When you operate as a self-employed person in Australia who provides services to your clients you may classified as a sole trader contractor. If you’ve been having dreams of starting your own contracting business, then this is the guide for you as we navigate some of the key things you need to understand when it comes to setting up shop.
Get your registration sorted
As a sole trader contractor, one of the typical ways to structure and register your business is as a sole trader set up. There are a few steps involved to ensure you are correctly registered with the Australian government and being legally compliant as a business. These are some of the key things to keep in mind.
- Get your ABN – this is one of the first steps you will need to do to make your business official. Make sure you have all your important identification and business details on hand before you start the process which can be done here. Your individual ABN help the government to uniquely identify your business and will be used on all official business documents like your tax invoices and receipts for example.
- Tax file number (TFN)- You will need an individual TFN to register your sole trader business in Australia. This will help not only with tax but many other business activities. When you operate as a sole trader you do not need a business TFN. You can apply for your TFN here.
- Registering for GST– The Australian Tax Office advises that you may need to register for GST.
– when your business or enterprise has a GST turnover (gross income from all businesses minus GST) of $75,000 or more- when you start a new business and expect your turnover to reach the GST threshold (or more) in the first year of operation
– if you’re already in business and have reached the GST threshold
– if your non-profit organisation has a GST turnover of $150,000 per year or more
– when you provide taxi or limousine travel for passengers (including ride-sourcing) regardless of your GST turnover – this applies to both owner drivers and if you lease or rent a taxi
– if you want to claim fuel tax credits for your business or enterprise.[i]
Licenses and registrations
Within Australia there can be varying licences and registrations which may be needed depending on what your local, state and federal governments may require. Various business will have different requirements, so it is always a good idea to check before you start serving your first clients.
The Australian Business License and Information Service is where you can verify what type of registrations and licenses you may need to have in place.
Putting your name out there
Once you have all the legalities of getting your business sorted, you need to look at how you are going to let your future clients know that you are open for business. As a sole trader, it is a good idea to get a solid understanding of who your competitors are and how you can stand out from the crowd.
Check out these basic marketing tips to help launch your sole trader contracting business.
- Set up social media accounts for your business- make sure you keep the branding (use of logos for example) and tone of voice consistently across all points of customer contact
- Get involved with community focused groups who may require your services to network. Many online local community groups often have people asking for recommendations for local professionals and trades to help with certain tasks.
Protecting your business with insurance
There’s one important step that you need to consider when it comes to protecting your sole trader business for the long haul. Regardless if you an engineer or an electrician, business insurance* is one of those things that should be part of your business plan.
Let’s take a look at why your sole trader contracting business may need to consider business insurance and some of the typical types of business insurances on the market.
Why do sole trader contracting business need business insurance?
- Financial implications– if you were faced with a claim for anything from a client alleging negligence to having your tools stolen, would you be able to financial afford the impact of a claim? There’s also the potential time spent away from your business to attend legal proceedings which is precious time away from your business that no sole trader can really afford.
- Legal costs– if your claim went to court the costs involved for legal representation can cost a pretty penny. There are also the compensation costs to consider if the claim is awarded, something which may put your personal assets at financial risks to cover the cost.
- It may be a requirement– depending on the type of sole trader contracting work you perform; business insurance may be a legal requirement. This is something which is typically common for professionals who wish to become a member of an industry board and for tradies working out on site.
Types of business insurance to consider
These are just a snapshot of some of the different types of business insurances your sole trader contracting business may need to consider:
Public Liability insurance*
Public Liability insurance is designed to provide protection for you and your business in the event a customer, supplier or a member of the public brings a claim against you due to their being injured or sustaining property damage as a result of your negligent business activities.
Professional Indemnity insurance*
Professional Indemnity (PI) insurance offers protection for businesses that provide specialist services or professional advice. It is designed to respond to claims against your business for losses as a result of actual or alleged negligent acts or omissions in the provision of your professional service or advice. PI Insurance will also assist with the legal costs associated with responding to or managing claims which are covered by the policy.
Business Insurance is an insurance package designed to provide cover for your business contents, stock, tools and commercial premises when an insured event occurs (such as fire, storm, theft or even accidental damage). A Business Insurance package can also cover your portable equipment, glass and for loss of revenue due to business interruption in specified circumstances. In addition, cover is available for public liability, tax audit, employment practices and statutory liability risks.
Arrange your business insurance with BizCover
It’s an exciting and busy time starting your own sole trader contracting business. We know you’ve got lots going on, so when it comes to shopping around for your business insurance let us do the shopping around for you.
At BizCover, we provide multiple quotes from some of Australia’s most trusted insurers straight to your inbox, ready to compare and get your business covered. We don’t think business needs to be dramatic, so there’s messy forms to fill out, fancy insurance lingo or mountains of paperwork, just insurance made easy. Get a quote today.