Tradesman Start-Up Checklist.
Starting a business in the construction industry can be tough, so having a clear plan in place before making the jump is vital for success. As a tradesman or tradie, as we like to call them, there are many areas to consider before starting your own business.
From sourcing materials, employee contracts, to budgeting and assets, there can be lots of conflicting advice floating around on what to and what not to do. Like any business, making sure your finances are correctly handled and in check is a big part of keeping your job, and therefore, your business, stable and successful.
We have simplified all these question areas that you may have for starting a business as a tradesman to provide you with a handy checklist to set you on the right path to success.
At Super Nice, we advise tradies who are keen to dip their toes into the realm of sole trading and want to go on to create a reliable, effective, and structured company making a profit of $120,000 or more. It is at this point when you start to realise the cash flow benefits of retaining profits and paying lower tax on earnings in a particular year.
If you follow this simple checklist, you will be well on your way to starting your trade business.
Step 1: Create a Business Plan
Be conservative and honest with yourself. This is one of the most important steps as you can visualise whether or not the business will be viable.
What services and/or products does your business sell?
Can you make a margin on selling those services/products?
Who are you selling to?
How do you get in front of the people you are selling to?
How many sales can you make in your first year?
How many sales can you make in your fifth year?
Times your sales by your margin for the first year, can you live on this much money?
Times your sales by your margin for the fifth year, will you be happy with this much money?
Why are you passionate about starting this business?
Do you have the conviction to follow through?
Have you talked to someone in your trade/finance/marketing to get further advice?
Step 2: Establishing Your Business
After considering all these areas and you have decided to follow through, you must then establish your business.
Register Your ABN
To start trading as a sole trader you should register for an ABN in your own name as a sole trader, PAYG (if you are employing staff members), and GST.
Set Up a Bank Account
Once you have set up your ABN, you can go to the bank and set up a bank account that is attached to your business number.
Set Up Accounting Software
Now that you have a bank account and card to start subscriptions, it is vital you set up your accounting software and connect the relevant bank feeds. We highly recommend getting advice when setting up your accounting ledger at later dates.
Step 3: Show Time
It’s time to start trading. Get out there, do what you do best, and sell!
Step 4: Compliance
Compliance is important as it not only majorly reduces risk in litigation but also keeps you and your team safe. This can then be turned into a more profitable scheme in the long run as it ensures better tender opportunities, increased budgeting and financial control, lesser chance of tax audits, and of course, risk mitigation of your business and the associated assets.
The main activity statements that need to be kept in check are:
Taxable payments annual report
Tax return
Sole trader business schedule
Single touch payroll
Superannuation
Workcover, liability, etc.
Step 5: Document the Process
At every step, you must keep track and document each and every process. Over time your business will grow, and so will its complexity. Documenting all processes will help you improve and streamline procedures, preserve business and company knowledge, obtain operational consistency, and create patent and trade secrets within your industry.
It is now that you can begin searching for employees and training staff. By creating this documentation, your future employees will have a better understanding of the job that is required of them and will make it significantly easier to familiarise themselves with the processes that are involved.
Step 6: Profit
Now comes the fun part…
Continue to grow your business until you reach a profit of $120,000. This may take some time which is why it is important to be honest with yourself when developing your business plan. This is when having the conviction to follow through is majorly important. From here on out is when we advise you to set up your company structure.
Once you have hit a profit of $120,000 as a sole trader, the benefits of converting to a company are obvious. Not only will your personal assets be protected from any losses incurred by the company, but there is also the opportunity to grow exponentially. With increased tax flexibility, the chance to introduce shareholders, equity, and capital, as well as the opportunity to split income with an accountant's guidance, it truly is a win for everyone involved.
Step 7: Prosper
This one is pretty self-explanatory. Go get 'em.
Need Help Launching Your Trade Start-up?
At Super Nice Advice, we have extensive experience with helping tradies launch businesses which thrive. To chat with us about how we can bring your business to life, get in touch today.
