What accounting a private repair contractor needs
Plumbers, electricians and finishers who take orders directly from private individuals are essentially a small business, even if the contractor doesn't think of it that way. And the question of legally registering income sooner or later comes up for everyone.
Which format fits
For one-off orders from private individuals, self-employed status is usually the simplest option — minimal reporting and a clear tax on income received. If orders become regular and a crew or permanent subcontractors appear — you should switch to a sole proprietorship.
What to keep in mind
Working with the customer's materials and with your own materials is accounted for differently: if the contractor buys the materials and includes them in the price of the work, this is part of income and must be recorded. Another point is the contract: a verbal agreement protects neither the contractor nor the customer in a dispute about quality or deadlines.
Common mistakes
- They work without a written contract, which makes it hard to prove the scope and cost of work in a dispute
- They don't report income at all, considering themselves "too small" a business for the tax authority
- They don't separate the cost of materials from the cost of labor in settlements with the customer
Conclusion
Even a simple self-employed status protects a contractor more than working "off the books" — legal income provides grounds for a loan, official relationships with customers and peace of mind in case of disputes. We'll help you set everything up correctly from the very first job.