Thinking of Starting a Trades Business?
In this blog we will going to examine the 4 things every builder, plumber, electrician or tradesman needs to know before they start their own business.
If you work in the building trades you already understand the importance of solid foundations and every successful business is also built on some key foundations including the right business structure, accounting software and insurances.
Starting any type of business involves risk but the building trades are recognised as one of the most dangerous. Job sites can be accidents waiting to happen and if you work for property developers then you are also exposed to the risk of financial collapse. As a tradie, you probably spend a lot of time on the road driving between job sites which also presents additional risk.
There are several things you can do to minimise the risk and it starts with the right business structure. This is the foundation of your business and there are numerous options available including a company, trust, partnership or sole trader. When deciding on a business structure you need to consider issues like asset protection, potential admission of new partners, industry risk, the forecast level of profits and eligibility for small business capital gains tax concessions. As a result, the business structure can often be a compromise to balance these issues.
Secondly, your choice of accounting software is critical and our mission is to help you minimize your cost of compliance. When choosing accounting software you need to match your business needs with your level of accounting skill, otherwise you can end up with messy data file that adds to the cost of your compliance. When it comes to accounting software one size certainly doesn’t fit all which is why we support a range of programs including Xero, MYOB, QuickBooks, Banklink and Cashflow Manager just to name a few.
To reduce risk you also need the appropriate insurances in place. Because of the physical risks associated with the trades you need to consider insurances like income protection, life insurance and workcover if you have employees. If people visit your job site then public liability insurance is a must, while insurance for your tools and vehicles should also be considered. We work through a checklist of insurances with our Building trades clients before they start their business to ensure they have the appropriate cover.
Finally, the right advice is critical. This might include legal advice regarding agreements, contracts, leases and even your will. If you plan to finance vehicles or equipment you’ll need tax advice regarding how best to structure that finance. Marketing, branding and website advice can also be invaluable for a tradesperson and in some cases you may require counsel on issues including registrations, licences and permits.
We understand the building trades and as you know, you need to get the foundations right. If you are starting out or want to grow your existing trades business talk to us today.