Looking to turn the construction experience you’ve gained from a side hustle into your own lucrative business? Whether you’re looking to be a general contractor, or you’re looking to get involved in residential or commercial property developments, there is always a need for contractors. As eager as you might be to get started, you want to make sure that you’ve dotted your eyes and crossed your tees as it pertains to necessary paperwork, registrations, and policies. Most often, first time business owners in the construction industry forget about three important things:
1. Licenses
2. Surety Bonds
3. Business Insurances
Secure Your Business Licenses
Most states have rules and regulations as they pertain to starting a business in the construction industry. No matter what area you intend to start working in, you’re going to need to have a business license. A license essentially states that your business is legally allowed to conduct specific types of work within the area. It also lets customers know that you’re legit, and that you’re aware of and in compliance with federal and local laws. According to the Small Business Administration, you will need to check your locality to determine which licenses and permits are necessary for your type of construction business.
Surety Bonds
When you get your first project, chances are you’re going to sign some form of contract with the customer. Surety bonds are necessary for construction businesses as a method for ensuring project completion as outlined within the contract. Let’s say you started a bathroom remodeling project for a customer, and for some reason or another you failed to complete the job. Because you’ve obtained a surety bond with a third party, the company who issued the surety is responsible for either finding another contractor to complete the job or compensating the customer for any financial loss. So essentially, such bonds protect your business’ integrity and also keep the customer satisfied.
Business/Contractor Insurance
While it would be nice to assume that you’ll never encounter any accidents, you’re working in a risky industry. Construction projects whether large or small can result in accidents. Whether it’s one of your crew getting hurt while on the job, or a customer who slips and falls on your construction site, being prepared is what matters. Personal injury claims and lawsuits can really put a damper on your business endeavors, and therefore protecting your company against litigation is crucial. General liability or contractors insurance protects your company’s assets in the event that something goes wrong. Such insurance will pay for any financial obligations incurred as a direct result of an accident. This may include medical bills, time lost from work, legal fees, and whatever else is necessary.
As you can see, there is a lot of legwork that should be done prior to ever setting foot on your first construction job. In order to ensure the credibility of your business, protect your staff, and gain the trust of consumers, you must make sure that you’ve covered all bases. Failure to obtain the above mentioned documents and policies could result in fines, lawsuits, and more importantly, the demise of your new found business. Be sure to talk everything over with a lawyer to ensure that you’re protected and in compliance on all levels.
I’m not thinking of going so far as to set up a construction business, but I am interested in the idea of renovating property to make use of the CGT allowance in certain countries… tax free cash is tax free cash!
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A Best Architects Construction company in Miami and Florida, Offers variety of services like single, multiple family home construction, commercial office design
Construction projects are way too risky and it can be nightmare for your business if it is not covered with insurance. Remember, though, that insurance is only as good as the maximum of your policy’s coverage limit
Thanks for this advice, my husband and I want to start a small time shed building company and want to do it the right way. I didn’t think to check into all the licensing that we might need to even call ourselves a company though. I know how to get many of the building permits but that is just about it.
Thanks for sharing this! I definitely agree that these things are all important for contractors to have. I know that I wouldn’t want to hire a contractor that didn’t have a license for it. Having the right license and experience can make marketing your new business a lot easier!
Oh, so that’s what they mean by LIcensed Bonded and insured. Now I feel like a dummy because my community was having a class on what those things mean and how to get them. I am actually really interested in getting some of these things to be able to start my contracting business. http://www.arctic-const.ca
Thank you for your advice on insurance and licenses. My grandfather was a general contractor and he loved his job. However, he began to tire of running his own business. Many people don’t think of all the costs and time involved in running any business. Thanks for posting the specifics for general contracting because we need people to look at these things before starting out as contractors.
I definitely agree that you should make sure that your business is insured so that it is protected in the case of personal injury. You talk about how personal injury claims and lawsuits can put a damper on your business endeavors, and I definitely agree with this. Making sure that your business is protected will make your business run more smoothly financially as well as keep your head above the water in the case of a lawsuit. Thanks for all of your insight and tips on how to start my construction business well!
Pauline, my Uncle worked construction when he was younger and is know trying to take those skills he learned and make his own business. The tip about making sure to have a licenses, surety bond and business insurance was really good. I will have to show this to my Uncle.
It’s also really important that folks are fully aware of the many safety regulations that are continuously evolving when it comes to work sites. Thankfully there’s a lot of great resources available online, including this one which gives some really helpful tips for those looking to transition into full time work.
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Contractors are also great help in narrowing the range of materials to be used and in deciding on minute details like whether you should have suspended ceiling panels for the project. Doing this will surely help you save a great deal of money.
I really liked the advice to secure your business licenses. Not a lot of people do that. I think that it is very important, however, to do so. All too often, people get in trouble for not having proper licensing. The best way to avoid that problem is by making sure that all of your licensing is in order. http://www.mlaholdings.com.au/forklift-hire/forklift-hire-perth
I think that it would be a great idea to start a construction company. It’s a good professional that makes a lot of money. However, it does take some work like you say in the article. I think a big thing to get, like you mention, is a license. Work on that first, so that you can start doing all of the other stuff required.
Working in construction definitely seems like a hard but worthwhile job. I definitely agree that when it comes to businesses like this it is essential for you to be insured. It is also super important for you to have the proper licensing. Those are just two really good first steps to becoming successful.
Selecting the appropriate construction and building materials for a project entails more than just placing an order at a building supplies firm. There are several other factors that you need to consider to come up with the best choices and in compliance with building regulations.
Hi admin, I have a small working area where I have to move my heavy products. actually I have to shift my products to my new garage. But I do not have the suitable size of forklift. I want to know in which size forklift used to work?
