When a specific project needs to be completed within a certain timeframe, people often turn to contractors. A good contractor can become highly valuable in the market by providing essential services to their clients.

If you’ve been thinking about starting your own contracting company, that’s great! However, it’s important to remember this: excelling in your industry doesn’t automatically mean you’ll excel in business.

Starting a company is an entirely different beast. It involves considerations you may not have encountered before, such as the legal factors associated with running your contracting company. As the owner, the technical aspects of your company will be crucial in determining its success in the market. Therefore, it’s essential to have legal assistance when starting your contracting company. 

Don’t worry though – we’re here to help.

What Are Some Types Of Contracting Companies?

Contracting companies aren’t limited to one industry, they’re present in various different sectors. Commonly, you’ll see contracting companies that specialise in various areas of construction, IT, engineering, electricity and real estate development. 

Can I Start A General Contracting Company? 

There’s no rule against starting a general contracting company, however, we’d be wary of this idea. Contracting companies are usually hired for their expertise in a certain area. Moreover, there might be qualifications, certifications and permits you are required to attain prior to conducting certain types of work – it can be hard to keep up with the different requirements if your company is spread out too thin.

We’d recommend specialising in a niche area – as your contracting company grows, you can always consider expanding into more areas later on. At the start of your business journey, it always helps to have a specific area to focus on, do research, create a business plan and of course, execute accordingly. 

How Do I Start My Own Contracting Company?

Properly registering your contracting company is the first step to getting it started. To register your company, you will need to fill out an application form with the Australian Securities and Investments Commission (ASIC). 

Before jumping online and getting started on the application process, you’ll need to have a few details lined up such as: 

  • Understanding how your company will be governed
  • Knowing who the directors of your company will be
  • A list of company shareholders
  • The legal structure your contracting company will have
  • Administrative details, such as the bank details, contact information and address of your company 

It’s a good idea to have a legal expert help with registering your company. The way your company gets set up will have pretty big implications on your contracting company’s future, so you want to make sure it gets done right.  

Keep in mind that ASIC is the main regulatory body for all companies in Australia. That means, your company will still be ‘in touch’ with ASIC long after it’s been registered by means of annual fees, letting them know when something has changed with the company, yearly audits plus much more. Getting expert guidance and understanding what your legal obligations are with ASIC is important, as your contracting company could face penalties for non-compliance with their regulations. 

Can I Start My Contracting Company As Just One Person? 

Yes, there’s nothing stopping you (legally) from starting your contracting company as just one person. A common misconception about companies is that it needs to be a big organisation with multiple people. In reality, there are certain types of company structures that are perfectly suited for companies with just one person. 

Moreover, a company provides more legal protection than other types of business structures, such as a sole trader or partnership business. Sole trader and partnership business structures are much quicker to set up however, after registration they will be legally attached to you. With this type of legal set up, anything that happens with the business is likely to impact you personally as well. 

A company on the other hand, is a legal entity on its own. This type of legal structure allows some separation between you and the company, known as limited liability. A company is the wiser choice as it gives you a certain level of legal protection, which is the better option, especially if you have plans to grow your company in the future. 

What Kind Of Legal Documents Will I Need To Protect My Contracting Company?

After registering your company, it’s important to make sure you’ve got your legal house sorted. Part of that involves getting all the right legal documents drafted. Legal documents are extremely important when running a contracting company – they help secure your future and safeguard your company. Getting them expertly drafted by a legal expert is always worth the investment. 

We’ve listed a few legal documents you may want to consider getting for your contracting company. 

Service Agreement

Before providing clients with your services, it’s important to sign a service agreement with them that covers matters such as scope of work, duration of the contract, liabilities, payment plus other important details. 

Supply Agreement

If your contracting services are in an industry like construction, then you might have a supplier for important materials. When engaging a supplier, it’s crucial to have a supply agreement in place that covers the terms of your relationship. 

Non-Disclosure Agreement (NDA) 

When you run a contracting company, it’s crucial to keep sensitive company information or trade secrets confidential. An NDA is an important tool for protecting the private information of your company. 

Privacy Policy

When you decide to put up a website for your contracting company to make it easier for clients to find your business, then you will need to have a privacy policy visible on it. Australian privacy laws require any business that collects information from users on its website to have a privacy policy displayed. 

Employment Agreement/Contractor Agreement

At some point, you might decide to hire staff for your contracting company. When you do this, ensure you have clear and concise contracts that state their rights and obligations, as well as yours.  

Does My Contracting Company Need To Follow Any Laws?

Legal compliance is another important factor to consider when starting a contracting company. Not taking proper steps to follow the law could put your business at risk of legal penalties, financial consequences and even a bad reputation in the community. 

We’ve listed a few regulations that will likely apply to your contracting company as you start the process of building it. 

  • Australian Consumer Law (ACL)
  • Data and privacy law
  • Industry specific regulations 
  • Employment law
  • Intellectual property law 

As you can tell, there’s a number of different regulations to look out for. It can be confusing to know which specific laws apply and the last thing you want is to break laws you weren’t even aware of! 

Fortunately, legal compliance is pretty easy once you have the right guidance. A legal expert can let you know the exact laws that apply to your contracting company and the best practices when it comes to following them.

Next Steps 

When you start your contracting company, it’s crucial to make sure your company is legally protected and compliant. To summarise what we’ve discussed: 

  • Starting a contracting company requires understanding legal aspects beyond industry expertise, such as registration with ASIC, governance, and compliance 
  • Registering your company involves preparing details like company governance, directors, shareholders, legal structure, and administrative information 
  • A company structure offers better legal protection through limited liability compared to sole trader or partnership setups 
  • Essential legal documents include service agreements, supply agreements, non-disclosure agreements, privacy policies, and employment agreements to protect your business
  • Legal compliance involves adhering to regulations such as Australian Consumer Law, data and privacy laws, industry-specific regulations, employment law, and intellectual property law
  • Seeking legal assistance ensures proper setup, compliance, and protection against potential legal issues and penalties 

If you would like a consultation on starting a contracting company, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.

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