How to Start a Trade Business (Plumbing, Electrical, Building)

You can't legally start a plumbing, electrical or building business in Australia until you hold the right state licence — that comes before the ABN, the ute and the first quote. The trade itself is the easy part. What sinks new trade businesses is pricing off gut feel, carrying the wrong insurance, and funding a builder's project out of their own pocket for 60 days.

Get licensed in your state first

There's no national trade licence. Each state and territory runs its own regulator, its own licence classes and its own dollar threshold above which the work becomes licensed building work.

Figures are as at September 2026. Two things override every threshold in that table. Electrical, plumbing, drainage and gasfitting work is licensed at any dollar value in every state — there is no small-job exemption. And splitting an invoice into chunks under the threshold doesn't work; regulators treat it as one job.

Queensland goes further than most. QBCC contractor licences carry minimum financial requirements: the SC1 category allows up to $200,000 in annual revenue and requires $12,000 in net tangible assets, and SC2 allows up to $800,000 and requires $46,000. Exceed your declared maximum revenue and you're in breach of your licence, not just having a good year. Check what your own trade and state require before you commit — our guide to business licences and permits covers the wider registration picture.

Structure, registrations and the ones tradies forget

Sole trader is the cheapest way to start and works fine for a solo maintenance operator. A company costs $636 to register with ASIC plus a $342 annual review fee (as at September 2026), and earns its keep once you're hiring, working on commercial sites or carrying defect liability that could outlive the job. Read the structure comparison before you decide — restructuring later means new licences, new insurance and new contracts.

Beyond the ABN and GST registration (compulsory at $75,000 turnover, worth doing voluntarily if you're buying a ute and tools), trades carry obligations most other small businesses don't:

• Portable long service leave. QLeave in Queensland, CoINVEST in Victoria and the Long Service Corporation in NSW run schemes covering construction workers across employers. Self-employed contractors can register too, and levies apply to projects above a set value.
• Taxable payments annual report (TPAR). If you're mainly in building and construction and you pay subbies, you must report those payments to the ATO by 28 August each year.
• Workers compensation. Compulsory from your first employee, through your state scheme. As a sole trader you generally can't cover yourself under it, which is why income protection matters.

Price off your own numbers

The most common mistake is charging what the last boss charged. Build the rate from the bottom up. Here's a solo licensed tradie targeting a $120,000 income:

Now the hours. Forty-six working weeks at 38 hours is 1,748 hours a year, but quoting, invoicing, chasing materials and driving between jobs aren't billable. At a realistic 60% billable ratio that's about 1,050 chargeable hours, so $164,400 ÷ 1,050 = $157 an hour excluding GST ($172.70 including GST).

Watch what happens if your billable ratio slips to 50%. The same costs spread over 874 hours need $188 an hour. Tightening your admin is worth more than a price rise. Materials should carry their own margin on top — a 15–25% markup is common and covers pickup time, wastage and the fact that you carry the warranty.

Insurance: five covers, not one

• Public liability. Most head contractors require $10 million minimum for subbies, and $20 million for commercial, multi-unit or government sites. Check the contract before you quote — the certificate of currency is usually a condition of getting on site.
• Tools and plant. Theft from a locked vehicle is the number one trade claim.
• Contract works. Covers the partially completed work against fire, storm and vandalism during construction. Often required by the contract.
• Income protection or personal accident. Nobody pays you when you're off with a broken wrist.
• Home warranty / domestic building insurance. Compulsory on residential work above set thresholds: $3,300 in Queensland under the Queensland Home Warranty Scheme, $20,000 in Victoria (the Home Warranty scheme replaced Domestic Building Insurance on 1 July 2026 and lifted the threshold from $16,000), and $20,000 in NSW through icare HBCF. In NSW and Victoria you must have the cover and give the certificate before you take a deposit.

Our business insurance guide explains what each policy actually covers.

Getting paid: progress claims and security of payment

Deposits are capped. In NSW you can't ask for more than 10% of the contract price on residential building work, and contracts above $5,000 must be in writing. Structure the rest as progress claims tied to defined milestones — slab down, frame up, lock-up — not to dates.

