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Starting a business

So you want to start a trades business?

Starting your own trades business may seem like a daunting task, but it doesn’t have to be. Laying the groundwork is simple if you have a solid plan and stick to it.

So, you’ve finished your apprenticeship, or you completed it a few years ago, and you want to start your own trades business? Maybe you’ve been working for another organisation for some time and you’re ready to take the plunge for financial independence.

Going from wage earner to small business owner can be extremely rewarding, but there are several things you’ll need to do before your up and running.

Do you need a licence?

First things first: Find out if you need specific licenses to operate. The requirements vary from state to state and will depend on the nature of your trade and the corresponding qualifications required. The Australian Business Licence and Information Service (ABLIS) is a great tool for guidance on the type of licenses you need based on your business type, location and operations, and can help to expedite the application process.

You can usually find more specific licensing information through your relevant state body. In NSW, the Department of Fair Trading licenses all builders and tradespeople working in the residential building industry. On their website you’ll find a comprehensive list of licensing requirements for every trade – from bricklaying to wet plastering.

For example, you’ll see that in NSW you’ll need a contractor’s licence to contract, subcontract or advertise to do:

  • Residential building work worth more than $5,000
  • Electrical wiring
  • Plumbing, draining, or gas-fitting
  • Air conditioning or refrigeration work

Deciding on a business structure

A business structure refers to the legal structure of your business. In Australia, there are four main structures. These include:

  • Sole trader: a single individual responsible for the business.
  • Company: a legal entity distinct from its shareholders.
  • Partnership: a group of people or entities operating a business together.
  • Trust: an entity that holds property, assets or income for the benefit of an individual, or group.

Operating as a sole trader is the simplest and cheapest business structure, and is arguably the most popular among tradies. However, each structure comes with its own set of pros and cons concerning things such as taxation so, before you settle on one, make sure you get advice from a professional. Speaking to other tradies in a similar industry can also offer some valuable insight.

Once you’ve made your choice, apply for Australian Business Number (ABN) and register your business name via the Australia Business Register.

What about insurances?

Next on your list should be working out the insurances you need to operate. Compulsory insurance requirements will differ from state to state depending on your trade, but usually the most important insurance for tradesmen is public liability, which protects you and your business if you’re sued. Income or disability insurance might be another valuable protection, which you’ll need if you’re injured on the job, or sick, and can’t work for any period.

Managing finances and tax

Being a small business owner, it’s not uncommon to want to spend as little time as possible sorting through your finances. Keeping consistent and accurate records of your transactions, income and expenses will not only make this process far less painful, but will give you a clear view of your cash flow to help you run a tight, and hopefully profitable, ship.

Accounting software, like QuickBooks Online, can help – automating things like invoicing and payments, recording and categorising business expenses, and even tracking your GST to make tax lodgement simple.

Marketing your business

Finally, you’ll need to think about how to market your business. The amount of work you need to do will depend on how you operate – for example, if you’re a carpenter planning to subcontract to building companies, you won’t need to do much, but if you’re a plumber looking for direct business from residential clients, then you’ll need more than just word-of-mouth to get your business off the ground.

A good place to start is advertising on websites like Gumtree or Airtasker, or in your local newspaper. If you can’t afford to build your own website, start a Facebook page instead.

Once you’ve decided to strike out on your own, make a checklist of everything you’ll need to do and work through it systematically. It may take additional research to find out the specific requirements of your trade, but it will simplify the process down the track.

For more information have a look at some of our guide on how to start business: 


Want to know more about starting your own business? Check out these resources.


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