How to Start a Subcontracting Business in Perth: A Guide for Tradespeople

Many tradespeople in Perth reach a point where they want to go out on their own. Subcontracting — working for builders and contractors under your own ABN — offers independence, higher earning potential, and control over your work. But it also comes with responsibilities that employees don’t have to worry about.

Here’s how to set up as a subcontractor in Perth’s construction industry.

Employee vs Subcontractor: Know the Difference

Before going out on your own, understand the legal distinction:

Employee

Works under the direction and control of the employer
Paid wages (hourly or weekly) with tax withheld
Receives super, leave, and workers’ comp from the employer
Uses the employer’s tools and equipment (usually)
Works set hours determined by the employer

Subcontractor

Operates their own business
Quotes for and contracts specific work
Controls how and when the work is done
Manages their own tax, super, and insurance
Provides their own tools and equipment
Can work for multiple clients
Bears the risk of profit or loss

Important: Simply having an ABN doesn’t make you a genuine subcontractor. The ATO looks at the real nature of the working relationship. If you’re working like an employee (same hours, same boss, using their tools, being told exactly what to do), you may be in a sham contracting arrangement — which is illegal and can result in penalties for both parties.

Step 1: Get Your Business Set Up

ABN (Australian Business Number)

Apply for an ABN through the Australian Business Register (abr.gov.au). It’s free and usually processed immediately online. You’ll need your Tax File Number (TFN) and personal details.

Business Structure

Most tradespeople start as a sole trader — the simplest and cheapest structure. As your business grows, you may consider:

Sole trader: Simplest setup, you and the business are the same legal entity. All profits are your personal income.
Company (Pty Ltd): A separate legal entity. Offers limited liability protection and potential tax advantages at higher income levels, but more expensive to set up and run.
Trust: Can offer asset protection and tax planning benefits. More complex and expensive to establish.

Talk to an accountant before choosing — the right structure depends on your circumstances, income level, and goals.

GST Registration

If your annual turnover is (or will be) $75,000 or more, you must register for GST. Most subcontracting tradespeople exceed this threshold quickly. Once registered:

You charge GST (10%) on top of your quoted price
You can claim back GST on your business purchases
You lodge Business Activity Statements (BAS) quarterly or monthly

Business Bank Account

Open a separate bank account for your business. Mixing personal and business finances is a common mistake that causes headaches at tax time.

Step 2: Insurance

As a subcontractor, you need your own insurance. Key policies include:

Public Liability Insurance

Covers you if your work causes injury to someone or damage to property. Most builders and head contractors require a minimum of $10 million to $20 million public liability cover before they’ll engage you. Cost: approximately $500 to $2,000 per year depending on your trade and coverage level.

Workers’ Compensation

If you employ anyone (even one apprentice or labourer), you must have workers’ compensation insurance in WA. If you’re a sole trader with no employees, you may not need it — but you won’t be covered if you’re injured at work unless you have income protection insurance.

Income Protection Insurance

Covers your income if you can’t work due to illness or injury. As a subcontractor, if you don’t work, you don’t get paid — and you don’t have sick leave. Income protection is strongly recommended.

Tool and Equipment Insurance

Covers theft, damage, or loss of your tools and equipment. A tradesperson’s tools can be worth $10,000 to $50,000+. If your tools are stolen from your ute overnight, can you afford to replace them?

Vehicle Insurance

Comprehensive insurance on your work vehicle (ute, van). Make sure your policy covers commercial use and the tools and materials inside.

Step 3: Licences and Registrations

Trade Licence

Depending on your trade, you may need a specific licence to operate in WA:

Electricians: Electrical Contractor’s Licence from Energy Safety
Plumbers: Plumbing Contractor’s Licence from the Plumbers Licensing Board
Builders: Building Contractor Registration from the Building Services Board
Painters: Painting Contractor Registration from the Building Services Board

Check the Department of Mines, Industry Regulation and Safety website for the specific requirements for your trade.

Building Services Registration

In WA, various building trades require registration with the Building Services Board. This is separate from your trade qualification and is about your right to contract for work.

Step 4: Pricing Your Work

Getting your pricing right is critical. Too cheap and you’ll work yourself into the ground for nothing. Too expensive and you won’t win work.

What to Include in Your Rate

Your labour: What you want to earn per hour or per day
Super: You need to pay your own super (currently 11.5%)
Leave loading: You don’t get annual leave or sick leave — factor in the cost of your time off
Workers’ comp / income protection: Your insurance costs
Vehicle costs: Fuel, maintenance, registration, insurance, depreciation
Tool costs: Replacement, maintenance, and insurance
Business costs: Phone, accounting, software, licences, PPE
Tax: You’re responsible for your own income tax
Profit margin: Something on top to build the business

As a rough guide, if you want to take home the equivalent of a $100,000 employee salary, your gross subcontracting income needs to be approximately $140,000 to $160,000 to cover all the costs that an employer would normally pay.

Step 5: Finding Work

Build Your Network

In Perth’s construction industry, relationships are everything. Your first clients will likely be:

Your previous employer (if you leave on good terms)
Builders and contractors you’ve worked with as an employee
Contacts you’ve built over your career
Other subcontractors who can refer overflow work

Register With Recruitment Agencies

Perth Trades Recruitment works with subcontractors as well as employees. We can connect you with builders and contractors who need reliable subbies.

Online Presence

A simple website, Google Business profile, and presence on industry platforms can generate leads — particularly for residential work.

Step 6: Managing Your Money

Set Aside Tax and Super

The biggest mistake new subcontractors make is spending everything they earn and getting hit with a massive tax bill. From every payment you receive:

Set aside approximately 30% for income tax
Set aside 11.5% for super (pay it quarterly)
Set aside GST collected (if registered)

Put these amounts in a separate savings account and don’t touch them.

Get an Accountant

A good accountant who understands the construction industry will save you more than they cost. They’ll help with:

Tax planning and minimisation
BAS preparation and lodgement
Claiming deductions correctly
Business structure advice
Super obligations

Keep Records

Keep receipts for everything — fuel, tools, materials, phone, insurance, licences, PPE, training. These are all tax deductions that reduce your tax bill.

Common Mistakes to Avoid

Not charging enough: Underpricing to win work is a race to the bottom
Not saving for tax: The ATO will catch up with you
No insurance: One accident without public liability could bankrupt you
Poor record keeping: Missing deductions means paying more tax than you need to
Not paying super: Future-you will regret it
Working for one client only: This looks like sham contracting and limits your independence
No written agreements: Always have a written scope, price, and payment terms

Perth Trades Recruitment Supports Subcontractors

Perth Trades Recruitment works with both employed tradespeople and subcontractors. If you’re going out on your own and need help finding your first contracts, or if you’re an established subbie looking for more consistent work, we can help.

Contact Perth Trades Recruitment to find subcontracting opportunities in Perth.