Going out on your own and pursuing your goal as a contractor is an exciting career decision. The world of contractors is often in high demand as businesses look at outsourcing and hiring the talent they need to help make their business grow.
We take a look at the basic steps you need to take with our contractors guide to starting out. Through some solid groundwork and doing things right from the get-go, you can set your contracting business up for a successful future!
What is a contractor?
A contractor is someone who works independently who is hired by other businesses to conduct work on a particular project or task. As a contractor you have the freedom to accept and reject which jobs you wish to take on and have the flexibility to subcontract out work if required.
It also means you need to have a few legalities in place to ensure your contractor business is running appropriately and legally.
Structural decisions
Most small businesses require doing some research around which business structure is going to suit their business best. An example of the primary types of business structures in Australia are usually sole trader, partnership and company.
Each have their own characteristics, pros and cons- things which can have a significant impact on your business for the years to come. As a quick snapshot of the various types of structures, sole traders are generally seen as the easiest type of structure to set up when working solo, with companies involving more costs and reporting requirements.
If you find yourself a bit unsure kind of structures and which one is going to be the most suitable for your contractor business, speak to a professional like your accountant or business coach.
Financial checks
The structure of your contracting business may also impact the way you set up your banking, something which your accountant or business banker will be able to provide guidance on.
It has always been suggested that businesses keep their personal and business banking accounts separate. Not only does it make it easier come tax time, but it is just a good practice to get into to keep things transparent and organised.
Making your contractor business legit
When establishing a business within Australia, you will need to have a few legalities in place before you can start operating. These are commonly things like getting your Tax File Number (TFN) and Australian Business Number (ABN) and registering your business name. For some contractor businesses you may also need to look at registering for a trademark too.
The process for obtaining these is relatively straight forward and can usually be online. Once you get the green light for your business, you can start to make your contractor dream a reality by getting things like your business cards printed up with all your details.
Super and tax obligations
Depending on the business structure that you decide to go with, you will need to look at your tax and obligations as a contractor.
Having a plan in place to how you will manage what percentage of your income you need to set aside and how much you need to have to achieve things like your retirement goals is something a financial professional like a financial planner can provide guidance with.
Licence regulations
Different industries will have different licence requirements in place. Common types of contractor professions which may require a licence in place include:
- Electricians
- Plumbers
- Carpenters
- Accountants
- Bookkeepers
- Allied health professionals
- Architects
- Engineers
- Real estate agents
- Migration agents
It is always a wise idea to check with your state or territory’s exact licence requirements as these are not all universally the same across Australia. This is something to particularly be aware of if you contract to different jobs and projects in different states/territories.
Recommended reading: How to get a contractor licence in NSW?
Insurance requirements
Something which you may commonly come across as a requirement in contracts is holding a certain type of business insurance, often with the specific level of cover specified.
Two of the most common types of business insurance contractors will be often required to have are Public Liability or Professional Indemnity insurance*.
Both of these types of policies cover very different things and will depend on the type of contractor work you perform. If you ever in doubt about what type of business insurances, you need to have to protect your business get in touch with an insurance agent for a chat.
Open for business!
After establishing your contractor business with all the legal and administrative requirements, you need to start letting your clients know that you are available to hire. With a little creativity and help from the internet you can get your contractor business out there in the marketplace. Consider doing the following action items:
- Create a website for your contractor business
- Print off some business cards
- Connect your business on social media accounts
- Network- use a mix of online and face-to-face networking opportunities to connect with others who may be looking for your contractor services
These are just a few steps to keep in mind when it comes to getting your contractor business going. Taking the time to get the basics right, being organised, accessing the right professional advice and having a plan in place are just of the things you can do to launch your contractor business in the right direction.
When it comes to getting your contractor business insurance in order get in touch with us here at BizCover. We understand all types of contractor businesses and believe insurance should be simple with no-dramas. Receive multiple quotes in minutes from some of Australia’s leading insurers, without the hassle, paperwork or having to shop around for the best deal.
