Beginner’s Guide on Starting a Construction Business in the United Kingdom
The construction industry is a vital part of any nation’s investment-led economy and infrastructure. It generates numerous job opportunities not only for the construction sector but also for the operations after the establishment of the buildings. The pronounced and busy construction industry is a clear indicator of the economic stability of a country. As the industry continues to boom, starting a construction business may be a smart move, especially if you have the money to back it up.
However, please note that entrepreneurs in this industry not only turn over a healthy profit but also contribute positively to the community. Building hospitals, schools, highways and bridges, all contribute towards the growth of a society. Indeed, starting a construction business helps in nation-building.
To be a part of this robust industry, you need to know how to set up a construction business in the United Kingdom.
What is a Construction Business?
A construction business can be focused on providing services to the industry as well as going all out to build skyscrapers—a range usually shown by experienced and industry giants. Starting your construction venture should begin with a business plan that lays out the following:
- financial framework
- business strategy
- types of jobs to bid on
- target market
- number of employees
- marketing plan
- initial expenses for starting the business
- key performance indicators
Work out how much share capital you may need, type of equipment, amount of labour, etc. This will also enable you to decide whether you want to operate as a sole trader, partnership, or limited company. Choosing the right business vehicle from the very start is a good strategy and the best overall use of resources.
Diversity in the Industry
Before starting a construction business, it is important to know the basics first. The UK’s construction industry is diverse, ranging from residential to commercial, recreational, and social infrastructures. Among the sectors included are the following:
- Infrastructure and contracting
- Building and refurbishment
- Manufacturing and services
- Mining and quarrying
- Maintenance and disposal
Choosing Your Path
Starting a construction business takes a lot of considerations, especially regarding the type of company you want to be. You have to do your market research and prepare for your business. The next step is UK company registration and getting the permits.
As mentioned, a construction business can offer diverse options for services for both the private and commercial sectors. With this, you should choose to become either among small renovation contractors, general contractors, or owner-builders from one another to have a better understanding.
- Small renovation contractors. This might be ideal for those starting a construction business with less funding as this requires you relatively smaller capitalization. The jobs for small renovations vary from home alterations, office renovations, and small-scale commercial work. With this situation, you might not need to rent office space anymore because you will not be using so much space for paperwork. You can do it at home, which makes this venture cost-efficient. Take note that starting with small renovations can lead you to become a general contractor if the business operations and capitalization permit it.
- General contractors. As the term implies, general contractors can offer a lot of trade services in their labour force as they are very knowledgeable and experienced in building or alteration work. Starting a construction business as general contractors means you have to know many skills, technical know-how, and industry knowledge. Why? You will eventually deal with different sectors and infrastructures for private and commercial jobs.
- Owner-builder. It must be noted that owner-builder companies are not categorized as contractors. Why? They finish building jobs for their own ownership. This way, they can use the property for rental, operation, or reselling upon completion. This is usually another segment of business for general contractors.
Securing Your Business with Insurance
Being in the construction business means you are exposed to risks, and this is beyond financial aspects. Actual workers have risks of potential accidents every day when they are at the construction site. People passing by the Job site are also facing the risks of falling debris. You need to apply for insurance so you can have protection when these unfortunate events happen.
The policy you need to secure depends on the nature of your industry. Still, there are certain coverages to apply for when working in construction. Public liability insurance, for example, is a must as this protects the business from injuries or property damage arising from the work. This insurance coverage includes the payment for compensation, legal fees and even hospitalization if needed.
If you are looking to hire employees, you need to have employers’ liability insurance to cover any personal injuries and property damage in the workplace. As for your machinery and tools, it is wise to have insurance for them as well. The insurance can help you with the repair fees of your tools. It can even shoulder the cost of new machinery and tools if you have to purchase again due to irreparable damage or theft.
Basically, your insurance can shield you from a potentially catastrophic financial burden. Without insurance coverage, you might not be able to net some clients. Some clients make it a requirement before engaging with a contractor to avoid further costs on their part as well.
Registration and Regulations
Here comes the nitty-gritty aspect of starting a construction business. These are technical matters you have to put in mind so everything will go according to plan. Furthermore, you may need to hire company incorporation services for easier registration.
Depending on the type of entity, you will need to choose a company name and register with Companies House. You need to submit articles as well as a Memorandum of Association and appoint directors and shareholders. Firms such as 3E Accounting provide company formation packages that can get these done for you. Services also include registered business addresses that afford privacy for directors, etc.
Other considerations for your business include opening a bank account, getting a logo, website and domain name. You will also need to register for taxes with HMRC, the UK’s tax authority. Depending on criteria such as annual turnover, you will need to pay corporate tax and value-added tax (VAT). Annual filings must be done within your business’ financial year-end.
Depending on whether you are a contractor or sub-contractor, registration with HMRC should also include CIS. This is the UK’s Construction Industry Scheme which covers tax deduction for some types of construction work. The Government website on CIS provides more information about who needs to register, types of construction work, and how the deduction is made.
The UK’s construction industry is very tightly regulated, and compliance should be at the top of your to-do list. This includes the health and safety of your labour force, operational compliance, zoning laws, etc. You will also need to be certified to carry out certain types of work, which can include international ISO certification. Numerous associations, boards and authorities oversee the industry and staying compliant may best be achieved via professional help.
Professional Help for Your Business Today
Even if registration seems confusing, you do not have to do this alone. The experts at 3E Accounting can offer further guidance on how to set up a construction business in the UK. As an excellent corporate service provider in UK, we also provide customizable business solutions for all your business requirements. Impeccable professionalism and decades of industry expertise will ensure that you get the best possible outcomes.
What are you waiting for? Contact 3E Accounting today to explore business solutions created just for you.