More and more Australian households and businesses are looking to use solar panels. This has resulted in many business owners expanding their current business, or choosing to set up a new solar installation business. However, if you decide to set up a solar installation business, you need to consider the business structure you will use, whether you are licenced and the key commercial contracts you will need. This article will unpack some of these considerations and explain how you can protect your business.
When you start a solar installation business, it is important you have the right licence and are qualified to run the business. Every state in Australia has different requirements for who is allowed to install solar panels. For example, in New South Wales, you can only contract to install solar panels on the roof of a residential property or other premises if you hold a building or electrical class of licence. Furthermore, you must hire someone with an electrical licence as part of the contract so that they can carry out the electrical wiring work. Therefore, it is important that you consider whether you have the relevant licences to start a solar installation business before you start working with clients.
Once you have put together your business plan, you will need to decide what business structure you will set up.
Most solar installation businesses will set up as a company. A company is an entity that has a separate legal existence from its owners. This means that when the company enters into contracts with its clients, the company is responsible for the contract, not you personally. For high-value contracts, this is very important. It can help protect your personal assets if something goes wrong. A company will also let you own part of the company and your business partners to own the other parts.
If you are starting the business by yourself and do not have any business partners or workers, you may choose to operate as a sole trader. A sole trader is an independent individual carrying out a business. It is very cheap and quick to set up. However, you will be personally responsible if something goes wrong.
Partnership or Trust
Other businesses choose to operate as a partnership or trust. A business structuring and tax lawyer or tax accountant will be able to help you choose if this is more appropriate for your circumstances.
Although you may want to start working immediately, it is important that you document any arrangements in writing. This will minimise the chance of a dispute arising, which is a costly exercise no business starting out wants to deal with. There are three key contracts that you should have in place.
1. Terms of Trade
Your terms of trade will contain the terms and conditions between you and your clients. They will address terms such as:
- the goods and services you are providing;
- pricing, invoicing and payment;
- warranties; and
- ending the contract.
However, different contracts and standards are required for residential and commercial solar installation terms of trade. Your commercial contracts lawyer will be able to break down the differences and help you draft them.
2. Supply Agreements
Unless you are building the solar panels yourself, it is likely you will be purchasing them from a supplier. This relationship is critical to your business’ success so it is important that your agreement with the supplier is in writing. Often, the supplier will provide you with their own supply agreement. You should read over it thoroughly, and check that it carefully describes:
- the goods you will be purchasing;
- the purchase price;
- the order and delivery process;
- a forecast clause to ensure they have enough solar panels to meet your anticipated demand; and
- what happens if the solar panels they supply to you are defective.
3. Employment Contracts and Contractor’s Agreements
If you are going to engage more people to help you with your business, these workers should be bound by either:
- an employment contract if they are an employee; or
- a contractor’s agreement if they are a contractor.
These contracts will address:
- what their job is;
- how they will be paid;
- how leave works;
- whether there is any restraint on working with your competitors; and
- how termination will work.
An employment lawyer will be able to help you determine if your workers should be classified as employees or contractors.
If you are putting a lot of work into your promotional material and increasing brand awareness, you do not want a competitor to start using your branding. To protect your brand, you should consider registering for a trade mark. A trade mark is a sign that distinguishes your services from other business’ in the industry and can include a business name or a logo. Registering a trade mark will give you an exclusive right to use your business name and logo.
Before you start installing solar panels, it is important you take the time to make sure you are setting up the business properly. You should ensure that you:
- are qualified to run the business and have the right licences;
- consider what business structure you will set up;
- put in place commercial contracts with clients, suppliers and workers in writing; and
- register a trade mark to protect your brand.
If you are starting a solar installation business and need assistance, you can contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.
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