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Very sound advice. We can’t stress enough how important it is for individuals to take all the steps necessary before they even think about beginning any sort of construction work for hire. Unfortunately, people doing work without meeting the requirements hurts both parties involved and happens all too often.
My brother is about to start his own business, and he wants to make sure he has everything set in stone before he starts. This being said, I really appreciate you letting me know that getting business insurance is a necessity when starting a business. I definitely think that this would be a good thing for my brother to get because then he’ll be able to stay safe from other people. Thanks a ton for all your help. I’ll be sure to show this to him right away.
If a contractor doesn’t have insurance and a worker gets hurt on your project, you could be liable. The same goes with accidents that damage your next-door neighbor’s home. “If you have scaffolding that fell and damaged the property next door, you want the contractor’s liability to cover the cost of that damage,” Get proof of insurance. Pick a contractor who specializes in your project type.
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I had no idea that there are so many forms to fill out when starting a construction business. I can see how licensing, bonds, and insurance would all be important. Another thing that might help your business is to work out the contract you will be using with customers. It seems like that would be a good way to protect both the business and the customer.
The construction business is booming once more. In fact, the residential building construction industry was the number one fastest-growth industries for small businesses in recent years.
I didn’t realize that there was so much legal work that went into creating a business! It would definitely help to have a lawyer walking you through all parts of the process from recruitment to hiring to reality. I’d definitely go ahead and just schedule a consultation to figure things out.
Hey, great share….
Me and my husband were planning to start our own small construction business but we were little apprehensive of starting this sort of business as it involves lots of efforts and responsibilities. Finding the right kinds of workers is really a difficult task.
I agree that securing your licence is really important. Your article is definitely going to help us out in our new venture. Thanks for sharing this post.
Cheers!!
You should have heavy equipment also like forklifts to be used on what ever it is needed to.
Why don’t you try asking the help of a business adviser? A well known individual to assure the best option for you.
If you’re looking to improve the look of your home without the painting, vinyl siding is a popular, affordable choice. Many homeowners and builders choose it because it’s long lasting, durable, inexpensive and relatively easy to install and maintain. Vinyl comes in a variety of grains, thickness and colors making it also a practical choice for many homeowners.
Taking good care of your home is a priority. A home, for most people, is a lifetime investment. You want it always to be solid and in good repair. It has value. Keeping it well maintained is necessary not just so you can live in comfort, but also in case you decide to sell it. Well maintained homes sell much faster than those that are in need of repair. The other consideration is that you may want to leave the home for your children. We want our children to have the best and leaving them the family home in good condition will be a blessing for them.
Although I’m not a personal contractor, It’s good to know that there is insurance to protect you with demo and remodeling jobs. I have been considering the idea of remodeling my kitchen, but I really don’t want to deal with the mold issues that could come with it. Your site gives me comfort in this situation. Thanks for the helpful advice.
Business is a really hard thing to manage. It’s like a little kid that needs a lot of attention and sometimes you need to have some extra help to make it even better. Advisers for example.
It sounds like insurance really covers you when you rent heavy equipment, and also it helps with giving you a good name in the case some accident on the job might occur. Although licenses seem like just a piece of paper to those of us who know what the job requires, it seems you are protecting your builder too. I’ll consider this when I hire someone for doing my home. Thank you for the information.
Insurance as you point out is essential. Accidents can and do happen! Anything to make construction safer for everyone makes sense. Enjoy the article, thanks.
Business is always a struggle and to lessen the fears of failure on it, it is wise to get help in how to run it.
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Wow, I actually cannot believe I learned so much through reading this post. I had no idea that contractors go through an immense amount of paperwork. I think picking a contractor out is so difficult and now thinking of the amount of time invested, I think I will start looking at the way they structure their business plans and how apt for the job their backgrounds make them. Thanks for sharinh!
The right contractors may come cheap or expensive. Don’t rely on the price but check their previos projects and reviews.
Your warnings are well warranted. Not having the proper documents in place could have unfortunate repercussions for those transitioning from a “side hustle” to day to day business operations.
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Advisers are really helpful in determining the proper thing to do for a business and how to deal with financial related stuff.
A custom built commercial building must be done in perfection. It should pass any requirements and the contractors should be excellent.
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Impressive and interesting post! Many of people get aware from this kind of information like what type of things everyone should keep in mind while doing construction business. I think this would be the good stuff for all startups that interested in construction field.
Great tips. You really have to consider a lot of things in hiring a contractor. It is really important.
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Some great tips here. Thanks for the post!
Your comments about being protected have a lot of truth in them. Whether a customer or an employee ends up injured, having the proper protection can save you a lot of trouble in the end, as you suggested.
Great post.
It is really wonderful to see such an informative post.The term “business insurance” is used to describe all of the different types of indemnification companies can purchase from providers. Because all companies have different risks associated with operations, they require different types and amounts of protection.I definitely agree that these things mentioned by you are all important for contractors to have.Thank you so much again for sharing this post. Keep sharing.
Contractors may be expensive but with the quality they make it shouldn’t matter that much as long as they deliver.
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The right contractors may come cheap or expensive. Don’t rely on the price but check their previous projects and reviews.
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Great post. A must read article I should say. Taking good care of your home is very important because your family’s safety is our top priority.. Building house and call it a home is not just construction but making memories and it is a lifetime investment. We always want our home to be solid and in good physical feature and It has value. So that whenever there is a need to sell it, there will be no additional dollar to spend or at least save dollars for improvement.
Looks great! That nice!
Completely agree with everything mentioned
Is that all? cause I’m planning to build up my own construction company.