Have you ever thought about the idea of working for yourself? Running your own business? Perhaps becoming a contractor sounds appealing to you.
A contractor can be their own boss, set their hours, and work from virtually anywhere in the country. Contractors are often self-employed, which means they can start their own business without asking anyone for permission. Being a contractor is a great way to make money. Many construction contractors can earn anywhere from $50,000 or more in a single year.
Contractors are in an excellent position because they can work with a wide range of different companies. You could work for a large construction company one day and then switch to working with a smaller company the next day.
What type of Contractor do you want to become?
Based on your skillset or interests, you’ll want to consider what type of contracting business would be best for your circumstances. This depends on factors like:
- What types of projects do you want to work on in the construction industry (heavy construction, residential/commercial painting and repair, landscaping, and more)?
- What type of contracting business best matches your desires, skills, and abilities?
- What are your goals for your contracting business (in terms of growth, work hours and lifestyle, etc.)?
- Do you want to work as a sole proprietor or have employees?
- Will you want to be a limited liability company (LLC), S Corporation, sole proprietor, or some other legal form?
- How many employees would you be comfortable managing?
- What type of business license can you qualify for?
- How much capital do you have to start, or what income will you need?
It is important to remember that having a contractor’s license in the U.S. does not guarantee you’ll make money. You should have some special skills, be professional, responsible and reliable. If possible, get help from an experienced licensed contractor to guide you through getting the license; this kind of help is also helpful in learning the trade. Or start as an employee to get on the job training.
How do I start my career as a general contractor? Or subcontractor?
The construction industry is incredibly lucrative. Solo commercial contractors are often subcontracted to large jobs. As a general contractor, your role is construction management oriented. Therefore, you are responsible for facilitating entire construction projects, including planning, procuring construction materials, and hiring subcontractors, whether for new installations, maintenance contracts, or repairs. G.C.’s carry more responsibility for the company, and therefore it can be more stressful but worthwhile.
If you prefer to specialize in a specific area, you can choose specialty contracting, such as painting, excavation, electrical work, carpentry, or roofing.
For example, if you work in the construction and renovation business and know how to deal with concrete and asphalt, you can register as a masonry contractor.
Let’s say you have experience as a painter and electrician, but you also have skills in plumbing. In this case, you can register as a painting and electrical Contractor, but perhaps pursuing general contracting is the better option.
As you can see, there are no limits to the different types of contractors you can become, but it’s essential to do your homework and find out which type is more suitable for your skills and experience.
Before you start: Eligibility criteria for general contractors
The minimum requirement to become a general contractor is reasonably low. A high school diploma is all you require to enter the general contracting business. But starting a G.C. and operating one is not the same thing. Before you get clients to hire skilled people or secure funding, they must show they have the experience and skills required to run the G.C. business.
Study the educational requirements
A large portion of getting an apprenticeship or becoming a licensed contractor includes the proper training.
You can get construction training by completing construction courses or specializing in construction management at the university level to obtain a bachelor’s degree. Such construction equipment courses are required if you want direct entry into contracting work. For example, if you’re dealing with concrete and asphalt, construction equipment training is likely required. These formal education requirements are usually needed to make you more attractive in terms of potential customer demand, such as business management education or an advanced master’s degree.
However, for laborers, the highest level of high school education is typically required along with on the job or vocational training.
Start small to build your contractor reputation.
After a year or two of planning and preparation, you’re finally able to get your first client on board. Before starting a government and industrial bid, you have to have successful projects with satisfied clientele. That will mean getting traction and taking jobs when you can build an influential reputation for yourself. Past colleagues and employers are great opportunities for you to gain new work experience and display worth. Maintain good relationships to ensure your customers provide recommendations and referrals.
Get a State License
What is the process of becoming an authorized construction company? Each state has a licensing process and its own state’s contractor licensing board. Each has different requirements for issuing a general contractor or specialty license, so be sure to check your state’s contractor licensing requirements.
