Year one has a shape, and it pays to work it in order. Months one and two are the legal shell (registration, insurance, tax registration, a separate business account) built before a client asks for it rather than after. Months two to six are your first clients and then the most valuable exercise of the year: working out what your time actually costs, by dividing your real overhead by the hours somebody actually paid for. Months six to twelve are where it is decided, because that is when the work turns steady, the admin starts slipping, and the tax bill for the first three quarters arrives.
The first Monday you work for yourself is quieter than you expected. No dispatcher, no foreman, no schedule taped to a site trailer wall. Just you, a truck full of tools you already owned, and the slow realization that every single thing that happens next is your job now, including the parts nobody ever taught you.
Most trades businesses do not fail because the owner is bad at the trade. They fail because the owner is excellent at the trade and treats everything else as an interruption. The first twelve months are where that pattern either forms or doesn't. Here is what each stretch of the year is actually for.
Months 1–2: What paperwork do you need first?
The temptation is to start working immediately and "sort out the paperwork later." Later arrives as a problem: a client who wants an invoice from a registered business, an insurer who asks when you started operating, a tax year that began before your records did.
The foundation list is short:
- Register the business. Sole proprietorship is the fast, cheap default in most of Canada and the US; incorporation adds liability separation and some tax flexibility at the cost of more filing. Plenty of solo operators run year one as a sole prop and incorporate once revenue justifies it. Ask an accountant which fits your numbers, not a forum.
- Get the licenses your trade and region require. This varies enormously: an electrician in Ontario and a handyman in Texas face completely different rules. Your provincial or state licensing body publishes exactly what you need. Do not guess, and do not work outside your license class; one complaint can end the business before it starts.
- Open a business bank account. Day one, before the first deposit. Mixing business and personal money in one account is the single most common bookkeeping wound, and it never heals. You will spend hours at tax time trying to remember whether that $214 was materials or groceries.
- Register for sales tax when required. Most countries set a revenue threshold above which registration stops being optional, and the figure is different in every one. Look up the current number for yours rather than trusting a rule of thumb you heard on a job site. In Canada it is GST/HST once you cross $30,000 in revenue over four consecutive quarters, and many contractors register earlier voluntarily so they can claim input tax credits on tools and materials. In the US there is no national sales tax at all: it is state by state, and whether your work is taxable varies with it. Australia and New Zealand both run a GST with a registration turnover threshold of their own, published by the ATO and Inland Revenue respectively. Wherever you are, this is a one-hour conversation with an accountant that prevents a five-figure surprise.
- Get insured. General liability before your first job, not after. Many commercial clients and general contractors will not let you on site without a certificate. (Insurance is its own topic; the short version is: liability now, tools and commercial auto soon.)
None of this makes money. All of it protects the money you are about to make.
Months 2–4: First clients, and the discount trap
Your first clients will mostly come from people who already know your work: the employer's clients who followed you (check your old employment terms first), friends of friends, the neighbor who watched you re-deck your own porch. That is normal and fine. Year one marketing is mostly showing up, doing clean work, and asking happy clients to tell someone.
The trap in this stretch is buying work with discounts. It feels rational: you need jobs, your calendar is empty, and $60 an hour is better than zero. But the clients you win at a desperation price expect that price forever, and they refer you to people who expect it too. You are not building a client list; you are building a discount list.
There is one exception worth making deliberately: a genuinely strategic first job (a visible project in a neighborhood you want, a general contractor you want a relationship with) priced slightly keen, once, with your eyes open. That is a marketing spend. Eleven jobs priced out of fear is a business model, and a bad one.
When a prospect pushes on price in month three, the answer sounds like this:
"That's the price for the work as we scoped it. If the budget's fixed, I can look at trimming the scope. We could hold off on the closet built-ins and do those in the fall. But I can't do the same work for less."
Scope moves. Rate doesn't. Learn to say that in month three and you will still believe it in year five.
Months 4–6: What does an hour of your time actually cost?
By now you have enough jobs behind you to do the most valuable exercise of year one: figure out what your time actually costs.
Take a month of records and add up everything that was not wages: insurance, fuel, phone, tool replacement, license fees, accounting, the software you use, the truck payment. Divide by the hours you actually billed, meaning the hours somebody paid for, not the hours you worked. Most new contractors discover two things at once. Their overhead per billable hour is two or three times what they assumed, and their billable hours are far fewer than their working hours, because quoting, driving, and supply runs ate a third of the week.
If you worked 50 hours a week but billed 28, and your overhead runs $2,600 a month, then roughly $22 of every billable hour is spoken for before you earn a dollar. Price like an employee ("I made $42 an hour at my old job, so $55 feels generous") and you are quietly earning less than you did with none of the risk.
