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  • #990814
    jordanwhittaker
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    Hi guys!

    I am starting a carpentry company (which will be a stepping stone to a building empire ), and need a little advise on how to set it up and what to set it up under, such as a sole trader, private company, partnership , etc.

    I have had advise from a few people in the industry that have different outlooks on different set ups, but none have given me a clear answer, which is sort of worrying, but I do know there are a bunch of smart people here,so can anyone help me out? Which is going to be beneficial for tax purposes and insurances.

    Also what insurances am I going to need, workers comp, public liability insurance, income protection, is that all? Any help would be greatly appreciated.

    Thanks guys

    #1178689
    MyGreatIdea
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    Talk to your accountant about the best structure for your business. He knows your personal financial situation and would be in the best position to advise.

    For the insurances, looks like you’ve got them all covered, but an insurance broker can save you money finding the best cover/cost combination. Well worth the small fee for the time spent shopping around.

    Best of luck with your new business !!

    Wendy :)

    #1178690
    ThexArm
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    Pty Company and Sole trader are the 2 most common and popular structures people use when they start a business. Both can be started with one member. But in Partnership you need a partner. It can not be started with one person.

    As a Sole trader, the owner takes up full responsibility for the liabilities arising out of your business. Your personal assets are not safeguarded. Whereas in Pty company, in most cases you are different from your company. So, most of the liabilities of the company are limited to its assets. In most cases your personal assets are different from Companies assets. But again there are different company structures with in Pty ltd companies. So, speak to your accountant. He may know more about your personal circumstances to advise you better.

    #1178691
    MissSassy
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    Hi Jordan

    As a carpenter the ideal option is usually a Pty Ltd Company and then just get in contact with an insurance broker to set you straight on the requirements.

    Speak to a trusted accountant who can take your circumstances in to account before deciding on the company structure.

    #1178692
    alliedib
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    jordanwhittaker, post: 208175 wrote:
    Also what insurances am I going to need, workers comp, public liability insurance, income protection, is that all? Any help would be greatly appreciated.

    Hey Jordan,

    Let me see if I can help you out with a brief description of some of the covers my carpenters have taken previously….

    Public & Products Liability – sometimes called Business Liability, this covers you for accidents causing property damage or injury that occur as a result of your business activities – eg you are working with a drop saw and another tradie trips over it and breaks their leg. The policy covers you not only for any compensation that you are required to pay, but also for the legal costs in defending the claim against you. Premiums and covers vary between insurers.
    It is ‘virtually’ compulsory, as most principals won’t allow you to work for them unless you have it.

    Statutory Liability – Unfortunately these days, there is a tendency for government bodies to fine people for failing to provide safe workplaces. The tradie above that broke his leg on your lead – he is an employee of the sparky on the job. Workers Comp pay his claim and then recover the lost wages and medical bills under your Public Liability. Workcover / Worksafe investigate the accident and declare you failed to ensure that the workplace was safe – $11,000 fine. Statutory Liability generally covers you for the costs in defending this breach notice against you and in certain circumstances, may also cover you for the fine/penalty.

    Workers Compensation – Covers workers (not just employees – there is a broad definition as to who is a worker) for workplace injuries (medical expenses and loss of wages generally). It is generally compulsory by law and there are different rules in different states – in some states eg. NSW the premiums are set by the government and are the same across insurers (scheme agents) whilst in others eg. WA the premiums may vary between insurers. Generally Sole Traders and Partnerships cannot be covered by workers comp, however Working Directors of a Company may be able to be covered.

    Journey Cover – certain states now no longer cover you under Workers Compensation for injuries suffered whilst traveling to or from work. Journey cover is designed to cover this gap.

    Income Protection – this is basically cover for you in case you are become injured or sick. It can include weekly benefits and also lump sum payments for certain incidents eg loss of a finger (happened to one of my clients – received $7,500 from memory after some mishap with a saw). There are two types of these policies – Personal Accident which are generally cheaper and sold through insurance intermediaries (may limit the cover to $2,000 per week, max 2 years or 5 years), or Income Protection policies which are sold through financial advisors and generally have higher levels or cover and longer benefit periods (up to age 65). Every case is different but I always suggest that clients look at both – many want the cheaper personal accident policy but it is a false economy (fall off a roof at age 25 and end up a quadriplegic – is the $100,000 Personal Accident policy going to pay off the mortgage and help the kids through school? Most likely not).