Consider specializing (subcontractor approach)
The job of general contractors is lucrative. A second exciting option to explore is subcontracting. As a subcontractor, you will concentrate on specific aspects of construction like HVAC and electrical, plumbing and fire control, permits, and design. Often, G.C.s work with subcontractors to complete specialized assignments unless they already know someone with the required skills. Subcontracting is one way to gain more profound knowledge while still owning an independent business with less startup risk than a G.C.
How much can a contractor earn in U.S. 2022?
Contractors are paid hourly, by the job, or as a percentage of the cost. Contractors who work on a project basis charge an hourly rate based on their experience and skill.
Income from a contracting company comprises salary, bonuses, and profit-sharing. It is calculated by taking an average hourly wage and adding a bonus or profit-sharing based on experience and skill. In general, contractors get paid an hourly rate between $15-$51. The top 10% make over $30 an hour, and the lowest 10% earn less than $11 an hour.
Salary Overview
Construction workers will see 16% job increases between 2016 and 2026.
- Hourly Rate- $15 – $51
- Bonus- $201 – $20k
- Profit Sharing- $10 – $32k
- Commission- $0 – $16k
- Total Pay- $31k – $116k
A general contractor charges a fee for their time, skills, and experience on a given construction project or contract. A contractor’s income is made up of hourly pay rate, bonuses, and profit-sharing based on their situation. Owning a G.C. offers unlimited profit potential.
What are contractor job outlooks and prospects like?
Now is a great time to become a construction contractor. The number of construction contractors needed is expected to grow by 6% this year, further boosting contractor prospects. Many states are increasing infrastructure investment to accommodate population growth and economic development, which will create even more opportunities for residential and commercial building contractors.
Construction contractor employment is projected to grow 18% through 2026, much faster than the average for all occupations.
The median annual income for construction contractors was $45,410 in May 2017. The lowest 10 percent earned less than $25,570, and the highest 10 percent earned more than $87,150. Median earnings were highest in the specialty trade contractors – building construction sector and lowest in the heavy and civil engineering construction sector.
Want to start a Contracting business?
With the demand for construction contractors growing, now is a great time to consider entering this growing field and starting a contracting business.
Create your business plan
After you have the proper training, the next thing you should do is create a business plan. A formal business plan is essential because it will be the basis of your business. As a contractor, you must use your plan to help get funding and attract new customers and employees.
A contractor’s business strategy comprises numerous elements, including the work that will be done and the financial aspects of running a firm. Developing a business plan is essential to any contractor’s success in the industry.
Stand Out From the Crowd
Differentiation is the ability to stand out from competitors. It might seem complicated for a contractor to run a small business, but there are numerous ways to increase their differentiation.
Be a resource: Offer tips and advice for construction projects on your website and social media. Build a following by providing free professional construction advice and guidance.
Give back: Find low-cost or no-cost ways to give back in the community. Volunteer at construction sites, donate construction equipment or offer discounted construction services to local nonprofit organizations.
Any contractor can offer excellent customer service and quickly resolve problems through a strong referral program. Through referrals, a contractor can inform prospective customers about their work and why it is beneficial.
Plan Finances
Identifying sources of capital to launch a construction company is a complex element of producing a business plan as a contractor. The business plan should detail the amount of money needed to launch the company, what the funds will be used for, and potential sources such as banking relationships to establish working capital lines.
Plan and Implement your Marketing
New construction firms must develop a marketing strategy for their business to residential or commercial customers in the state or city where they operate. The process of gaining business might differ depending on who the Contractor is targeting, but generally, it will begin with researching potential customers and developing an advertising budget.
An essential aspect of effective marketing is identifying how to best target the audience. Whether you need help with graphic design, copywriting services, or web design, an online marketing specialist can help your company get the word out about its benefits. Many affordable freelancers can help startup contracting businesses with this and services like social media.
Create a Contracting Business Structure
To become a general contractor or start a specialty contractor business, you must choose the form of business that best suits your business approach. Most state’s laws require corporations to have a structure or way of running their business before engaging in any activity. These forms range from sole proprietorships limited liability companies (LLCs), and corporations. You can choose which is best for you based on your goals, resources, and risk control ability.
