How to Set Up Your Construction/Contracting Business in 10 Steps

June 01, 2021
construction-set-up-business

There are more than 31 million small businesses in the U.S., according to the Small Business Association. Forming a construction/contracting business is a great way to put your skills to work and achieve your entrepreneurial dreams. Here are 10 key steps you will need to complete to get your business going.

  1. Complete any licensing and permit requirements. You will need to meet state and local licensing and permit requirements to operate as a construction contractor in your area. See your state’s licensing board for contractors for more information. For example, in California, the Department of Consumer Affairs Contractors State License Board lists the requirements for a contractor license, as well as other related licenses. These requirements include passing an examination.
  2. Decide what type of business you’re starting. For example, a business could be a sole proprietorship, a Limited Liability Company, a Limited Partnership, a Limited Liability Partnership, a General Partnership, or a Corporation. Limited Liability Companies are a common choice for construction contractors due to the liability protection, but you should review your options to decide which business structure suits your needs.
  3. Register your businesses with the state. The requirements for a business license will depend on the state and city where you live and work. Contact your state’s Department of Revenue or Business Licensing Agency for more information on how to register a business in your area. In California, for example, you can use the California Business Portal.

The details will vary depending on where you are operating, but your Department of Revenue or Business Licensing Agency should take you through the requirements. There may be additional requirements if you are importing/exporting goods, you have employees, or you are selling physical items.

  1. File with the federal government if needed. Depending on your business structure and whether you have any employees, you may need to obtain a Federal Employer Identification Number. You may also decide to register a trademarked name with the federal government.
  2. Get insurance and bonding. Construction work involves many risks, and your state may require liability insurance and bonding as part of the licensing requirements for contractors. You may need additional insurance to protect your business or to qualify for projects.
  3. Set up your business accounting. You will need to keep a record of both your business expenses and revenue. You may also want to set up a separate bank account and credit card for your business.
  4. Create a website. A website is the online face of your business. It should be professional and informative. You can create a website yourself using sites like Squarespace. However, you may want to invest in professional website development. You will also need to buy a domain name for your website.
  5. Maintain social media accounts. Social media can be a great way to get the word out about your business and connect with potential clients. Social media platforms to consider include Facebook, LinkedIn, and Twitter.
  6. Get business cards. Business cards are another essential tool for spreading the word about your business. You have many options when it comes to getting business cards, including Staples, Moo, Vistaprint, and Office Depot.
  7. Put in bids. Once your business is set up, it’s time to start looking for projects to bid on. You can find projects through construction lead services, as well as networking and referrals.

It’s a good idea to enlist the help of an expert as you navigate each of these steps. For step #5, consult the small business, construction insurance team at Heffernan Insurance Brokers. We’ve helped countless new business owners get the tailored protection they need to safely launch their businesses.