Laying the Foundation: 6 Essential Tips to Starting a Construction LLC

The construction industry is booming, and there is always a demand for commercial and residential construction. A Limited Liability Company (LLC) is a smart business choice for those who do not want their personal assets to be liable if their business sees trouble. However, there’s much more to starting a construction LLC than meets the eye. This guide will provide some essential points to help get the ball rolling.

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1. Create a Business Plan

Construction is quite a large field. Will your company handle renovations or new constructions only? Will you be the only worker, or will you manage a team? Will you fill a construction niche like drywall or stick with general construction? Hopefully, you’ve figured out the answer to these questions already, but if you haven’t, it’s time to start. Figuring out what construction work you’ll do and who your general client base will be is critical to starting a business. Your business plan should also outline your goals and how long you expect to meet them.

2. Stick to Your Budget

Starting a construction business costs a lot of money. You must pay for marketing, equipment, a physical location (if applicable), vehicles, tools, and employees. You need money to do this, so subtract all potential costs from income to create a budget. It’s okay to take out a loan to start a business, as most people do, but make sure you can cover the payments while your business gets on its feet. Look into grants and investments to help start your business as well. Once you’ve created your budget, stick to it! Don’t take on more loans or expenses than you can handle.

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3. Create a Solid Brand

One of the first steps to starting an LLC is to choose a name for it. Choosing your construction company’s name is the perfect opportunity to create a solid brand for it. Your brand’s name should be memorable, relevant, and straightforward. Along with the name, it’s the best time to create a matching logo and color scheme to create a cohesive, memorable brand identity. You can hire marketing experts, graphic designers, and artists to help you achieve any vision. The earlier you start a solid brand, the more chances of success you have.

4. Organize Your Documents

While forming an LLC looks slightly different in each state, you’ll need a lot of documentation to get started. You also need documentation for licensing and insurance, so it’s wise to gather all relevant documents beforehand, including your business name, address, contact information, identification, and any tax documents you have. You’ll need to set up a unique tax number for your business, known as an Employer Identification Number (EIN), so documentation can also help with that. Make copies of any relevant paperwork, as you’ll likely need to file it in multiple places, including registering your LLC, getting licensed, and obtaining insurance and permits.

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5. Get Licensed

When you start an LLC in construction, you’ll need proof that you’re trained and certified to do the work. If you’re not licensed already, it’s time to get going. Obtaining a general contractor license is generally required in most states to do commercial construction work. Niche construction fields like electric or plumbing will typically always require a license. What you’ll need to get licensed varies by location, however. 

On average, you’ll need to prepare for and pass a licensing exam, submit business documentation, have relevant work experience, and pay licensing fees. Exams can be lengthy and complicated, so taking licensing prep courses before starting the exam is smart. 

6. Separate Personal From Business

Getting used to running an official business can take a lot of work, especially with finances. While it may be tempting to line your personal checking account’s pockets with your LLC’s income, it’s a bad idea. It’s difficult to separate personal income from business income, and you’ll want to have a separate business account for making business purchases, issuing refunds, paying bills, and any other overhead costs. An EIN and a business bank account are solid ways to split your personal and LLC assets. Physical separation is essential since your LLC will not utilize your assets in times of trouble.

Starting a construction LLC is a great way to realize your entrepreneurial dreams. However, starting a business, registering an LLC, and getting licensed can be confusing and time-consuming, so it’s good to be prepared. Organizing your documentation can make the registration process simple. When deciding on a business name, consider your entire brand identity for a better chance of success. Ensure you budget your LLC startup adequately, or you may get in trouble. 

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