Becoming your own boss A small business guide for apprentice tradies

Contents Becoming a Subcontractor ‘Subbie” Your Own Boss Planning to Start Your Business Common Business Structures For Tradies Choosing Your Business Structure: Tax Basics For Small Business Pros and Cons (Which Type Of Business To Start) Registering A Business Name (ASIC) Australian Business Number (ABN) Tax File Number (TFN) The Income Tax System GST Accountants/Tax Agents Support Teams Accountants and Bookkeeping Other Useful Support Teams Business Insurance What Are The Costs ? Do You Know How To Quote? Customer Service Personal Attributes/ Customer Service References

This PowerPoint has been developed specifically for Western Australian Construction apprentices who are in their last year of studies. The presentation aims to simplify the complex process of moving from an employee/apprentice to a small business owner. At TAFE and onsite you have learnt the skills and knowledge to do your trade that are experientially gained. You have learnt the standards and the rules and regulations, you have learnt how to fit into the culture that is your workplace. But as you leave be mindful what have you learnt about running a successful small business? Can you look at your trade through the eyes of a business person? http://www.lifestyletradie.com.au/people-start-thinking-like-business-owner-not-just-tradie/

Becoming a Subcontractor ‘SUBBIE’ Your Own Boss I’m ok I don’t need any help this is going to be easy now I’m a tradesman I am going to earn lots of money. Question: Have you thought about running your own business and where you would start?

Financial capacity to start a business? Planning To Start Your Business Many small businesses begin with a business plan, some are very simple visions others are complex documents. It is important to note Business Plans are regularly updated. Financial capacity to start a business? Are you prepared to invest the time ? Network, communicate, research, market Choose your business structure Business plan Key considerations when starting a small business include: Do you have the financial capacity to start a business as a subcontractor? There are many costs in starting up a business, then to keep it running there are ongoing costs. Do you have and are you prepared to invest the time in starting your business? Businesses take a lot of work not only to start up but continue running. Often evenings and weekends are taken up with phone calls from customers, emails, quoting, bookkeeping. Are you prepared to network with customers and other trades, market your brand and network to expand your business? 4. What sort of business structure suits your business? Sole trader, Company, Trust or Partnership? If you are serious develop a business plan. page reference https://www.smallbusiness.wa.gov.au/business-advice/starting-your -business/business-skills https://www.smallbusiness.wa.gov.au/business-advice/starting-your-business/business-planning reference this website A good template for a business plan can be found here: https://www.business.gov.au/Info/Plan-and-Start/Templates-and-tools/Business-Plan-Template-and-Guide

Common Business Structures for Tradies Individual -the sole person legally responsible for all aspects of the business.  you can employ people Sole Trader an association of people  running a business. (not company) Partnership a legal entity separate from shareholders. Company Trust http://asic.gov.au/for-business/your-business/your-business-structure/ Usually the progression from apprentice sole trader. Your business structure can determine: 1.Licencing requirements 2.The tax you pay 3.Your liability 4.Costs 5.Amount of paper work It is important to note that you can change your business structure: https://www.business.gov.au/info/plan-and-start/start-your-business/business-structure/business-structures-and-types This tool can help you decide which type of business to start: \https://register.business.gov.au/helpmedecide/helpmedecide entity that holds property or income for the benefit of others. https://www.business.gov.au/info/plan-and-start/start-your-business/business-structure/business-structures-and-types

Choosing Your Business Structure: Tax Basics For Small Business https://www.youtube.com/watch?v=zsorYp67atg

Yes (if employed by the company) Pros and Cons (Which Type Of Business To Start) Business Structures Sole Trader Partnership Company Trust Is the structure difficult to set up? No Yes Is it expensive to register? Do I retain complete control? Are there complex reporting requirements? Will my assets (house etc...) be under threat if my business goes into debt? Not as likely Do I receive full profits made from the business? Can I employ staff? Do I have to pay myself superannuation, workers comp etc.? Yes (if employed by the company) Can I change the legal structure easily? Do I have the ability to plan tax through avenues like income splitting? Is it easy to raise capital? Is it easy to dissolve or exit? © 2016 Small Business Development Corporation https://www.smallbusiness.wa.gov.au/business-advice/business-structure/business-structures © 2016 Small Business Development Corporation https://www.smallbusiness.wa.gov.au/business-advice/business-structure/business-structures

