the ACCC)
- General Data Protection Regulation (GDPR)
OK, so that’s the general framework for the beauty industry – now let’s get down to the nitty gritty of laying your flawless legal foundation:
1. Slay the Business Structure Game
First things first, let’s talk business structures.
It’s like choosing the perfect shade of lipstick – you want something that suits you and makes you feel fabulous. In Australia, you can opt for a sole trader setup, a partnership, a company, or a trust. Each has its own perks and quirks, so get some solid legal advice and choose the one that aligns with your business goals and ensures you’re strutting down the right legal runway.
2. Registrations and Compliance: Because You’re Worth It
Now that you’ve picked your business structure, it’s time to register your baby.
Start by getting yourself an Australian Business Number (ABN) with ASIC.
Think of it as your business’s VIP pass to the exclusive party that is the Australian business scene.
Next step: compliance!
It’s not always the most glamorous field but the beauty world has its own set of rules, and it’s crucial to play by them. Complying with regulations is not only responsible but also adds a layer of trust to your brand – consumers love transparency.
You don’t need to register cosmetic products like you do in the EU, for example, but you will need to think about what other licences, registrations or permits you need, depending on what area of the beauty and skincare industry you’re operating in.
Here are some of the registrations you need to consider in different categories:
If you’re in the game of selling therapeutic goods, make sure to register with the TGA – consider it your product’s exclusive red carpet moment ⭐
If you plan to sell any cosmetics in Australia that you bought from overseas, you must register your business with AICIS before you import (introduce) into Australia. Imagine your business as a jet setting beauty guru, and the entry stamp on your passport to the ultimate beauty destination comes from the AICIS. There is no threshold value or limit so you must register regardless of how much you sell.
Manufacturers (including home-based and small businesses)
If you intend to make cosmetics for sale in Australia where one or more ingredients were purchased from overseas, then you must also register your business with AICIS. Again, there’s no threshold value or limit so you must register regardless of the quantity and how much you sell.
If you purchase all ingredients locally and you blend these together to make your cosmetics, then you don’t need to register with AICIS. But if your process of mixing ingredients results in a chemical reaction, then they consider this to be manufacturing and you must register.
Take soap making, for example. If you’re a chemical maestro, whipping up soaps through the process of ‘saponification’, then you’re not just a soap maker: you’re a chemical magician! This means registering with AICIS is essential.
Local Council – Your Business’s Neighborhood Watch
If your business is setting up shop at home, your local council is like the neighborhood watch – keeping an eye out for all things business-related. Check out your local council’s website for the lowdown on any registrations or permits needed. It’s like getting the thumbs up from your local squad.
Insect Repellent – Keep Bugs at Bay, the Legit Way
Planning to whip up an insect repellent potion? Smart move – bugs are so last season 🙂 Make it official by registering your bug-be-gone creation with the Australian Pesticides and Veterinary Medicines Authority (APVMA).
3. Taming the Tax Beast
Taxes – the necessary evil that keeps the beauty industry glowing. Familiarize yourself with the Australian Taxation Office (ATO) and their guidelines (and find yourself a great accountant). It’s like contouring – a bit tricky at first, but once you get the hang of it, you’ll be sculpting your financial success with finesse.
4. Protecting Your Magic Formula: Intellectual Property
Your beauty and skincare creations are your magic potions, so guard them with all your might.
Just like a signature fragrance, you want your brand to be unmistakably yours.
One of the most important ways that you can protect your cosmetic brand and keep copycats at bay is by registering a trade mark.
You can register your business name, logo (or a combo of both) and cosmetics brand, and you can also trade mark the distinctive packaging of your products and their distinctive scent.
A registered trade mark will provide you with the exclusive right to use, licence and sell your mark, which means no one can use or misappropriate your trade mark without your permission.
You might also want to apply for a patent to protect your product formulas. A patent is a type of intellectual property that gives its owner a legally enforceable right to exclude others from making, using or selling their innovative device or process.
With a patent, you’re not just creating products; you’re crafting a legacy. It’s a legally enforceable declaration that says, “This genius is mine, and no one else’s!” Whether it’s a groundbreaking skincare formula or a haircare concoction that’s pure magic, a patent makes it yours – and yours alone.
5. Employment: Hiring and Contracts
As your empire grows, you might need to bring in some glam squad members.
When hiring, ensure you’ve got the legalities covered with proper employment contracts (you can check out our post on contract playbooks and employment considerations here).
It’s like having a beauty agreement that keeps everyone on the same page – no messy breakups, just a flourishing business relationship.
6. Insurance: A Beauty Business’s Best Friend
Accidents happen, my beauty friends. That’s why insurance is your BFF in the beauty biz.
Whether it’s public liability, product liability, or professional indemnity insurance, make sure you’re covered. It’s like having a nice big beauty umbrella, protecting you from unexpected downpours.
7. Staying Ethical and Sustainable: A Trend That Never Fades
In the era of conscious consumerism, consider weaving ethical and sustainable practices into your business model. It’s not just good for the planet; it’s excellent for your brand image. Showcase your commitment to beauty that cares, and watch your customer base flourish.
There you have it – a laid-back guide to navigating the legal and regulatory scene in the beauty and skincare business.
If you’d like help setting up your legal foundations or drafting your contracts, here at Law Quarter, we advise clients throughout the cosmetics supply chain, including product and packaging manufacturers, importers, exporters, wholesalers, distributors and retailers and our lawyers work with clients involved in beauty, healthcare and wellness throughout Australia.
We also run a sister business, Compliance Quarter, so we’re set to help you build a big glowing beauty empire with the strongest of foundations 🙂
You can also reach out to me directly at firstname.lastname@example.org or call me on 0411 659 671.
Now, go forth and conquer the beauty world – stay fabulous 💄✨