While running a small business as a tradesman can take a lot of time and effort, setting up a small business in Australia can be surprisingly easy.
Proper planning and correct cover are a few of the small steps to take for any electrician, plumber or carpenter to become the owner of their own licensed business. Here are four tips on how to set up a small business in Australia.
Prepare a Business Plan
Before you get started on the other aspects of your business, it’s important to begin writing a detailed business plan. This plan should include all the necessary information about your business, such as its unique features, identity and goals. These details will help you to develop a consistent vision for your business and help you to plan around and avoid potential problems.
A quality business plan isn’t just helpful for running your business, it can also be an essential part of showcasing it to potential financers. Having a well-made plan will outline your business in an easy to understand way and prove to potential investors or financers that you have thought about and protected yourself against common risks.
Choose a Structure
Once your business plan is drafted, the next step is to select a business structure. The two most common choices for tradesmen are operating as a sole trader or a company.
Operating as a sole trader has many advantages. It’s much easier to get started as there are less rules and regulations and you remain fully in control. However, unlike a company structure, sole traders are left completely responsible for all business debts. This can put a lot of pressure on a sole trader and means that they need correct insurance to avoid paying costly lawsuits if something goes wrong.
A company structure is generally harder to start and more expensive to maintain. Their main feature is that they are a separate legal entity to their business owners. Company structures offer more potential tax advantages and in some cases can protect their owners from being personally liable for business debts.
Register Your Business
With the essentials in place, it’s time to officially register your business. In Australia, your business name and Australian Business Number (ABN) are registered separately. Your business name can then be further licensed against the potential for copyright infringement if you’re concerned this could happen.
Your ABN will allow you to register your business name and is required for a number of later licenses and permissions, such as domain name registration for your website. It will also enable you to set up your taxes correctly with the Australian Taxation Office (ATO).
Additional permits and licenses for your business may be required depending on the state that you’re operating in, as well as the specific type of work that you’ll be doing.
Consider Your Insurance
In Australia, certain types of insurance cover aren’t just recommended, they’re compulsory requirements for operating a business. Depending on the circumstances of your business, the following insurance covers are very likely to be compulsory:
- Workers Compensation Insurance: This cover helps to pay medical fees for injuries sustained while at work and is a mandatory requirement for each of your business’ employees.
- Public Liability Insurance: This insurance helps to cover the costs of causing an injury or damaging the property of a third party due to negligence in your work.
- Third Party Personal Injury Insurance: This cover helps to pay costs if you injure another person with your vehicle and is a mandatory part of owning and licensing a business vehicle.
Insurance is an important step for protecting your business and your personal assets, especially if you’re deciding to operate as a sole trader. Finding the right insurance for the type of trade or service your business provides is essential to operating safely and securely.
With a detailed business plan, correct structure, registration and insurance, your new business will be fully qualified and ready for success.
About the Author
Daniel Defendi is an avid writer and researcher from Perth, Western Australia. When not writing, he enjoys reading, watching movies and blogging. You can catch him on LinkedIn to discuss this piece.