Going from an employed contractor on a building site to someone who is self-employed in the industry is game-changing. It’s something that can transform your financial fortunes but suffice to say; it isn’t easy.
While you most probably will get involved in six-figure projects, and potentially one’s worth much, much more, it can come at a cost. There is a lot of risk involved within this industry, and through today’s post, we will take at some of the key considerations you need to keep in mind as you approach it.
The challenges of winning business
Let’s cut to the chase, out of all of the considerations that we look at today, the hardest job for most self-employed builders is winning new business.
Without trying to generalise, most self-employed builders have spent their working life up until this point as a contractor. It means that they haven’t really dealt face-to-face with clients, and have instead focused on the manual elements of the job.
Ultimately, it means that many people don’t have the list of contacts required to allow them to take this step. This should be the first thing that you think about and if you don’t have these contacts, at least consider all of the usual marketing strategies that can help you along your way. It might be a website, handing out business cards or even traditional activities like advertising in local magazines and directories.
Hopefully, if you have worked on building sites for a while, you’ll know exactly what we mean when we talk about seasonality.
In short, not all months are equal. You might make considerable progress on your projects through the summer months, but as soon as winter arrives all of the said work has been undone. Working conditions become problematic, while the productivity of workers tends to drop as well. There’s not much you can do about the former, but when it comes to the workers, you can at least take steps to make their working conditions a little more comfortable.
Regardless of how you tackle this, it’s all about planning for a rollercoaster of a year. Your income is going to fluctuate throughout, and you need to question just whether or not this is something that your life can withstand.
The tax implications
Finally, let’s talk about tax. The building trade is a little different to others in this regard, as it’s not just your own tax that you need to think about.
However, if we start with your own commitments, it should go without saying that you are completely responsible for your own accounts and you need to budget for this throughout the year. The last thing you need is to be left with a huge bill that you need to foot after forgetting to dedicate enough money through the year.
Then, there are any contractors that are working with you. Are you treating them as self-employed as well? Or are they effectively employees? This will dictate your other tax commitments, and you’ll need to learn this before jumping into the self-employed game.