If you have finished your apprenticeship and are looking to start your own carpentry business in New Zealand, this may be a good time to do it, given the construction industry’s continued growth and increased demand for carpenters. However, before you start running your business, you should consider creating a business plan to help you make decisions like:

  • how to operate your business; 
  • should you enter into a commercial lease; and 
  • whether you should engage business partners and employees.

This article explains how to start a carpentry business in New Zealand and how to negotiate your business contracts and commercial lease.

Getting Your Qualifications and Licences 

To start your own carpentry business in New Zealand, you have to obtain a licence from the Ministry of Business Innovation and Employment (MBIE). Doing this will allow you to work across a broader range of building tasks without supervision.

To become a licensed carpenter, you will need to get a National Certificate in Carpentry (Level 4) or an equivalent one. In addition to this, you will need specific qualifications and licences to work in specialised building areas, such as roofing and brick and block-laying.

If your carpentry qualification is not from New Zealand, you can get it assessed by the Qualifications Recognition Services at the New Zealand Qualifications Authority (NZQA) to ensure it aligns with the New Zealand Qualifications Framework (NZQF).

Choosing a Structure for Your Carpentry Business

There are different ways to structure your business in New Zealand. Carpenters looking to go out on their own after finishing their apprenticeship, often start as sole traders or incorporate a company, but you can also set up your business as a partnership or trust. 

Operating as a sole trader is easy and inexpensive to set up, and it offers advantages such as deciding how and when to complete your work. Incorporating a company is slightly more involved and expensive to set up. Nevertheless, it has many financial advantages, such as: 

  • limited liability;
  • lower tax rate; and
  • easier access to funds.

In New Zealand, it is common for carpenters to start as sole traders and switch to a company structure later down the track. In this article, we compare these two structures in more detail.

Once you have decided on your business structure, you will need to apply for a New Zealand Business Number (NZBN). If you choose to operate your carpentry business as a company, you’ll also need to register the company with the New Zealand Companies Office.

Getting Your Carpentry Business Insured 

One of the essential things to do when setting up a new business is to get adequate insurance as this helps protect you financially in the event of something going wrong. When you run a carpentry business, some of the main types of insurance to consider include: 

  • public liability;
  • home building compensation;
  • tools insurance;
  • income protection; and 
  • contract works insurance.

An insurance broker can help you get appropriate coverage for your business, and save on costs by recommending the most competitive providers and policies.

When you work as a sole trader or contractor, you are covered by ACC. Your ACC levies are based on the type of work you do and how much money you make. However, you can control how much you pay in levies by deciding what percentage of your income you want to be covered for.

Drafting Your Business Contracts

Your Contracts With Clients   

When you work as a carpenter, each new project you take can be quite different from the rest. From building a deck to fixing a staircase, there is a long list of terms and conditions (T&C’s) to account for in your contracts with clients.

For example, a common scenario is the price of materials increasing before you complete your project. If you do not include a term in your contract to account for this, you will have to pay for this additional expense, instead of your client. 

Therefore, you have the option to include a comprehensive set of terms and conditions in your contract to cover you for most scenarios you can foresee or to tailor your T&C’s to the specific project. You should always include:

  • quote;
  • price;
  • time;
  • defects;
  • access to the property; and 
  • warranties.

You can have a go at drafting the initial contract. However, it is a good idea to have this draft reviewed by your contract lawyer to ensure you have covered all your business needs and any circumstances specific to your business.

Your Employment Contracts 

When you draft your employment contracts, you should ask yourself the following questions: 

  • do you want your employees to have some freedom;
  • how do you want to structure your business; and 
  • whether you want to control how your employees perform their duties.

Ultimately, you want to create a structure that allows your employees to know what they are required to do, and who to answer to within the business. 

You can write your employment contracts, but you should never copy the ones from other businesses. If you decide to write them yourself, you should ask your lawyer to review them to ensure there are no gaps or errors.

Entering Into a Commercial Lease 

When you start your own carpentry business, you may consider entering into a commercial lease. Entering into a commercial lease can bring stability for your business by allowing you to feel confident that your business premises will remain in your hands for the foreseeable future.

The two most important aspects of a commercial lease for your carpentry business are:

  • the price of the lease; and 
  • the length of the lease. 

However, before you consider entering into a commercial lease, you should create a thorough business plan. This will give you an insight into how much: 

  • money you are willing to spend on commercial property; and 
  • time you would like to lease the property for.

In this article, we offer some tips to create a thorough plan for your new business.

Final Considerations

There is also a list of essential things to do when you start a business in New Zealand, including:

  • creating a business plan to help you validate your business idea; 
  • signing up with your local Regional Business Partner Network to access free resources to help you start and grow your business;
  • conducting a thorough check before settling on a name for your business; 
  • protecting your name and brand by registering your trade mark with IPONZ;
  • getting an IRD number for your business; and
  • researching whether you need to comply with other industry-specific regulations.

We discuss more details in this article. 

Key Takeaways 

From obtaining your carpentry licence to drafting sound contracts with your clients and employees, there are several key considerations when starting a carpentry business in New Zealand. These include: 

  • if you want to work without supervision, you need to obtain a licence through the MBIE;
  • you can start as a sole trader and then switch to a company structure if you wish to grow your business; 
  • there are various types of insurance you should consider to ensure that your business has enough coverage;
  • you can draft your own contracts, but it is a good idea to get these reviewed by your lawyer; 
  • you should never copy the contracts of another business, as you could face liability and claims of copyright infringement; and
  • before you consider entering into a commercial lease, you should create a thorough business plan.

If you need help with getting your carpentry business set up, reviewing your contracts or drafting your commercial lease, contact LegalVision’s business lawyers on 0800 005 570 or fill out the form on this page.

FAQs

How do I start my own real estate agency in NZ?

To start a real estate agency in NZ you need to get a real estate license, choose a business structure, get business insurance and understand your legal requirements.

How do I get a real estate agent licence in NZ?

In New Zealand, you cannot start a real estate agency as an unlicensed person. You can apply for a salesperson, brand manager or agent’s licence. To apply for any class of real estate licence, you need first to get a property degree.

What is sole agency agreement?

A sole agency agreement is a written agency agreement with the buyer of the property. It generally sets out that you will be the only agent with the right to sell the buyer’s property.

What is the difference between a buyer’s agent and a seller’s agent?

The main difference between a buyer’s agent and seller’s agent is that they represent clients on either side of a transaction. As a buyer’s agent, you are representing the buyer’s interests and vice versa.

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