In an ideal world, the biggest problem you’d ever face as a trade business owner would be running out of screws in the middle of a job. However, let’s be honest: the world we live in is anything but ideal.
From customers pushing their luck just a little bit too far to issues with contractors, legal obligations and those completely unexpected emergencies, there’s a lot that could go wrong. Without a little planning and protection in place, any one of those things could land you in some serious trouble; at best causing a major dent in your finances, at worst sounding the death knell for your entire operation.
Sure, it sounds scary when we put it that way, but the truth is that’s often easier to mitigate the risks of running your own trade business than you might think. Here, we run down the most essential things you could – and should – be doing to legally protect yourself and your livelihood.
Don’t forget to tell the tax man
Yes, it may sound obvious to some. Yes, it may be one of the most basic things anyone needs to do when setting up a business in the UK, but you might be surprised by the number of people who choose to pick up tools and get to work without letting the government know they’ve started a business.
Okay, so that might be tempting if you really, really hate filling in forms, but if you get caught, it’s going to land you in some pretty hot water. For most tradesmen, simply registering as self-employed and sending in tax returns is going to be enough to stay in HMRC’s good books.
If you’re new to self-employment, you might find our complete guide to self-assessment tax returns helpful.
Establish a refunds policy & let your customers know about it
Particularly pernickety customers may be quick to point out their rights to a refund, but the truth is, they might not have as many rights as they believe.
- You must deliver your service with “reasonable care and skill.”
- That any information you give to your client, either verbally or in writing, is binding “where the client relies on it.”
- If price and timescale are not agreed in advance, the service must be delivered for a reasonable price and within a reasonable time.
If your work doesn’t meet these criteria, then you could be asked to redo all or part of your work at no extra cost to the client. Where that’s not possible then, yes, the client can claim a reduction in price, depending on bad things are a complete refund.
What that doesn’t mean, however, is that your client can’t ask for a refund simply because they don’t like the finished job.
Here’s an example: let’s say you go into a client’s home and fit a brand new kitchen. When the job is done, the client decides that it’s just not what they wanted. Perhaps they’ve had a change of heart and would rather have different coloured door panels or a different kind of worktop. As much as they may insist otherwise, they’re not eligible for a refund as long as you’ve carried out your work to a high standard and done everything you agreed to do, when you agreed to do it, at the price you agreed to do it for.
In order to protect yourself from customers like this, it’s worth writing down your refund policy and making sure they have a copy of it before you start work.
On a related note, if your customers do simply decide they don’t like the finished work, you might want to consider finding a way to help them as a gesture of goodwill. Doing so can go a long way in maintaining your reputation as a quality tradesman.
Stick to the law when hiring contractors, employees & apprentices
Bringing in people to help get all those jobs finished off can an exciting experience. After all, it’s a sign that things are going well and your business is really growing. Yet whilst you might be able to get away with bringing in a mate and bunging him fifty quid on the odd occasion, if you need help long-term, then you need to protect your business and play by the rules.
If you’re hiring an employee, you’ll need to ensure that you pay them at least the National Minimum Wage and that you abide by health and safety as well as anti-discriminatory regulations.
You’ll also need to:
- Check that your employee has the legal right to work in the UK
- Register as an employer with HMRC
- Give your employee a written statement of employment if you’re hiring them for more than one month
If you’re hiring someone on a short-term basis, be sure to check out our guide to hiring temporary employees which offers lots more advice and guidance designed to help you protect your business. If you’re thinking of bringing in an apprentice or trainee, then yep, you guessed it, we’ve got a guide for that too.
Don’t forget your insurance
On the subject of all thing’s employee-related, as soon as you bring your first member of staff on board, you’ll need to take our employers’ liability insurance. This is true regardless as to whether you’re hiring full-time, contracted employees or simply hiring a temporary worker to give you a little helping hand.
Whilst we’re at it, don’t forget about your tradesman insurance, one of the quickest and simplest ways to ensure your trade business is well protected when those unexpected emergencies rear their ugly heads.