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How to Start a Contracting Business

Jess Casto
Contractor working on building storage unit
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Starting any business can seem daunting, but starting a contractor business might seem especially daunting. We are here to help by providing you with a few tips and tricks of the trade to help ease the transition into your first Contractor Business. Make sure to keep reading to the end to learn how STORExpress can help you with our Contractor Units.


 STORExpress Contractor Unit in Turtle Creek


What do I need to do to start a Contracting Company?

Setting up a business as a contractor, no matter the specific field of construction that you want to work in (i.e. Roofing, Plumbing, Oil & Gas, or Masonry) requires that the business be registered federally with a Tax ID Number or EIN. To set up a business as a contractor, you must meet additional requirements within the state guidelines of Pennsylvania as well. The specific borough, city, or village may also require that the business be registered as well. 

From the first day that you consider opening your own contracting or construction business, you should consider what licenses, bonds, or insurance policies you might need to authorized to work in the state of Pennsylvania. Understanding the difference between being a Registered General Contractor and a Certified General Contractor will help you understand what services your business is able to provide. 

   

Contractor Licenses and/or Qualifications

Whether you are a general contractor or work within a specific trade or industry, such as an electrician, you will need some kind of licensing to work legally within the state. Start by checking with your local borough or city’s code office to determine which exams and licensing you need. Many of these specialty trades require state exams and licensing, while general contractors who oversee projects are usually licensed at the city or county level. If you haven’t already, take the correct classes and pass the required certification exams. This is the very first step in starting a legal business. Many online classes are available, and usually, the local code office is happy to direct you to a local in-person program. 


Register the business

Register the business entity with the secretary of state, and obtain a federal identification number from the IRS. The business entity registration gives you legal permission to operate in the state using the business name and to maintain a certain tax structure. The cost to register your business in PA as an LLC is roughly $125. The cost is FREE to register your business on the IRS form SS-4 to obtain an EIN number. You can complete the form online for immediate processing. 

Once you have completed these legal tasks, you would want to go to your state franchise tax board or state comptroller’s office to obtain a business license. This is different from your contractor’s license, although they might ask for your contract license information on the application, along with your designated industry. 


Paperwork


A Bond. What is it and Why do you need it?

A surety bond, what is that? Basically, a surety bond is like a professional “co-signer”. The surety company essentially promises the agency requiring the bond that you will follow the rules. Working in the construction or home improvement industry has risks. Tools get stolen, workers accidentally break something at a client’s job site, or your employees might get hurt on the job, so most states require that a contractor maintain a surety bond purchased through an insurance company. A surety bond gives clients confidence that any contractor error, such as damaging property while performing a service is covered. 


Liability & Workers Compensation Insurance

It is important to consider liability insurance in the event that tools are stolen, or employees get hurt on the job. Call a property and casualty insurance agent to obtain a business general liability policy. If you have employees – meaning that you hire people to perform work, you determine a work schedule for them and pay them via a W-2 paycheck- you must also have workers compensation insurance. This provides benefits for employees injured on the job. It is required by law for any company with employees. If you choose to only use independent contractors – meaning that you pay them via a 1099 form – you won’t need workers' compensation. 


STORExpress Contractor Unit in Etna, PA


Finding an Office Space

Congratulations! You have officially cut through all the red tape to start your Contracting Business! Now you need to find the perfect space! If you found this blog then you probably already know that STORExpress specializes in helping startup businesses and businesses looking to grow to the next level with the Perfect Space. Here are a few tips to make this exciting transition incredibly smooth:

1. Know how much space you need. A good rule of thumb is 1,000 square feet for every four to six employees. If you are looking to store in addition to having staff then looking at shelving for organization is a must! Contractor Storage Room in our Turtle Creek and Mckees Rocks locations offer Office Space inside of the Storage Contractor Unit.

2. Month to Month Contracts. Going into business for yourself and setting up your first office space can be scary enough, so signing a lease for two or more years for a property can seem daunting when you aren't 100% sure of what business you have coming in to pay for it every month. Consider finding a company that offers month to month contracts.

3. What amenities would make doing business easier? If a company could provide internet, heat, electricity, water, trash, and a FREE conference space to take professional meetings in, would this make doing business easier for your new startup? Think out the amenities that your business really needs and try to get all of them (or as many as you can negotiate) included in the cost of your rent. All of the amenities mentioned above are included in the contractor storage spaces at STORExpress. 


Starting your own business can be the most exciting time of your life! Everything is new and fresh and an adventure.  STORExpress has been in business helping other small businesses for over 20 years. We’ve made a business helping people with the perfect space for their business! We provide affordable, clean, and secure contractor spaces that are perfect for your business.  We currently have contractor spaces occupied by businesses serving the industries of Wedding planning, Auto Mechanics, Roofers, Electricians, Hot Tub Sales, Carpet Installation and many more. We would love the opportunity to talk to you about how we could be of service to you in making your dreams of owning your own business come true.


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