How To Start A General Contracting Business

A general contractor speaks with a construction crew.
| 10.21.22
Susan G.

You have the general contractor license, you know the ins and outs of local regulations, you have the years of contracting experience, and you have the pool of interested customers. Now is the right time to strike out on your own and start a general contracting business! We’ll tell you what it takes.

Step-By-Step Guide To Starting A General Contracting Business

Plan for the startup expenses.
A general contracting business has some upfront costs. Make a plan to have the money on hand for the necessary:

  • Equipment
  • Labor (hiring and paycheck)
  • Licensing
  • Marketing
  • Business Location
  • Supplies

Decide what services you’ll offer and your pricing.
Determine whether your business will offer services as general home contractors or commercial building contractors. How will you pitch and give estimates for your services? Determine what your pricing will be. Know what the local market is for general contracting services when you set your prices!

Name your business.
You’ll want a business name that not only tells what services you offer but also communicates trust and confidence. Your family name might help do the trick if you are known for the high quality of your work already. Check with your business registration department or Secretary of State to make sure your business name is not already in use. Google the name you are considering and make sure you are satisfied that the results won’t be confusing.

Register your business.
Now that you have a name, register your general contracting business to make it official! Some states require you to register your business with the state and locally, so check. While you’re at it, apply for an employer identification number (EIN).

Decide on a structure for your general contracting business.
The structure of your business determines how you will pay business taxes and whether you are protected from liability or not. The basic choices for a general contracting startup are:

  • Sole proprietorship. You’ll be the only owner of the business, which means total control and total liability. You’ll pay your business taxes on your personal income tax.
  • Partnership. You’ll own the business with one or more other people, sharing control and liability. You’ll each pay your portion of the business taxes.
  • LLC. A limited liability company helps shield your personal assets from liability. You’ll have to pay business taxes to the federal government and possibly to your state. There are online services to set up an LLC, or you can talk to a lawyer.

Open a business bank account and credit card.
While not required unless you have an LLC, having a separate bank account for your general contracting business helps you stay organized for tracking expenses and revenue and for paying taxes. Having a business credit card is similarly helpful in keeping track of business expenses separately from personal ones.

Set up accounts with suppliers and vendors.
You’ll be able to get commercial pricing with certain hardware stores and vendors, so call around. You may need other vendors like administrative services or bookkeeping. It’s a good time to get those contracts in place.

Obtain the right business insurance.
If you’ll have subcontractor employees, you’ll be required to have workers' compensation in most states. You’ll also want basic business insurance to protect your contracting business. Most lease agreements require general liability insurance at a minimum. You’ll want to be sure you’re covered when you’re working on someone else’s property, so talk to a licensed agent about your needs.

Hire subcontractors and other employees.
If your business needs people to help run it or service customers, you’ll need to hire. You can put the word out in industry circles, tell friends, and list the jobs on job sites. Craft a compelling job posting! And use our hiring tips.

Find a business location for your general contracting business.
While your business can start out in a garage, you will likely want to expand to an office at some point. Work with a real estate agent to find the perfect spot! Then work on getting the furniture you need to make it look great for potential customers and put your name on the door!

Market your new business.
Stretch your dollars by making sure your friends and family know about your new business first and help get the word out. Next, seek out free methods like putting together social media pages with your contact information and services. Post consistently to help grow an audience. Participate on your local social media community pages, including NextDoor. Print up service menus and attend your local chamber of commerce events. Make sure you have a Google business page.

A general contracting business is lucrative and in demand. We hope these steps will help you be well on your way to running a successful new general contractor business!

About the Author

B2Z Insurance is a small business insurance company that provides coverage for on-the-go business owners: simple explanations, easy application, digital quotes, and mobile claims. A product that is easy-to-use and helps you assess the unique coverage needs of your business with confidence—freeing you up to grow your business.