Every state has security of payment legislation, and it's the strongest tool a subcontractor has. Using NSW as the example: serve a written payment claim, and the respondent has 10 business days to give you a payment schedule setting out what they'll pay and why it's less. Miss that deadline and they're liable for the full claimed amount. Maximum payment terms are capped by statute — 15 business days for a head contractor claiming from a principal, 20 business days for a subcontractor. Contracts can shorten those periods but can't extend them. Exempt residential contracts (owner-occupier work) sit outside those caps: the contract's own payment date applies, or 10 business days after the claim if the contract says nothing. If you're not paid, you can go to adjudication instead of court, which is faster and cheaper.

Retention of around 5% is common on larger contracts, half released at practical completion and half after the defects liability period. Price for it: that money is out of your cash flow for a year or more. And if a builder simply stops paying, adjudication under the security of payment Act is your escalation route, not a debt-collection letter.

Cash flow when everyone pays on 30 days

Trades pay for materials and wages before they get paid for the job. That gap is the business.

One easy fix: if your aggregated turnover is under $10 million you can account for GST on a cash basis, so you report GST when you're actually paid rather than when you invoice. The difference is real. Invoice a builder $44,000 including GST on 20 June and, on an accruals basis, the $4,000 of GST lands in your April–June BAS due 28 July 2027 — even if the builder doesn't pay you until August. On a cash basis, that GST isn't reported until the quarter the money arrives.

The rest is discipline, and two habits matter more in trades than almost anywhere else: take a deposit on every job worth more than a few thousand dollars, and invoice the day a milestone is reached rather than at month end. Our cash flow management guide covers the buffer and the tax provisioning that sit around them.

Taking on subbies without creating employees

Once you're subbing work out, the contractor line matters. Fair Work applies a whole-of-relationship test from 26 August 2024 that looks at how the arrangement actually works in practice, not just what the contract says. The ATO uses its own test for PAYG withholding. Passing one doesn't protect you from the other.

Two traps catch trade businesses repeatedly. First, super: if a contract is wholly or principally for a person's labour — more than half the value is their own work — the ATO treats them as an employee for super and you owe 12% on the labour component, ABN or not. Second, sham contracting: the defence changed in 2024 from a recklessness test to a reasonableness test, so you now have to show you reasonably believed the person was a contractor. Get the employee versus contractor distinction right before the first invoice, not after an audit.

Software and finding the work

Job management software pays for itself in recovered billable hours. ServiceM8 charges by job volume with unlimited staff, which suits high-volume maintenance trades; Tradify charges per user per month; simPRO is quote-based and aimed at larger operations with stock and multiple crews. Any of them beats a notebook — quote from the van, capture photos and variations against the job, and push invoices straight to your accounting software.

Work comes from three places early on. Builders and head contractors give you volume but the worst payment terms and thinnest margins. Real estate agents, strata managers and facilities managers give you steady maintenance jobs at better rates. Direct homeowners pay best and fastest, and they find you through a complete Google Business Profile with real job photos and steady reviews. Run all three and shift the mix as your cash position allows.

Key takeaways

• The licence comes first, it's state-based, and electrical, plumbing and gasfitting are licensed at any dollar value with no small-job exemption.
• Build your hourly rate from your own costs and realistic billable hours — improving your billable ratio beats raising your price.
• Carry public liability at the level your contracts demand ($10m for most subbie work, $20m commercial), plus tools, contract works and income protection.
• Learn your state's security of payment process before you need it; a valid payment claim with no payment schedule inside 10 business days means the full amount is owed.
• Account for GST on a cash basis if you're under $10 million turnover, and never fund someone else's project past your own terms.
• Getting the contractor-versus-employee line wrong exposes you to super, PAYG, payroll tax and sham contracting liability at once.

Where to get help

• Your state building regulator — QBCC (Qld), Building Commission NSW, Building and Plumbing Commission (Vic), Consumer and Business Services (SA), Building and Energy (WA), CBOS (Tas), Access Canberra (ACT), NT Building Practitioners Board — for licence classes, financial requirements and home warranty obligations.
• ato.gov.au — GST registration and accounting method, super for contractors, TPAR, and the employee-or-contractor decision tool.
• fairwork.gov.au — the whole-of-relationship test, sham contracting, and award coverage if you hire.
• business.gov.au — the Australian Business Licence and Information Service, which lists every licence and permit for your trade, postcode and activity.
• Your accountant for structure, GST method and cash flow, an insurance broker who specialises in trades for the right cover levels, and a construction lawyer before you sign a head contractor's subcontract.