Starting out feels exciting and a little scary, and both feelings are normal. The good news is that the path is clear: choose a trade and a structure, handle the legal basics, price your work and get in front of customers.
This guide shows you how to start a contracting business in the United States or Canada. Rules differ by state and province, so we link to official sources like the SBA's guide to launching a business and the U.S. Chamber of Commerce guide to starting a contracting business. We are not lawyers, so check your own local rules.
- Pick a trade and a legal structure
- Check licensing and insurance where you work
- Price jobs to cover costs and profit
- Be findable on Google from the start
- Choose your trade and structure
- Get licensed and insured
- Price your work
- Set up your business basics
- Get found and book jobs
Each step protects the next.
Start a contracting business: trade, structure and name
Start a contracting business by choosing a trade you can do well and a legal structure that fits.
Pick work you know, with demand in your area. Then choose a structure, such as a sole proprietorship or an LLC. An LLC separates your personal assets from the business and is common for contractors, but ask an accountant or attorney what suits you.
Choose a name that is clear, easy to say and available. Check your state or province for name registration, and confirm the matching web address.
- A trade you can do well
- A structure that protects you
- A clear, available name
- A simple budget for the first jobs
Write a simple contractor business plan
A contractor business plan does not need to be long. Write down your trade, your area, your prices and how you will find your first customers. A page or two keeps you honest.
Contractor license and insurance requirements
Most places require a license, insurance or both, and the rules differ by state, province and trade.
Some trades, such as electrical and plumbing, need specific licenses almost everywhere. Others depend on job size. Your state licensing board or provincial authority publishes the rules. Do not guess, because working unlicensed can mean fines and unpaid invoices.
General liability insurance protects you and your customers, and many customers and builders ask to see proof. Workers compensation applies when you hire help. Talk to an insurance agent who knows your trade.
Contractor license requirements and insurance
Rules for contractor licenses vary by trade and place, so start with your state or provincial licensing board. Many people also need an employer ID if they hire help, and the IRS explains how to get an employer identification number. Talk to a local insurance agent about contractor insurance that fits your work.
Check your own state or province. We cannot give legal advice.
Need a hand with start a contracting business? Send a request or call (877) 340-5052.
Ask our teamHow to price jobs when you start a contracting business
Price jobs to cover materials, labor, overhead and a profit, not just the cost of the work.
Add up what a job costs you: materials, your time, helpers, fuel, tools and insurance. Then add overhead and a profit margin. Many new contractors underprice to win work and then struggle to stay open.
Quote in writing, state what is included and get a deposit when it is appropriate. Clear quotes protect you and impress customers.
Illustration of how a quote is built, not real numbers.
Business basics every new contractor needs
Open a business bank account, set up bookkeeping, get a business phone and choose software for quotes and invoices.
Keep business money separate from personal money from the start. Track every expense. Use a business phone number that you answer, because it goes on your Google profile and your website.
Simple software for quotes, scheduling and invoices saves effort.
- A business bank account and bookkeeping
- A business phone number you answer
- Quote and invoice software
- A CRM so leads never get lost
Choose a business structure to start a contracting business
Many contractors pick an LLC to separate personal and business assets. The SBA's blog on choosing a business structure compares the options in plain language.
Start a contracting business: common business structures
| Structure | Setup | Personal liability | Good to know |
|---|---|---|---|
| Sole proprietorship | Simplest | You are personally responsible | Easy to start, fewer protections |
| LLC | Moderate | Usually limited | Common for contractors |
| Corporation | Most involved | Usually limited | More rules and paperwork |
How to start a contracting business and get your first customers
A new contracting business gets customers by being easy to find on Google and easy to trust.
Set up your Google Business Profile early, build a simple website with a page for each service and ask each early customer for a review. New companies can compete earlier than most expect when the basics are complete.
Add ads to fill the gaps while your organic results grow. See our new business marketing service and the guide to contractor marketing ideas.
Conclusion: start a contracting business the right way
Handle the paperwork first, price your work to leave a profit and set up your Google profile and reviews early. The companies that do those things tend to feel steady sooner.
Our guide on how to get more customers as a contractor picks up where this one ends.
Two more free resources are the IRS small business center and SCORE, which pairs new owners with volunteer mentors.