This is also the month to write down a rate card and stop pricing every job from scratch by feel. Feel drifts downward under pressure. A written rate does not.
Months 6–9: The admin habits that decide year two
Somewhere around month six, the work gets steady and the admin starts slipping. This is the hinge of the whole year. The contractors who make it comfortably into year two are not the ones with the best jobs. They are the ones who built four boring habits before the busy season made habits impossible:
Invoice the day the work finishes, not Friday, not "when I get to it." Every day between finishing and invoicing tells the client this isn't urgent and pushes out the day you actually get paid. A same-day invoice from your phone in the driveway takes four minutes. Capture every receipt the day you get it: a photo at the counter beats a shoebox in November. Every lost receipt is a deductible expense you paid tax on for no reason, or, if you are registered for GST or VAT, an input tax credit you handed back to the government voluntarily. Follow up every quote, because a quote you never chase is a coin flip you paid to enter. Two follow-ups, one at three days and one at ten, will win you jobs you had silently written off, since half the time the client simply got busy. And write down what happened on site. A two-line day log (what got done, what was said, what changed) feels pointless until the day a client remembers a conversation differently, at which point it is the most valuable thing you own.
None of these habits takes ten minutes. All of them are the first things dropped when you are tired, which is why they have to be habits and not intentions.
Months 9–12: Taxes, numbers, and the year-two decision
The last quarter of year one is when the bill for the first three quarters arrives. Literally, if you have not been setting aside tax.
If you have been putting 25–30% of every payment into a separate tax account since month one, this stretch is calm. If you have not, start today with whatever is left; a painful partial reserve beats an impossible lump. Self-employed tax surprises are the most common near-death experience of year one, and they are entirely a plumbing problem: the money arrived looking like yours, and it wasn't.
Then sit down with the year's numbers and answer three questions honestly:
- Which jobs actually made money? Not which felt good. Which ones, after real hours and real materials, beat your target rate. Most owners find a pattern: one type of work quietly subsidizing another.
- Where did the hours go? If a third of your week is windshield time and supply runs, that is the first thing to fix in year two: tighter service area, fewer trips, better staging.
- What is the plan: bigger, or better? Year two either means more capacity (a helper, longer bookings) or better margin (raising rates, dropping the losing work). "Both, vaguely" is how year two becomes a rerun of year one.
Start with a system, not a shoebox
One structural choice makes every habit above cheaper: run the business inside one system from the first job, instead of spreadsheets and a camera roll that you plan to migrate "once things settle down." Things never settle down; migration is a job nobody ever schedules. Zeus is built for exactly this start: quotes, invoices, payments, receipts, job photos, and time tracking in one offline-first app on the phone you already carry. Job one and job four hundred live in the same searchable place. Starting organized costs nothing. Getting organized in year three costs a winter.
Which months of year one are hardest?
Expect the middle to be the hard part. Months one and two run on adrenaline; months eleven and twelve run on momentum. Months five through nine run on discipline, because that is when you are busy enough to drop the habits and not established enough to survive dropping them.
And expect to be wrong about what the job is. You thought you were going into business to do the trade. You are actually going into business to run a small company that performs the trade. The owners who accept that early are the ones still choosing their own Mondays in year five.
Frequently asked questions
Should I incorporate right away or start as a sole proprietor?
For most solo trades, a sole proprietorship is the sensible year-one default: cheap to start, simple to file. Incorporation earns its overhead once there is meaningful liability exposure or enough profit to benefit from leaving money in the company. The right answer depends on your revenue, your province or state, and your risk. A one-hour session with an accountant before you register is the cheapest advice you will ever buy.
How much money should I have saved before going out on my own?
Enough to cover three months of personal bills plus your startup costs (insurance, licenses, initial materials float) without a single dollar of revenue. Jobs arrive slower than optimism predicts, and clients pay slower than jobs arrive. Starting with two weeks of runway does not make you brave; it makes you cheap to negotiate against.
When should I register for sales tax?
Two separate questions, in order. First, when does it become mandatory? Most countries answer that with a revenue threshold, so find yours. In Canada it is $30,000 over four consecutive quarters. In Australia and New Zealand the GST rules each set their own turnover figure, and in the US there is no national threshold at all, since it depends on your state and the kind of work you do. Second, should you register before you have to? In GST and HST countries plenty of contractors register from day one so they can claim back the tax paid on tools, materials, and the truck. Either way, decide deliberately with an accountant. It is a bad rule to discover you broke.
What is the most common first-year mistake?
Pricing like an employee. New owners set rates by what their old wage was plus a bit, and only discover at tax time that insurance, slow weeks, unpaid quoting hours, and self-employment taxes ate the difference. Work out your loaded cost per billable hour by month six at the latest, then price from that number, not from what feels polite.
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