How to Start a Construction Business

What are some legal considerations when starting a construction business?

There are numerous legal considerations that you need to take into account when starting up a building and construction business in Queensland. For example:

Trading Structure: This is simply considering the structure through which you will operate your business. Will you operate as a sole trader, partnership, company or through a trust? Each entity has its own legal, accounting and taxation advantages. We can help you setup any entity that you wish to trade through.

Minimum Financial Requirements: The QBCC impose a number of minimum financial requirements that need to be satisfied before they will grant you a building or contractors license. You should speak to your accountant about ensuring that you can satisfy these requirements. You should do this before you consider a trading structure to ensure that you do not waste money setting up the wrong structure.

Deed of Covenant and Assurance: As a part of being issued a license you may be required to provide a personal guarantee to the business to ensure the business has sufficient assets to meet its relevant turnover. This is usually through a QBCC Deed of Covenant and Assurance. The Covenantor under a Deed of Covenant and Assurance is required to obtain independent legal advice relating to the effect of the document. We can provide this advice to you.

Employees: It is important that you build the right team around you when you are trying to create a building and construction business. You will need site supervisors, account clerks and project managers. If you employ anyone at all, you should ensure that you have a written employment contract in place, written workplace policies and procedures and make sure that you comply with Fair Work laws and regulations. We can assist you with preparation of employment contracts and workplace policies and procedures.

Contractors: If you engage a contractor whether as a consultant, project manager or a trade, you should ensure that you have a written contractor's agreement in place

Health and Safety: There are strict Work Health and Safety requirements in the building and construction industry. You should consider your obligations at a workplace and site level.

What are some considerations to minimise financial risk and get paid?

Trade Credit Insurance: If you are a contractor and also subcontract out work then there is a high chance that you will at some stage be faced with head contractor insolvency. This means that you will not be paid however, you are still required to pay your subcontractors - essentially making you out of pocket two ways. You should consider taking out trade credit insurance.

Business Funds: Where will the funds for the business come from? If you are providing these funds personally then you should consider putting yourself in a position to be able to recoup these funds if the business does not work out. We suggest that this be done by way of a loan agreement and general security deed. This will place you ahead of creditors in the event of a bankruptcy or liquidation.

Terms and Conditions / Terms of Trade: You should ensure that you have some well drafted terms and conditions that clearly sets out payment terms. Visit our terms of trade page to learn more.

Security of Payment: You should consider where appropriate, that you lodge an application for adjudication with the QBCC in relation to a tax invoice or payment claim that you have issued. See our page relating to recovering payments.