How to Set Up a Contracting Business

Repairing homes is usually a steady source of income for building contractors.

Starting a contracting business is an opportunity to gain revenues for larger projects. Bidding on a sizable job opportunity can yield thousands of dollars for a given deal. Contract work, to name just a few areas, is available for plumbing work, electrical work, teaching and construction jobs. Develop a plan to move forward so that acquiring contract jobs will be possible in a timely manner. Growing the business properly will work best by taking on smaller projects, successfully completing them and proceeding to bid on larger ones. It will take experience to figure out what works and what doesn't work.

Things You'll Need

• Contractor professional license
• Business license
• Office or physical building
• Truck or vehicle
• Tools for operation

Instructions

1. Obtain certification or licensure in specific skills to quality for a contractor's license in a given state or city. Talk with business advisers to schedule needed tests or exams to qualify as a contractor. Review all requirements such as having a legal background check or working under a master carpenter for six months, for example. Never assume that obtaining a contractor's license only requires paperwork.

2. Obtain a business license in both the city and county of operation. Ask local officials if a home address can be used, if the business will involve no actual foot traffic to the home. Rent an office space if a commercial address is required. Meet with a financial institution to establish a commercial line of credit and set up a business bank account.

3. Purchase a vehicle or truck, if needed, to serve clients. Buy tools needed to operate a given business, such as plumbing tools or scaffolding for painting jobs. Look into renting larger tools or vehicles that might stretch a start-up budget.

4. Seek assistance from local Service Corps Of Retired Executives (SCORE) counselors or business advisers to develop business contracts. Keep in mind that bidding on contracting work is a legal situation, so hire an attorney to review the first few contracts in minute detail. State clearly, for example, how many workers will be on-site, time frames for completing given work and moneys required as a retainer.

5. Invite a more experienced contractor to assist in writing a bid for a job. Find this person in a neighboring county, for example, one who will not be in competition with you in any manner. Turn in a bid after part-time or full-time workers are available to assist in the work.

Tips & Warnings

• Read books on contracting work, and go online to learn from other people's mistakes. In business, look for any event that might go wrong on a job site or in a job situation. Take steps to rectify potential problems ahead of time. This way, a project can be completed with fewer problems. Manage a contract job well to gain needed testimonials for future advertising.

• Talk with an insurance agent to get all insurance in order before beginning any bidding. Don't wait until a job has been won to talk about insurance. It can take days or weeks for certain types of insurance to gain approval from an agency.

References

• Education Portal: How to Become a Contractor
• Rich Contractor: How to Become a Contractor
• Capture Planning: How to Become a Government Contractor

Resources

• Business.gov: How to Become an Independent Contractor
• Cat Adjuster: How To Become a Preferred Contractor