Just starting up and need a little help. - Contractor Talk - Professional Construction and Remodeling Forum

Joe Fama · 02-02-2006, 11:56 AM

Me and a buddy have been doing work for a contractor for some years now and we are looking to finally get going on our own.

The problem is we don't know were to start. IE Obtaining a license, obtaining proper insurance and just getting our business incorporated.

We have several jobs ready to go, but we just need to get the things above done first before we can do them legit.

Our business will operate in NYC and Westchester county NY. I think what we need is a home improvement license. Even though we will also be doing plumbing. We have someone to sign off and pull permits on that side.

Can any one point me in the right direction?

Thanks in advance for any help.

Grumpy · 02-02-2006, 02:41 PM

Lawyers can help you incorporate or if you are adventerious try www.legalzoom.com also have a lawyer draft up a partnership agreement. The agreement should dicttate who does what, how each will be compensated and how dividends will be split. Also devise an exit strategy on what will happen if one partner wants to back out of the partnership. It's all going to cost you about $1000 ($500 for inc and $500 for agreement), maybe more.

After you have got that done consider your startup costs and make your new corporation a low interest cash loan to cover the costs.

Is licensing required? Ask your local lbuilding department, they will help you.

Is insurance required? I'd be suprised if not. Call a few local agents.

Also remember that running a business often times has very little to do with the trade you are working in. It takes BUSINESS skills to run a business, being the worlds best craftsman doesn't qualify you to run a business; though if you have both you should do very very well.

Be prepared for paper work paper work paper work paper work paper work paper work paper work paper work paper work paper work. Did I say peper work?

The best advice I can give is to hire an account you can really trust who has experience with other contractors.

GriffDecker · 02-06-2006, 09:25 PM

#1 -- Make sure you have insurance. A good bit of it. No reason to lose your house, truck, pets, etc. because of an honest mistake.
Be sure you have a good understanding of how you will do your accounting -- and keep track of it throughout the year. Nothing worse than having a 3 inch tall stack of receipts on April 14th.
Be a bit wary of the guy pulling your permits -- he should be wary as well. If you screw up, he takes the fall. And will probably point the finger at you, which puts you in some trouble.
The best way to grow your business -- do good work. Get some nice business cards made up, give them to every potential customer you meet and give a handfull to all the happy customers when you're done. And get to know your suppliers -- the 2 tile companies in my area send me a good bit of business, plus the Realtors in my area send me a few leads, but they're usually huge.

Webs · 02-06-2006, 10:28 PM

Remember that you don't have to be incorporated. There is always a LLC or a partnership. I know that in Montana it is much cheaper and less time consuming to get going. The advantage to going to with an llc is that all partners have limited liability which can save your personal stuff if anything was ever to go wrong with the company. Check them out and see if it will work for you and your partner, it might save you some upfront money.

hatchet · 02-06-2006, 10:41 PM

I would suggest S Corp. A bit more paperwork than an LLC but not as much as a Corporation. You receive the same protection as a corporation but have the same taxation as an LLC (pass-thru). I did this for around $70 through the state and using their forms for the articles of incorporation. I then bought a book on setting up an S Corp for $25 and used their basic by laws and modified to meet my needs. It also had all the forms that would be needed for directors meetings, shareholder meetings, etc. I am a single owner - so I'm essentially the directors, shareholders, and president.. but the paperwork is still required (the downside).

realpurty2 · 02-06-2006, 10:43 PM

While I fully agree it is always best to put things in the hands of trained professionals, for entreprenuers who lack the start up capital to go that route, there are several of the items you can complete yourself.

1. Write and sign the Partnership Agreement. (example included) Have it notarized.

2. Purchase business license.

3. Apply for Federal EIN number, and local Sales Tax number if you expect any retail sales as well as services. ie buying parts wholesale and reselling to customer

4. If a CPA is unaffordable on start up, purchase accounting software such as Quickbooks, Peachtree or Quicken.

5. Create all your documents in advance. There is alot of paperwork that goes with running a business and it's nearly impossible to be on a jobsite and behind the desk simultaneously.

6. I personally recommend using business and marketing plans both to develop your business goals and operating strategies. They are time consuming and long but especially in partnership situations, they can shed light on potential differences before they become problems.

7. Open a business bank account. Use it for nothing but business so funds are not confused with personal funds.

8. Determine your operating expenses and incorporate recovery into your pricing structure.

9. Advertise and network.

10. Repeat #9 until your leads come in.

Of course there is alot more than those simple steps but atleast they will help you get going in the right direction until you can utilize professionals.

02-06-2006, 10:45 PM

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