Making the move from employee to a self-employed tradie can be both exciting and rewarding. So, if you’ve been itching to break out on your own and take charge of your working life there’s a few things you should to consider.
Choosing a business structure
The simplest business structure (and the most popular for tradies) is a sole trader. That’s because you’re allowed to trade under your own tax file number (TFN) and you’ll only be required to lodge one tax return for both you and your business. You’ll still need to get yourself an ABN though which is free, and if you’re planning on earning over $75K it’s compulsory to register for Goods & Services Tax (GST) and lodge quarterly BAS statements. As your business grows, you will need to think about having a corporate structure.
For more information on choosing a business structure and tax obligations visit www.business.gov.au
Being financially savvy
When you’re just starting out cash flow will be a tight, so it’s wise to have some stashed away as back-up while you’re trying to build up regular work.
Make it a priority to maintain separate bank accounts for your business and your personal spending, and pay yourself a weekly wage. Keep the rest aside for business expenses and income tax so you don’t find yourself in hot water come tax time or find you can’t buy essential parts for your jobs. Deposit whatever is left over into a high-interest savings account. Getting yourself a good accountant can help you stay on top of things and avoid costly mistakes.
And don’t forget one day you’ll want to retire, so don’t wait for that day to come only to get a rude shock that there’s doughnuts in your super fund. Start putting it away now!
The downside to being a sole trader is that you and your business are the same entity, which puts your personal assets at risk. In a nutshell, if your business is sued, so are you.
Whether you’re up a ladder, repairing a circuit board, or have your head stuck down a toilet for the most part of your day, having the right insurance is an essential part of being a responsible business owner. Public Liability insurance will ensure you don’t end up in strife if you accidentally damage someone’s property or cause them injury.
BizCover understands the insurance needs of tradies. Get free multiple quotes in seconds from top rated Aussie Insurers. Visit BizCover or call 1300 866 744
BizCover™ Pty Ltd (ABN 68 127 707 975; AR 338440) is a corporate authorised representative of Mega Capital Pty Ltd (ABN 37 098 080 418; AFSL 238549). This is general advice only.