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Home 5 Recycled Products 5 All You Need to Know About Starting a Construction Business: Waste Disposal, Landfill Taxes and Aggregates Levy

All You Need to Know About Starting a Construction Business: Waste Disposal, Landfill Taxes and Aggregates Levy

Nov 25, 2019 | Recycled Products, Waste Management

It doesn’t matter who we are, starting a business is always going to be a complex undertaking. From finding a quality USP and setting out a comprehensive business plan to actually turning a profit, getting a company off the ground can feel like a daunting task. This is no different when it comes to the construction sector, with a multitude of red tape and obligations making starting off your dream construction company a tricky prospect which is why we’re sharing our top tips for starting a construction business. 

However, this isn’t to say that starting a business in the construction sector is not worth your time. According to the Cabinet Office’s Government Construction Strategy, the industry’s GVA has been growing steadily since 2009 and is currently sitting around £110 billion, or 7% of the country’s GDP. With these numbers in mind, putting your passion for construction into a business could see valuable returns, however, where do you start? 

As an established waste management business that has aided construction companies throughout West Lothian, we definitely know a thing or two about operating a successful business venture. With this in mind, rather than letting the intricacies of starting a construction business dishearten you, read on to discover our top tips to start a successful venture.

Ensure you’re qualified

This is of course a bit of a no brainer, however, to be competitive in the building sector, it is essential to have the right qualifications and experience. For starters, it’s usually a good idea to have at least some formal training in the form of an NVQ. There are a multitude of courses on offer through the City and Guilds association, ranging in complexity from beginner to expert. 

Whilst having years of hands on experience in the industry is essential when it comes to giving you the knowledge to start your own business, having a formal qualification to show to potential customers will put you in good stead as you begin looking for contracts.

Contractor or owner-builder?

The term ‘construction’ is a pretty broad umbrella term and encompasses everything from renovations to civil engineering. With this in mind, it’s a good idea to consider what type of construction company you would like to begin. For most start-ups, the choice will probably vary between operating as a contractor or as an owner-builder. 

Contractors are those who carry out building and alteration work for others on a contractual basis. Many contractors start out by taking on minor building works such as home renovations and small-scale commercial jobs. The size of this operation means that paperwork can be done at home and is usually a great starting point for those who desire to become successful in the field. Those who reach a certain level of success usually go on to become general contractors, who have the ability and capital to take on larger, more complex contracts. 

Owner-builders, on the other hand, don’t work under a contractual basis and instead own the building in which they are working on. This style of company overlaps somewhat with that of a property developer and is the path many take who are looking to rent out, make use of or sell their premises. 

Both can become successful ventures if carried out properly, however, it’s a good idea to know which is best for you first before taking any next steps.

Write out a business plan

Now that we have the bare minimum required to advance in the industry out of the way, formulating a business plan is likely where most budding construction entrepreneurs are going to start. A business plan is an essential document that outlines your objectives and your strategies for achieving them, making it indispensable as both a tool to attract potential investment and as a guide to help you stick to your goals. 

In order to create the best business plan for you, start by carrying out some market research. This should include investigating other construction companies in your area, finding out the services they offer and whether they are successful in their industry. If you find that there are a number of successful contractors in your area offering similar services, it may be best to rethink your USP. The best ways to get a better understanding of the local market are via previous customers and determining the demographic in your area. 

Once you’ve carried out your research and are happy that your idea will be profitable, it’s time to begin drafting up your business plan. Whilst it’s unlikely you will end up completely sticking to your business plan in the future, it will help you to remain on task, especially in the early days. 

Luckily, there are a host of business plan templates online for you to have a look at for ideas and to download for your own use.

Structuring your construction business

To start your construction business, along with your business plan, you’ll need to decide how you would like to structure your new construction company. Construction businesses are usually either structured as sole traders or as a limited company, with both having their own advantages and disadvantages. 

Registering as a sole trader is arguably the easiest and quickest way of getting your business off the ground due to a minimal amount of complicated accounts to be filed. However, as a sole trader is completely liable for the business, they are at significant risk of action by creditors if investments aren’t met. Because of this, sole trading is a good option for small-scale businesses only. 

On the other hand, in the capital intensive world of construction, those with the money to invest into their business may look to register as a limited company and incorporate with Companies House. By doing this, you register your company as its own legal entity, meaning you are able to protect yourself from creditors if your business fails. 

However, it’s important to remember that limited companies are much more highly regulated than sole traders and will have a variety of obligations to adhere to in accordance to the Companies Act 2006.

Insurance

As with any business, insurance is essential both for safety and legal reasons. In the dangerous and complex industry of construction, insurance is even more important due to the host of things that could go wrong. 

Construction companies should have both public and employer liability insurance in place to cover if you or someone else is hurt while on the job. However, when starting a construction business it is especially important to look at other policies that will cover you in the event of an issue so spend time researching quotes.

Taxes and regulations

When it comes to construction, there are rules and regulations in place both to ensure that projects are safe and sustainable. As a builder you’ll need to keep these in mind to ensure you stay on the right side of the law. 

Of course, you will need to adhere to building regulations and health and safety for yourself and staff when working on a project. However, there are other things to keep in mind as a business. For example, you will need to register under the Construction Industry Scheme (CIS). This government sanctioned scheme was developed to aid payments to subcontractors by contractors, making it a legal requirement to sign up to. 

Also, if your turnover is £85,000 or more a year, you will need to start adding VAT to your services. While there are three types of VAT, in the construction industry, it is usual for companies to charge the standard rate of VAT.

Finally, aside from the host of regulations you should be aware of, there are certain extra taxes that a building company should be aware of when operating. For example, the aggregate levy is a tax which focuses on any materials that have been dug up, dredged from the sea or imported in an attempt to minimise environmental impact. The landfill tax is imposed for similar reasons and can cost companies that excessively utilise dumping sites for waste.

Working with a quality construction waste removal and aggregate suppliers

While setting up a construction business can be daunting, dealing with your construction waste shouldn’t. At Brewster Bros, we supply quality recycled gravel and other aggregates for your projects, meaning you needn’t have to splash out on costly levies. Also, with our state of the art waste collection services, we can minimise your construction rubbish output, reducing your impact on the environment and on your wallet. 

For more information on how Brewster Bros can help with your construction project, get in touch with our team today.

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