Starting your own business, regardless of the industry, requires careful planning and consideration but it could be the best decision for you and your future! If you’re a skilled tradesperson looking to go solo, establishing a strong foundation is key to the success and life of your business.

In this blog, we’ll delve into the top things you need to know before starting your own trade company. Whether you’re a plumber, an appliance repairman or a carpenter, we’ll set out everything you need to be aware of before you step foot as a business owner.

Workmanship and Reputation 

Before you even begin to consider working for yourself, first you need to make sure your craft is up to scratch. With trade work, more than half of your work will come from recommendations and word of mouth, for this reason, your work and attitude to work has to speak for itself.

There are particular trades which have a few regulatory requirements such as Gas Safe qualifications, you must be up to date with your qualifications and laws surrounding your trade. All clients will expect you to be fully qualified and adhere to the laws around health and safety.

Finally, a large part of having your own business is motivation. You need to be able to self-motivate and work to a high quality.

Business Skills You May Need 

As a business owner, you will be doing more than the trade you signed up for. You’ll have to keep on top of your books, any upcoming legal requirements, contracts and agreements and your time.

Bookkeeping and Accounting 

Budget management may already feel natural to you, particularly if you work within client budgets. However, as a business owner, you need to manage your business’ finances. This means keeping track of invoices, how much you’re spending on materials, transport, marketing and development and any staff you may have.

You can, of course, manage this expenditure yourself but due to automation, there are many accounting software available, which can keep track of your business’ finances. Allowing you to make sure you have time to focus on what’s important.

Many small businesses overlook the importance of digital software. Unlike large companies, a small or micro-entity simply does not have the time or manpower to keep on top of all of the business processes.

Make sure you spend some time finding the best digital software to suit your business needs. While the cost may seem a lot upfront, ultimately it saves you precious time and prevents damaging mistakes. Software is available for a lot more than accounting too, your marketing and customer service can be digitised too!

• Managing finances as a small business owner 
• Manage your finances with Mazuma 
• How to use AI for business

Contracts and Agreements 

To protect your business and livelihood, you may want to consider drafting contracts for your clients and partners. You can find templates online which can be adjusted for your use. These contracts help to protect you and your clients from unexpected mistakes and anything else.

A good contract would outline the scope of work, payment terms; including terms about late payment fees, and other details.

Managing Your Time 

You’ll be wearing a lot of hats as a business owner and a large part of this will come down to time management. You must make sure to leave time to attend to all the aspects of your company. From the actual job to time spent managing multiple projects, and scheduling tasks.

Make sure you keep a diary to keep track of upcoming jobs, outgoing and incoming payments, any staff hours, and time for you to manage the business. Organisation is key to keeping the operation running smoothly and managing your anxiety and time.

Marketing and Branding 

Finally, you’ll need to promote your business and work to open yourself up to other clients. Social media can be an especially powerful tool for this. Make sure you set your company up on social media channels like Instagram. Take pictures, videos and testimonials whilst you work and share these online to show a job well done. 
Not only will marketing help you reach new customers but it can also help others make a decision based on your work. If a customer wants to use your services based on word of mouth, they may go to social media to look over your business. A good before and after picture or testimonial may be the reason they choose you.

Should You Be a Sole Trader or an LTD?

One final thing to consider before setting out your business is what kind of business structure you should consider. There are two main types of formation types which would suit a trade business; Sole Trader or a Limited Company. 

Sole Trader 

Setting up your business as a sole trader is easier than forming a limited company, you have few annual requirements and obligations.

As a sole trader, all you have to do is file a self-assessment and pay income tax and class 2 NI on any profits you make.

As a sole trader, you are still able to employ staff and you can claim back expenses. However, you are fully liable for your business, in the eyes of the law you and your business are one. 
 

Limited Company 

A limited liability company means you are your business are separate entities. This means if your company has any debt, you are not personally liable for it. It also means in the future should you choose to pass on your company it can be done hassle-free. Which means you can build a lasting brand and organisation.

Secondly, as a limited company, you only pay corporation tax, which can be more tax efficient. As a limited company shareholder, you can also choose to pay your salary through dividends which are taxed lower than a traditional salary.

However, as a limited company, there are additional responsibilities to fulfil such as filing an annual account and confirmation statement to update HMRC on who is running your company.

• What is a Dividend? 
• How to pay yourself a limited company director 
• Sole trader vs limited company: pros and cons

Becoming a limited company can be done in as easy as four steps, with us! We can help you get your trade company up and running while you focus on the bigger picture.

Final Considerations for Your Trade Company 

Starting a new business can be an exciting but demanding time, which is why it’s crucial to lay a strong foundation so your business can grow unencumbered. By upholding great working standards, a positive attitude, managing the daily business and digitising you can start your business on the right foot.

Need more advice? Our start-up hub is full of great information! Or perhaps you're ready to start today? Find out how we can set your limited company up online.