As tradespeople, you know the importance of preparing a job properly, whether it’s the foundations of a house or sanding back old paint, preparation is vital to getting the best result.
Despite this, so many people fail to prepare their biggest job, which is their business and it’s often a costly and detrimental oversight.
So much extra stress is created with people not understanding their business and their legal obligations.
You need a strong business plan. You need to know your intention, what you’re going to do and also have a clear idea of how much you need to charge.
One of the biggest mistakes a business owner can make is not charging enough because they don’t have a firm grasp of their actual monthly expenses.
Keeping your records up to date
There is a tendency among tradespeople to use the old dashboard filing system but if you aren’t keeping proper track you could have a very large GST liability. That’s where we find a lot of our clients get a shock. With the digital revolution there’s a lot of software and apps out there that allows you to input the data straight away into the software package.
Not only does it help you have a firmer understanding of how your business is performing, it could save you some hefty fines from the Australian Tax Office for incorrect lodgements.
The ATO benchmarks a lot of industries these days especially the trade industry so they have a fair idea how much a tradesman should be earning based on the expenses he or she incurs. If they become suspicious they can audit your business.
On top of knowing the financials of your business, it is vital to have the right legal entity and setup to begin with as this has a major influence on other legal requirements such as insurance.
A common misconception is that if you are a company, you don’t need worker’s compensation. As soon as you are an employee of your company, you need this insurance and you can be fined if you don’t… you may even risk not been hired by some organisations.
Another area of confusion, particularly in the building industry, is income protection insurance.
There are some common misconceptions around income protection and what it covers them for. A lot of people take it out with the view that they’re covered from day one but what’s not often clearly explained that there is a waiting period and generally the lower the monthly premium, the longer the wait.
Although running a business can be overwhelming, it doesn’t need to be. Get the right mentor and professional advice before you find yourself chasing your tail.
Already overwhelmed? Please do not hesitate to contact one of our advisors today.