    Tools – Cover for Theft / Fire / Damage (if the vehicle carrying them is in an accident). My client left his tools trailer in the back yard of his parents place (padlocked gate) and went away for the weekend. Came back and his trailer (and $40,000 tools accumulated over 10 years) were gone – it does happen…. you won’t get cover if someone lifts your drills off the back of your ute tray but put them in a locked tool box or trailer and generally if there is forcible entry, there is scope for a claim.

    Motor Vehicle – cover for your ute, trailer (see above). Beware taking out a policy which is named driver only or restricted age – if you do and (as an example) your 18yo apprentice has an accident (and isn’t covered under the policy because you chose to exclude under 25 drivers and forgot this), then you may be required to pay for the damage caused (as you have a duty of care to ensure that he is insured to drive your vehicle) – a contentious issue but one that certainly isn’t worth the hassle for the saving of a few dollars…

    Construction – This is helpful if you are working as principal. It covers you for damage to the project you are are actually working on eg. deck etc. Its more used by builders but we have seen some carpenters take it out before.

    Home Warranty – This cover varies between states but it is designed to cover the consumer for residential projects over a certain value (eg. in NSW $20,000 from memory) if the contractor cannot finish / remedy a job because they die or become insolvent. Its not generally needed if you do work solely for a principal contractor (as they have the contract with the consumer) but if you help out an owner builder and do work over the threshold you will need it. Eligibility is based on a number of factors relating to experience and solvency and it is usually purchased on a job by job basis.

    Hope the above helps you – sorry it is so long (unfortunately I couldn’t condense much)… also it is only general so you should probably talk to an insurance broker who can work out exactly what you need. Happy to assist if you want to give me a call and discuss

    Good Luck with it all.

    Regards,

    Mark

    PS – re entity: there is no hard and fast rule – talk to your accountant as mentioned above and they can steer you in the right direction. I have many clients that are sole traders, but I also have partnerships and companies that in insure.

    #1178693
    Teni
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    Hey Jordan,
    Not sure if you got all your questions answered or if you did and you are still a bit confused/need more help but the company I work for, LawPath can really help – startups are somewhat of a specialty for them.

    For beginning businesses like yours you can look through a few really easy to fill online forms that will get you started on such things like trademarking, registering, etc. Also, later on for your empire, franchising.

    Also, if that’s not enough you can also speak to someone on the phone for free and ask away with the questions you have and get some resolution.

    I hope that helps!

    All the best with the startup of your carpentry. :)

    #1178694
    vanessa@legal123
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    jordanwhittaker, post: 208175 wrote:
    Hi guys!

    I am starting a carpentry company (which will be a stepping stone to a building empire ), and need a little advise on how to set it up and what to set it up under, such as a sole trader, private company, partnership , etc.

    I have had advise from a few people in the industry that have different outlooks on different set ups, but none have given me a clear answer, which is sort of worrying, but I do know there are a bunch of smart people here,so can anyone help me out? Which is going to be beneficial for tax purposes and insurances.

    Also what insurances am I going to need, workers comp, public liability insurance, income protection, is that all? Any help would be greatly appreciated

    Thanks guys

    Hi Jordan-welcome to the FS gang! There are lots of people here with help-a great group. Its a good idea to do your reading and check out your options then go to your accountant if you still need advice with a list of questions. They will cost you to advise! We specialise in helping startups and have lots of free guides and articles that will help you-here is one that discusses the different structures you can set up under: http://legal123.com.au/running-online-business/

    If you have further questions, feel free to pop a note in the contact form or give us a call!

    It’s important to set it up correctly in the first place but you can always change it later if, for example, you cannot afford to set up a Pty Ltd company initially.

    There are other things you should check also ie the name is not taken etc-here is an FS article I wrote recently which may also help: http://www.flyingsolo.com.au/startup/business-start-up/starting-a-business-want-to-fly-solo

    Good luck and let us know if you need more help or have further questions!

    Vanessa

    #1178695
    jordanwhittaker
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    thank you all so much for your input, really appreciated, notes have been taken down along with a little research and I will be heading down to my accountant to finalize everything, once again guys thank you!

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