There are many rewards that come from working in the HVAC industry.
Whether you work in the commercial sector or with private homeowners, you contribute to the safety, comfort, and environmental efficiency of buildings. Making the jump from an employee—working for someone else—and starting an HVAC business takes an investment of time and energy. The rewards, however, also increase when you are the person running the show.
Here's an overview of some critical matters to think about before starting your HVAC business—they will help keep you thriving in the industry for years to come:
Licenses and certification
In order to work in the HVAC industry, you typically have to meet state and federal licensing requirements.
At the start of your career, you should obtain training through an accredited school. This usually takes about 6 months to 2 years, depending on the program. According to the Bureau of Labor Statistics, many new HVAC technicians work with more experienced professionals, either informally or as part of a 3-5 year apprenticeship.
In addition to this training, every HVAC who works with refrigerants must get EPA certification under section 608. There are four types of EPA certification. If you are starting an HVAC company, it is a good idea to get the highest certification possible -- likely "Universal," for servicing all types of HVAC equipment. To know the additional requirements where you live, check out this guide on HVAC licenses by state.
Of course, these are just the requirements to work in HVAC. In order to run a business, you also have to follow state and city guidelines. You will probably need a business license and permit to start operations in a commercial space. You can visit your state or city chamber of commerce, or a resource like this one from the state of New York, to find out exactly what you need to know.
Business Structure and Taxation
Once you're properly certified, you have to decide on a legal structure for your business. This has big implications, in particular for how the IRS taxes your operation. Some examples of a legal structure include sole proprietorship and limited liability company (LLC), although there are others that you can use.
According to the Small Business Administration, you're automatically a sole proprietor until you formally create another business structure. That means your personal assets and liabilities are not distinct from your business assets and liabilities. With an LLC, your personal assets are somewhat protected from liability, but the IRS considers you to be self-employed and you must pay self-employment taxes.
The IRS has a detailed guide of what each kind of business structure means for your taxes. In addition to sole proprietorships and LLCs, that guide also includes corporations and partnerships. If you are starting your own HVAC business, you may want to know a little bit about all of these structures—even if not all of them are right for you.
As a business owner, it's essential to get insurance. This is vital for you to protect yourself, and your business assets, from any number of things that may go wrong. In addition, state business requirements may force you to get certain types of insurance. For example, workers' compensation coverage is usually mandatory if you hire employees. A typical business insurance package, that may be in a single comprehensive policy or more than one policy, may include such things as:
- Third-party liability if someone is injured and sues your business
- Workers compensation to protect your employees
- Coverage for property damage caused by a faulty repair job
- Coverage for your business equipment and assets against environmental damage
- Business interruption insurance in case you have to cease operations for a period of time
In many cases, you can tailor coverage to develop the right policy for your business. State government websites can give comprehensive overviews of the types of liability that businesses may be exposed to as well as how insurance can offer protection—like this example from the state government of California. As that resource notes, insurance can be complex, but it is essential and sites like Next Insurance can streamline the process.
HVAC insurance is one way to lay the groundwork for a successful company, so you have a backup even when the unexpected happens.
Business Plan and Marketing Strategy
So now that you have your licenses, insurance, and other requirements needed to get going, it's a good idea to figure out the economics behind your HVAC business.
There are several factors at play here—you can start by laying out your HVAC business start-up costs. These are initial expenses you have to incur to get off the ground. Some, like office space and insurance, will be regular expenses for your operations. One-time or ongoing expenses may include:
- Insurance premiums
- Commercial rent
- Vehicle purchase to travel to jobs
- HVAC tools and supplies
- Business supplies, such as office equipment and accounting software
- Marketing materials, such as signs, banners, and business cards
- Website development
After you have a sense of your startup costs, you can develop a business plan for the first five years of your business. This process helps you to project how much money you expect to make and on what timeline. It also tells you how much you expect to spend. The U.S. Small Business Administration has a very helpful guide on how to write a business plan if you want to start crunching the numbers and doing a market analysis.
Another important factor in how to start your business is HVAC marketing. You have to let people know you are on the scene and ready to work. Most small business owners gain the most initial traction through word-of-mouth marketing. So ask your first clients to leave reviews on Google and to tell their friends about you. For HVAC professionals, in particular, the Small Business Administration has additional help. They can give you marketing materials that help promote the environmental benefits of your business to potential clients.
Get Started as an HVAC Business Owner
As an HVAC professional, you can make a difference to people and to the environment. Start today by getting the right business insurance from Next Insurance to protect yourself as your business gets off the ground.