Checklist for starting a contractor business in California

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If you’re thinking of starting a contractor business in California, chances are you’re already working in the construction industry. This work experience is actually the first step in getting a contracting business started. If you are not working in the construction industry, then you’re first step is to get some industry experience so you have a general understanding of how things work. There’s a lot to know, and researching on the internet will only get you so far. If you are working, then the rest of this contractor business checklist is for you.

Budget & Operation Planning

Before you jump in, you’ll need to get a well defined budget in place. You’ll want to make sure that your budget includes start up costs, insurance costs, operating expenses, and ongoing proof of financial security.

You’ll also want to set up a thorough business plan that includes your operating plans and structure. You’ll want to think about how you will set up your business: a corporation, sole proprietorship, or LLC. How you set your business up will affect your taxes, licensing, and bonding requirements.

Choose a Business Name and Register it

You’ll want to pick a business name that can be used on business cards, invoices, and advertising. Utilizing a company name rather than just your own name appears more professional. Once you pick a name, you’ll want to register it.

In California there are four steps to registering a business.

  1.     Register a Fictitious Business Name

○      Sacramento Fictitious Business Name registration

  1.     Getting proper licenses and permits (see below)
  2.     Registering a Trademark (optional)
  3. Registering for business taxes

Get Licensed and Bonded

General Business License

The first kind of license you will need is a general business license. You will need to check with your local (city/county) government to see what the requirements are. If you’re in Sacramento, you can go to the Sacramento County Online Business License Application to get started.

California Contractor License

You will also need a California Contractor License from the CSLB (Contractor State License Board). The CSLB website has all the forms you will need to get started along with some informational videos.

Contractors License Bond

The CSLB requires all licensed contractors in California to post a bond for their contract projects that are over $500 total including labor and material. You can not get your license number issued with the California state license board until the bond has been purchased and proof of coverage has been sent. Steps to getting a Contractor’s License Bond in California.

Get Insured

Before you begin work, you’ll need to have a comprehensive contractors insurance plan that is tailored to your company’s specific needs. Contractor insurance plans cover exposures to:

  •      general liability,
  •      professional liability,
  •      equipment,
  •      property,
  •      pollution,
  •      commercial auto,
  •      umbrella or excess liability,
  •      worker’s compensation,
  •      employment practice liability,
  •      wrap-up or OCIP programs,
  •      surety bonds,
  •      and many other specialty insurance products for the construction industry.

Develop a Safety Plan

The majority of workplace injuries happen in the construction industry. You don’t want to find yourself in a situation that could have easily been prevented by a simple, but thorough, safety plan. Here are some tips to reduce construction injury claims in California.

Get Permits

There are numerous different types of permits needed to do business in the construction business. A few are highlight below. For a more comprehensive list of the required permits, utilize the CalGold Permit Assistance website.

Building Permits

Building permits are required for nearly all major construction projects including, but not limited to, new construction, additions, pools, remodeling, electrical work, plumbing, and mechanical systems. Sacramento offers online permit applications.

Seller’s Permit and/or Resale Certificate

If you will be purchasing products on behalf of your client and then taking a percentage, then you’ll need a seller’s permit or resale certificate, depending on your business model.

If your business is in California and you are interested in a comprehensive contractor’s insurance policy for a low price and/or need surety bonds, then fill out our online quote and we can get you started in your new contractor business.

 



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