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Aug 1, 2022

4 Helpful Tips on How to Start a Construction Company​

Choosing to establish your construction firm may be both thrilling and daunting. Getting caught up in the administrative aspects is tempting, with a lot of research, reporting, and documentation. Thus, losing sight of the enthusiasm that drove you towards establishing your own company in the first place.

68% of small company owners regret not devoting sufficient time to learning the fundamentals of running a company. This is similar to the feeling you get when you forget to buy Bitcoin.

Fortunately, starting different construction companies is relatively straightforward if you know where to begin. In addition, construction firms require time to organize and construct, so getting started early can help you succeed later.

How to Get Your Construction Company Started​

Here, we've assembled all you need to understand about getting your firm off the ground, from how to draft a strong business plan to what forms of insurance are required and beyond. Here are four helpful tips for starting a construction firm:

  1. Do some background study on the construction industry​

As long as you know where to search, you may find a wealth of accessible, publicly available information. In addition, there are a few excellent information sources to consult while conducting market research. The Construction Industry Publications and Statistics, as well as the U.S. Small Business Administration, are some resources available. In addition, you can add the U.S. Bureau of Labor Statistics and Local Industry Publications for construction news.

It is optional to conduct preliminary research. However, it makes the remainder of the process of establishing your construction firm much more manageable. If you have done your research, finishing the other parts of the process will be much easier.

  1. Draft a business strategy​

Every startup requires a business strategy to guide them through the path of construction. The method includes acquiring cash, having loans authorized, and managing the business. The following are the requirements you'll need to follow to build a business plan for your construction company:

  • Executive summary
  • Company overview
  • Market analysis
  • Business structure
  • Products & Services
  • Marketing & sales
  • Financial plans & projections
  • Appendix
It's necessary to make your business strategy official by licensing your company with the local, state, and federal governments.

  1. Obtain a business license​

The process of forming an organization is relatively straightforward. The following are the steps to follow when registering your construction company:

  • Choose a business entity for your company
  • Obtain an EIN (Employer Identification Number)
  • If you're starting as an S-Corp, submit Form 2553 to the Internal Revenue Service.
  • Submit registration with state agencies
  • Submit registration to local agencies
One of the most challenging hurdles for construction startups is determining how to form a firm. There are four primary business structures to select from, each with its advantages and disadvantages, and they include:

Sole owner

You have complete control over your business as a sole proprietor. You're also fully responsible, which means the bank can collect your assets if your firm falls on a loan.

Limited Liability Company (LLC)

A Limited Liability Company (LLC) is meant to mitigate the risks of operating a sole proprietorship. In addition, you may protect yourself as a person by separating your possessions and obligations from your company's finances.

The disadvantage of forming an LLC is that raising venture cash may be more difficult. Therefore, it would be best if you contemplated selecting it as a corporation. That is if you intend to establish your construction firm with a large amount of investment cash.

C Corporation

The C Corporation is a typical corporation. A C-Corp, like an LLC, safeguards operators from personal risk. They also make it simpler to obtain funds by dividing possession of the firm among shareholders.

The disadvantages of incorporating as a C corporation include more documentation and a higher filing cost. This disadvantage is because adding shareholders makes the procedure more complicated. C Corporations are also liable to double taxation: the company is taxed as an organization, and dividends are taxed to owners.

S Corporation

Another prevalent kind of business is an S-Corporation, similar to a C Corporation but with a few distinctions. S corporations are limited to 100 shareholders, all of whom must be citizens or residents of the country where the firm will be established. S Corps are also subject to taxes, which means that only the owners are taxed on their earnings.

The administrative procedure does not involve registering your firm as a registered business entity.

  1. Obtain the necessary licenses, certifications, permits, and insurance​

You'll need to research the licenses and permissions that your state and, in certain situations, your municipality demand. Check your state's contractor board and local Department of Labor to understand your required licenses. A few things differ from region to region, such as liability and workers' compensation regulations.

You must ensure that your construction business is insured before commencing any work. This process protects you in the event of an incident or crisis. You'll also require several specialized insurance plans to protect various components of your business, such as physical assets and personnel. You're prepared to start contemplating the most crucial aspect of business once you're completely registered, licensed, and insured.


Once your construction firm is up and running, don't sit back and rest. Every business move you make should increase your company's growth. While advertising is crucial, remember that the ideal marketing plan is excellent work that speaks for itself.
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