Registering a Business Name ASIC https://www.youtube.com/watch?v=ZeJDp5-MbC8 Registering a business name- https://www.smallbusiness.wa.gov.au/business-advice/starting-your-business/business-names If you’re trading under your own name, there’s no requirement to register a separate business name. eg. John Smith. All other registrations or business names go through ASIC https://asicconnect.asic.gov.au/public/;jsessionid=WkPfbnc282ApekkZOK9E4hECO35TkxIDfbgFOmMmn42iY2_VR1d6!-1875943659?_afrLoop=7705434773456885&_afrWindowMode=0&_afrWindowId=null&_adf.ctrl-state=vpxw66lep_1

What is an ABN and it where do you get it? An ABN is a 11 digit number that identifies your Business: All Australian businesses are required to have an ABN: You can apply for an ABN here: https://abr.gov.au/For-Business,-Super-funds---Charities/Applying-for-an-ABN/ Or here: https://abr.gov.au/For-Business,-Super-funds---Charities/Applying-for-other-registrations/Apply-for-GST,-PAYG,-business-name-and-AUSkey/

TFN – ‘’A TFN is a unique number issued by the Australian Taxation Office (ATO) to individuals and organisations to help manage tax and other government services’’. (business.gov.au) sole traders can use their own tax file number. Companies, partnerships and trusts must register for a new TFN. “Individuals and sole traders can use their own tax file number:” Register for a TFN or find out more at the ATO's Tax File Number essentials page. https://www.business.gov.au/search?q=Sole+trader&page=7 “Partnerships, trusts or companies need their own tax file number: Apply for a TFN at the same time as your ABN, through the Australian Business Register website”

The Income Tax System There is a flat rate for companies earning under $25 million a year a flat 27.5% https://www.ato.gov.au/Rates/Company-tax/ Taxable income Tax on this income 0 – $18,200 Nil $18,201 – $37,000 19c for each $1 over $18,200 $37,001 – $87,000 $3,572 plus 32.5c for each $1 over $37,000 $87,001 – $180,000 $19,822 plus 37c for each $1 over $87,000 $180,001 and over $54,232 plus 45c for each $1 over $180,000 https://www.ato.gov.au/rates/individual-income-tax-rates/?=top_10_rates Table from second link copied and pasted needs referencing and explaining Company tax rates need to be included too. https://www.ato.gov.au/Rates/Company-tax/ Company tax rates

Goods and Services TAX (GST) You must register for GST if: you run a business or other enterprise and your GST turnover is $75,000 or more, under this it is optional. Find thishttps://abr.gov.au/For-Business,-Super-funds---Charities/Applying-for-other-registrations/Apply-for-GST,-PAYG,-business-name-and-AUSkey/ “You are required to register for GST and lodge quarterly Business activity statements if your Business turns over more than $75 000 a year”. register for GST, lodge activity statements “For all jobs you invoice for you are required to charge 10% which you collect for the tax department”. https://www.ato.gov.au/Business/GST/Issuing-tax-invoices/#SalesOf1000OrMore “You can also claim a credit for any GST in the price of goods and services you buy for your business. eg materials you buy for your jobs or contractors who subcontract to you. This is a comprehensive link to the ATOs GST system. If you want to explore it in depth this is the link to reference for this page”. claim GST credits for GST included in the price of your business purchases https://www.ato.gov.au/Business/GST/How-GST-works/ “As an employer, you have a role to play in helping your payees meet their end-of-year tax liabilities. You do this by collecting pay as you go (PAYG) withholding amounts from payments you make to”: (copied and pasted change words and reference) https://www.ato.gov.au/Business/PAYG-withholding/ This section needs to be paraphrased in own words