Complete the necessary licenses and permits
To become a contractor, you may need to complete training to meet licensing requirements before applying for your contractor license. State laws require contractors to be certified and registered. This may be accomplished by taking courses and passing an exam. In addition, these states will require you to complete a specified number of hours in the construction field, have a certain amount of insurance and pass a licensing exam to procure a contractor license.
The entity in charge of Contractor licensing and oversight is generally the Contractor’s license board. The board usually consists of construction management professionals and other construction industry experts.
You can get the name and address of your state’s Contractor licensing authority from the National Association of Home Builders or a construction management association.
To become a licensed contractor firm in your state, you must file an application form with the licensing authority and meet its requirements, which will vary from state to state. You or your general contractors must supply the necessary information about the company and the principals involved in its construction management. This information may include a detailed description of the company’s financial structure and sources of funding, its ownership interests, resumes of key personnel, credit, and personal references, and a history of previous business ventures.
As part of the application process, you may need to submit a list of every project the company has worked on within ten years. You will also be required to list your individual construction experience and education on that project, and you may be asked to supply letters of reference from your previous employers.
In addition, you may also need a list of all the Contractor’s suppliers and subcontractors on each project. You will be required to provide copies of insurance policies, including names and addresses of all insurance companies holding the company and its employees and any subcontractors responsible in the event of a claim.
You will also need to prove that you have filed all business, federal, and state taxes on time. You may also be required to submit a detailed budget for each project you are applying for a license.
You will have to pay an application fee, which may be as high as several hundred dollars or even more. The price will vary from state to state.
Process and License Requirements
The licensing board has the authority to investigate your company and you, as an individual, to determine if you are fit to be a contractor. The board may contact your former employers and anyone else it believes has the necessary information about you.
After the application complete and necessary fees have been paid, a licensing board may take anywhere from three months to a year to process. If your application meets the board’s requirements, it will issue you your license.
The license may be valid for a specific length of time, such as two years. You may also be required to retake the licensing examinations every so often to keep your license current.
If your application does not meet the board’s standards, you will receive a denial in writing. You may be able to appeal this decision in court, but you may have to pay additional fees for this process.
Obtain a Contractor License Bond
A surety bond is one of the most critical contractor license requirements that you must fulfill. This is a security mechanism that is often required from professionals in order to guarantee their adherence to business standards to state laws relating to licensed contractors. It is important to note that contractor license bonds requirements may vary depending on your location.
The contractor license bond is typically only valid for one year, after which you must renew your license. Remember to take note of your expiration date so that you won’t have any problems about your license. In your quest to become a contractor, trust the surety bond experts at to provide your instant issue contractor license bond and walk guide you on how to get bonded the cost to get bonded. We offer many other surety bond types beyond the contractor license yet are often a requirement for construction work such as bid bonds, performance bonds and payment bonds.
Should I work as a contractor?
If you have the required expertise or education or simply a passion for building work, becoming a contractor may be an excellent option. There are benefits and drawbacks to being self-employed in the construction sector.
Let’s summarize the benefits of working for yourself:
- Once you have the necessary experience and education to become a contractor, it can be easy to start your own company, learning the trade’s best construction practices.
- You will likely get to pick which projects you want to work on, and you can set your schedule.
- The money you earn directly results from project execution rather than an hourly wage as a contractor. You are also responsible for paying your taxes.
Now, let’s look at some of the risks associated with starting a business:
- You must have the expertise to perform all tasks related to running a construction business, which can be time-consuming and risky if you don’t have the experience.
- There are additional financial risks involved in being self-employed. Not only will you need to pay any expenses until your first project is completed, but there may also be startup or development costs you will need to cover.
- If your company does not generate enough money to support you, you may have to work other construction related jobs in addition to running your business until it is profitable.
So if you’re considering becoming a contractor, consider the pros and cons carefully before embarking on this new career path. Construction will never go away! It can be a lucrative business, where you can reap great rewards by hard work.
