How to Become a Residential Building Contractor

Explore the diversity of starting a residential construction company.

While the fluctuation of the housing market can give any person pause about starting a business related to construction, no matter where you go in the country someone always needs something built. Residential building contractors with relevant skills are always in high demand, and if you have the ability to build quality buildings at a reasonable price, your name brand will expand exponentially. Getting started, however, can sometimes be a challenging process unless you know the proper methods to streamline your business.

Instructions

1. Decide the type of residential building you want to perform. Understand that there are a variety of trades within the overall umbrella title of residential construction, ranging from ceramic tile and natural stone installers to plumbers, carpenters, carpet layers, painters and more. Tools alone do not make a craftsman, and if you do not have the relevant training in a particular field you should not create a business within that trade.

2. Purchase relevant insurance prior to starting any jobs. Insurance is a vital component to any type of industry because it protects not only you, but also the client from any potential accidents. Obtain personal-injury insurance as well as property-damage insurance, and workers-compensation insurance should be carried for any individuals working for your company. Discuss the full range of options with your local insurance agent for more details on the type of insurance that is fit for your company.

3. Hire a certified public accountant---otherwise known as a CPA---to organize all of your paperwork for you, and to help you determine whether you want to run your business as a corporation, an LLC, or a sole entity. There are various tax considerations for each type of business you create, and only a CPA can help you navigate the complexity of the system. A CPA will apply for your Employer Identification Number as well as any letters of incorporation you need. Discuss the possibilities of having your CPA run your payroll for you if you do not want to deal with writing paychecks and the hassle of the tax system on your own.

4. Set up a bank account that is separate from your personal account and specifically in the name of your company. Understand that any revenues received or expenses paid by the company must go through this account. Never use your business account for personal reasons; instead, keep your business account separate from your personal in order to track legitimate business expenses as well as to avoid penalties on draining funds from a corporation. Discuss with your CPA which type of business account you should open .