How To Set Up A Carpentry Business
Carpenter’s insurance is crucial for any carpentry business. As a carpenter, you will need to interact with clients, procure materials, handle finances, and meet deadlines. Although it can be challenging, it is a fulfilling profession, especially if you have a passion for it. If you have received carpentry training and plan to start your own business, this guide is an excellent starting point. From developing a business plan and registering your company to marketing, taxes, and insurance, we’ll cover it all.
- Start With A Plan
- Register Your Business
- Taxes When Freelancing vs. Self-Employed
- Advertising Your Business
- Carpenter’s Insurance
Start With A Plan
Before anything else, you should create a business plan. This should be a detailed document that outlines your vision for your business, as well as the practical measures you will have to adopt in order to turn it into reality. First and foremost, you should identify the specific products and services you will be providing. For example, will you be creating substantial pieces such as wardrobes, bed frames and tables, or will you create handcrafted and artisan pieces?
It is also important that you research your target demographic, with useful markers being their age, gender, profession, interests as well as where they live. Outreach is another important factor, and this is essentially how you will reach out to customers and transport your products to them.
Alongside these considerations, finances and budgeting should also be thoroughly covered in your business plan. There will be starting costs and on-going costs, and it is important that you balance these against your predicted profits in order to avoid going into loss. The starting costs can be significant, and you should allocate a specified budget to the various aspects of your business you will be investing in. Your workshop, equipment and materials, transportation, marketing and advertising as well as licenses and permissions are some of the initial costs that you may face.
Once you have done this, you can then calculate your potential profits. Your profits will not only be determined by your starting and on-going costs, but also other factors such as your experience and craftsmanship, the demand for your products, your marketing skills as well as how much time you will be investing into your business and whether or not you will need to employ someone else further down the line.
Register Your Business
The moment you start working for yourself, you are regarded as a sole trader by HM Revenue and Customs (HMRC). Essentially, this means that you are self-employed. When you are starting your carpentry business, one of the first things that you should do is register your business with HMRC. Registering your business is important because it will ensure that you are paying the right amount of tax on any profits that you generate.
The penalties for not registering your business, and therefore potentially not paying the tax you should be, are serious. Fortunately, registering your business as a solder trader is relatively straightforward, and it is as simple as registering for Self-Assessment on the UK Government website so that you can begin to report your earnings and pay taxes. When you are a sole trader, your legal identity is inseparable from that of your business and you are personally responsible for any profits or losses your business makes.
There is an option to register your business as limited company rather than a sole trader. With a limited company, your business will have its own legal identity that is completely separate from your own. The process for setting up a limited company is slightly complex, and it will involve choosing a director and a company secretary, deciding who the shareholders or guarantors are, preparing the necessary documents and then registering an address for your company and obtaining an official SIC code. If you are just one person, then you can act as the director, secretary and shareholder yourself. The UK Government website provides detailed information on this process.
Taxes When Freelancing vs. Self-Employed
Legally, there isn’t a distinction between freelancing or self-employed individuals. The government doesn’t differentiate between the two when it comes to taxes either, and the way that you pay taxes will depend on whether you have registered as a sole trader or as a limited company. There isn’t much paperwork involved when you are a sole trader, and all that is expected of you is to submit a Self Assessment Tax Return on an annual basis.
Throughout the year, you should document the expenses and earnings related to your business. This is because you only pay taxes on your profits and you can subtract your expenses from your earnings, this will evidently reduce your profits, which in turn will reduce your tax bill.
With a limited company the concept is similar, as you can deduct your business expenses from your business earnings so that you pay taxes only on your profits. However, whilst a sole trader will pay income tax, a limited company will pay corporation tax. Corporation tax is significantly lower than income tax, so a limited company may be more profitable than a sole trader even if they are making the same earnings.
Advertising Your Business
By advertising your carpentry business, you can ensure that you are connecting with as many potential clients as possible and establishing recognition and visibility for your business. An effective marketing campaign is one that reaches out to and engages your desired audiences, whilst also being resourceful when it comes to time and expenses. The following are some ways that you can advertise your business:
- Reviews, testimonials and referrals. People will usually trust a word of mouth recommendation from someone they know, advertising your business at no additional expense to you.
- Social media. By creating accounts on Facebook, Instagram and Twitter, you can showcase your work and provide contact details for potential clients to get in touch with you.
- Local businesses. Corner shops and takeaways are usually more then happy to keep some of your business cards for their customers to take, or to show a leaflet or poster for your business in their window or door.
- Newspapers and magazines. Contact local newspapers and magazines and ask them what their advertising rates are. They are usually quite reasonable, and you won’t have to worry about distributing it yourself.
- Google Maps. Even if you don’t have a website, you can advertise your local business on Google Maps. You can even encourage customers to leave positive reviews on your Google Maps profile.
As a carpenter, there is no doubt that you take immense pride in your craftsmanship as well as your relationship with your clients. Whilst these are variables that you can control, there will always be variables that simply cannot be accounted for. Whether it is fire damage, flooding, extreme weather, theft or injury, there is no way to predict the unexpected. This doesn’t mean that you are powerless, however, and you can always be prepared for the worst. As a business owner, it’s crucial to have a disaster recovery plan in place. Let Brisco Business assist you with business insurance solutions that align with your recovery strategy.
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