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How to start a general contracting business

How to start a general contracting business

By Wil Chan
Aug 22, 2022
4 min read

Thinking of starting a general contractor business? Not only will you need a broad knowledge of the construction industry and years of experience working in the field, but you’ll also need strong business skills.

You’ll be responsible for tasks like choosing a business structure, hiring and managing subcontractors and finding the right business insurance

It’s okay if that seems like a lot — we’re here to help. 

Get licensed

As a general contractor, you’ll be in charge of managing construction projects. For that, you’ll need a license — whether you’re working on a home addition or a brand-new commercial tower. The specific requirements to get a general contractor license may vary by state

In general, you’ll need to demonstrate several years of professional construction experience or a combination of work experience and education. You’ll also have to pass a state exam, post a contractor bond and show proof of general contractor insurance.

Choose a business structure

Once you have your general contractor’s license, you can register your business. 

Your business structure is one of the most important decisions when starting a general contracting business. Some of the most common business structures for general contractors include sole proprietorship and limited liability company, or LLC. 

Each structure has its own pros and cons and can have significant tax implications. Consider meeting with a tax professional or attorney before making your final selection. 

All business structures have specific documentation requirements. You will typically need to get a business license and fill out additional forms with your state — check with your local agencies for more details.

Hire and manage subcontractors

As a general contractor, you’ll inevitably hire other contractors — called subcontractors — to help get specific jobs done. Hiring and managing subcontractors allows you to manage the project and deal with the client while “subbing out” more specialized tasks. 

For example, if you’re hired to construct a building, you could hire subcontractors like electricians, plumbers, HVAC specialists and masons. 

When hiring a subcontractor, you’ll typically sign a subcontractor agreement that describes the nature of the work and how the subcontractor will get paid. It’s important that both parties carry contractor insurance, as one contractor’s policy may not always cover the other contractor.

Get insured

When you’re starting a general contracting business, getting the right contractor insurance is a must. Not only is insurance required for general contractors by most states and clients, having proper coverage could protect you from financial ruin when something unexpectedly goes wrong. 

At NEXT, we’re proud to offer customized insurance for general contractors. All our plans include general liability insurance, and you can add on coverage like workers’ compensation, professional liability and commercial property depending on your needs.

How NEXT helps general contractors succeed

At NEXT, we know launching your own business takes work. That’s why we’ve made it as simple as possible to protect your business with general contractor insurance

You can complete an application, view policy options, get a quote and purchase coverage — all in less than 10 minutes. When you make a payment, you’ll get immediate access to your certificate of insurance.

Get started with your free online quote today.

How to start a general contracting business

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About the author
Wil Chan is a content writer at NEXT and has been a professional writer for more than ten years. His work has been featured in publications including Forbes and Greatist. He has run a freelance business since 2016 and feels passionate about helping self-employed people in all industries succeed.
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