3 Things to Keep in Mind When Starting a Construction Business

Assuming that you have already constructed a business plan, received necessary funding, and registered your business, you are ready to start! Or are you? Starting any kind of business takes time, money, and research, not to mention all of the paperwork that goes into starting a business. All of these tasks can be overwhelming, and it can be easy to overlook and even forget some important things. Here are a few important things you need to keep in mind when starting your construction business.

#1: Remember to get all necessary permits

In the United States, it is required that you have some sort of permit for the legal operation of your construction business. A building permit is a legal document that states that you are authorized to build or construct changes on a building. This is why it is illegal for a non-licensed and/or permitted the person to perform constructive changes on a building unless it is that individual’s own home— though this is not recommended.

Permits allow for inspectors to come into a newly constructed or remodeled building to make sure all work was done correctly. These inspections authenticate the work done by contractors and subcontractors, therefore establishing a building as safe for use/dwelling. There are also different types of permits, including:

• Mechanical
• Electrical
• Plumbing
• Racking

#2: Licenses may not be required everywhere, but are still important

This all depends on the location of your company/places where you will be operating business. Many states don’t require a construction or contractors license— but they leave the licensing decisions up to local jurisdictions. On the other hand, several other states do require some type of licensing to perform construction work. Some states even require updated licensure and continuing education courses.

Tax fees and other penalties can apply if your business is operating without proper licensing requirements. To be on the safe side, make sure that you and all of your employees are properly licensed. There doesn’t seem to be any sort of penalty for having the proper licenses to construct a building.

#3: Insurance and Liabilities: You may need more than you think

It’s unfortunate, but accidents do happen in construction and many other types of jobs. It is important to make sure that you are covered in the event of an injury. The main type of insurance that you should have would be workers’ compensation insurance, but here’s a list and description of other types of insurances that are also good to have:

• Disability Insurance in the case that a work-related injury causes a long-term disability.
• Unemployment Insurance to provide assistance for workers no longer working due to layoffs, etc.
• Property Insurance to cover your office building (if this applies) in the case of property damage.
• Vehicle Insurance for company trucks/cars and also any heavy machinery and other construction equipment that your company owns.
• General Liability Insurance, which is kind of a blanket insurance that covers work-related accidents and property damage.

Falling along the lines of insurance, liabilities are another important business decision that needs to be addressed. As a business owner in the construction industry, it is important to be aware of all possible liabilities present. This is why it is necessary to have a plan prepared for any conceivable unexpected event (called a contingency plan).

Sometimes these very important factors can get overlooked in the midst of all the paperwork that goes into planning and funding a business. This is especially true if certain locations require different permits, licensing, and even insurance types. The best thing to do is to research the requirements of your location— including any location that you may be conducting business in, as different areas can have different regulations. It is best to make sure that your business will be operating legally in all aspects no matter where the location is.