Accountants/Tax Agents Provide expertise in: setting up the structure of the business. applying for a Business Name with the Australian Securities and Investment Commission (ASIC). applying for an ABN. applying for GST registration – if turnover is more than $75,000. applying for Group Employer status if required. opening a business bank account in the name of the business. considering the best accounting package to use. how to apply for a tax file number. Selection of accounting package. Now we have been through all of the important start up issues and regulatory requirements it is important to note a good accountant and/or a bookkeeper are highly recommended. Not only can an accountant help you set up your business they can guide you through the maze of tax obligations you need to know about when setting up a business. https://register.business.gov.au/helpmedecide/helpmedecide

Support Teams (Bookkeeping and Accountants) Record keeping and bookkeeping are major issues for small businesses if you are late paying a debt the ATO charges interest and can refer you to debt collection agencies. Regularly visiting accountants and bookkeepers or using bookkeeping programmes is highly recommended.

Other Useful Support Teams Association- Join your trade association this is a great place to expand your networking base and stay current with industry developments. Mentors- Mentors such as the person who trained you through your apprenticeship, friends who are running a small business and family are all good sources to seek advise and learn from.

Business Insurance three main categories •assets and revenue insurance •public liability insurance •workers compensation or income protection You may wish to use and insurance broker Assets and revenue insurance “covers the loss, damage or theft of your business assets or revenue”. Liability insurance “You may be responsible for damages or injuries to another person or property caused by your business activities. public liability” Personal and workers insurance “It is important to ensure you have insurance to cover the costs of an unexpected illness, injury or accident including: workers’ compensation insurance – this is mandatory when employing staff personal accident, illness and life insurance income protection insurance”. TIP: “If you are a sole trader or partner you are not covered by workers’ compensation insurance”, It is advised you get income protection insurance. https://www.smallbusiness.wa.gov.au/business-advice/insurance-and-risk-management/insurance This section needs to be paraphrased in own words

What Are The Costs ASIC –charges bookkeeping and accounting tools tax accounts with suppliers, stock management debt collection vehicle phones phone and office, computers insurance advertising signage business cards

Do You Know How to Quote This is a really important part of running a business or being a subcontractor. Work out a price list what is included in a quote A)Materials B)Time or area/volume of work C)Tools D)Travel E)Other costs super and time off subbies don’t get paid for holidays F)Use written quotes, verbal quotes are legally binding but subject to confusion G)draw up a professional quote https://www.business.qld.gov.au/running-business/marketing-sales/sales/preparing-quote/tips Question: are you going to win all of your quotes and if you do are you too cheap?

Customer Service “No matter the size of your business good customer service, needs be at the heart of your business model if you wish to be successful”. (business.gov.au) https://www.business.gov.au/info/plan-and-start/start-your-business/what-is-customer-service - The link to the quote

Personal Attributes/ Customer Service Every client and the way you present to them mean the difference between positive repeat business and referrals or not! Be punctual, answer the phone, be polite, neat and tidy with your work, organised and professional, follow up on feedback, and listen to and handle complaints well. https://www.business.gov.au/info/plan-and-start/start-your-business/what-is-customer-service

References ASICConnect(2014). (2018, 05, 01). What is a business name and how to get one [Video file]. Retrieved from https://www.youtube.com/watch?v=ZeJDp5-MbC8 Australian Government, Australian Business Register. Accessed (April 2018). Retrieved From website: https://abr.gov.au/ Australian Government, Australian Tax Office. Accessed (April 2018). Retrieved From website: https://www.ato.gov.au/ Australian Government, Business.Gov.au. (2018). Multiple References. Retrieved from Website: https://www.business.gov.au/ Australian Securities & Investments Commission (ASIC). (2018). Retrieved From Website: http://asic.gov.au/ Australian Tax Office. (2018, 05, 01). Choosing your business structure: Tax basics for small business [Video file]. Retrieved from https://www.youtube.com/watch?v=zsorYp67atg Government of Western Australia, Small Business Development Corporation. (2018). Retrieved from website: https://www.smallbusiness.wa.gov.au/ Queensland Government, Business Queensland. (2017). Retrieved from website: https://www.business.qld.gov.au/running-business/marketing-sales/sales/preparing-quote/tips