Hello all,
After working 6yrs for a remodeling co., they got very slow and laid everyone off. Yes, including me. I went to work for a commercial outfit that I worked for in my younger days. A little pay raise, but I hate the work…concrete gang forms and such.
Here’s the question. I want to start my own residential remodel company, but I am a little confused about the requirements with the state and city. I would not need a business loan or accountant or anything like that. I just want to be in good standing with the great state of Missouri.
Any advice would be greatly appreciated.
Thanks,
Shane
Replies
I would not need a business loan or accountant or anything like that
Business loan you can do without. (though a line of credit can smooth out your cash flow)
taking the plunge without an accountant is like diving into a pool without water. Not that you need him/her in your back pocket at all times.
What is this "anything like that" other stuff you don't need?
Not trying to be a pain in the butt, just saving you some grief. I started on my own after 7 yrs working for others. I had around $12K in the bank, and a year later my balance was around zero, and that was 18 years ago. Point is, knowing the trade, and knowing the business are two very seperate entities.
Can't help you with your state requirements.
Bowz
My best advice is keep the day job while you save like a mad dog. Try to have at least 10K free and clear before starting up on your own. Once the economy picks up, advertise your business and see what kind of responses you get, before quitting the steady paycheck.
Meantime, get licensed (if that's required in your state), get worker's comp and liability insurance, and try to build up some experience on side jobs. Get a good accountant, open a business checking account, set up a website, get your fictitous name, set up an office somewhere (home office should suffice), tool up, etc. And keep a record of contact info for all the sub's and tradesmen you know to be honest, reliable, and good at what they do.
I don't think the economy will turn around significantly for at least 18 months - so that would be my goal: 10K, license, etc, in 18 months.
CaliforniaRemodelingContractor.com
There are small business resources available in each state, some with federal funding and simply administered by the state, others all state funded. I found this link:
http://www.business.mo.gov/
In some states/cities you aren't required to collect sales tax on construction, but others you are. There may also be property tax for the business.
The state will list occupations that require licencing (see above link) as will the city and or county you live in.
A real pain just about everywhere.
Beer was created so carpenters wouldn't rule the world.
I can't help with Missouri (or even the city or county you live in), but getting all the ducks in a row was the hardest thing I had when I started my own business. Here is the outline I used:
Business Start up
0. Read a book or two on the subject. “Small Time Operator†is a good start and is revised annually. Nolo Press also has some good legal and business guides.
1. Decide on business organization – sole proprietor, partnership, LLC, S-corp, C-corp. Get a lawyer involved if you don’t completely know.
2. File with the state, for a “fictitious name†also known as a “DBA – doing business as†unless you are becoming a sole proprietor and just go by anything other than your legal name, e.g., John Doe. If you are going with anything other than a sole prop, you’ll also have to file those papers.
3. While you are waiting on the state,
a. Get an accounting system and work with an accountant to set up your chart of accounts. Don’t get too creative with your accounting system. Look at tax forms, for example, schedule C, for a high level outline. I’d highly recommend a computerized accounting system.
b. Start spreading the word that you are going to be in business soon. Word of mouth advertising.
c. Line up tools, phone, computer, figure out what forms and documents you are going to need (example: contracts, bid sheets, purchase orders, invoices, etc.)
d. Talk to your insurance agent for vehicle and business liability coverage, workman’s comp, etc.
4. Once you get name approval from the state,
a. File for a federal EIN (employee identification number). They can issue it over the phone.
b. Order business cards, business forms, and stationary with name, address, phone, etc.
c. Go to a banking institution and open up a business account and line of credit. Order checks in business name and credit card in business name. Even as sole proprietor, keep your personal and business finances at arm’s length. Get to know your banker.
d. Open your insurance policies.
e. File with your suppliers for business accounts, even if cash accounts.
f. File necessary papers with state and local government, for example business license, vendor’s license, trade license, etc., if needed.
5. Open business
a. Start booking jobs
b. Don’t get behind on finances – ideally do paperwork every day for income and expenses. Nothing worse than trying to figure out at the end of the year what that $382.47 you spent in March at Lowe’s was for, and if you ever got paid for it.
Edited 9/7/2008 5:13 pm ET by byhammerandhand
Just curious what you'd need a business loan for??
I basically did/have all that Huck suggests.
I actually restarted up my business from nothing just several months ago.
I let my reno biz fall to the wayside when I did my past two houses. No more customers or references or leads. Figured I'd just keep doing my own houses till shid hit the fan with the housing/economy market.
It's been about six months or so and I'm really up and running...for now anyway. Booked for at least another two months with a seriously big job I need to bid on that I have a real good chance of landing...that'd take me to next summer easy. the jobs actually almost too big for me but I'm gonna still try and go for it.
I spent an immense amt of energy trying to drum up work doing everything I had and knew in me from a sign in front of my house to advertising in local Pennysavers...igh...actually targeting neighborhoods around me and going mailbox to mailbox stuffing them with big beautiful fliers I made. That was illegal btw and I knew it. I got a $350 fine but it paid off big time. Landed some incredible jobs. Long story.
I made oversized postcards I mailed out first which is a total waste...but I tried it all!!!
Didn't take all that long and now I'm really up and running again. Started out with cheap(ish) prices and worked my way up the more work I got and more references I got. I did what I did when I was first starting out when I was in my 20's and all I learned decades into it.
I even made my own website and sort of kept my "real" web site hidden for a bit b/c my real one just made me look expensive especially that it said Cold Spring Harbor$$$ all over it.
I tried targeting handyman work. Came up with a new name even..
"Punch List Plus". I don't use this web site anymore now that I'm back on track again ( http://www.punchlistplus.net )
One thing I probably should do is get an acct., but I've never had one in my life except for the short time I was a corporation.
Just go for it! Work your #### off trying to sell jobs. If you want it bad enough you'll do it!!
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Alot depends on exactly where you want to work.
Missouri does have state wide licensing or building codes.
So any licensing and enforcement is local.
In the KC area I don't think that any oc the cities have licensing for other than electric/plumbing.
But many cities require business license. Bascially they are just registration to identify who is working in the city. And nominal fees.
But Kansas city it is part of the earning tax and there is tax on gross proceeds. But I don't work in KC so I don't know the details.
I hve no idea of the sales tax. I an semi-retired and just do handyman projects and pay tax on what I buy and charge the client. But most of projects are less than $1000.
Look to a local community colledge or high school Adult Ed programs. They often have "starting a business" classes.
Also contact the chamber of commerce to see if they have or know of any such programs.
And they will cover the basics of other areas such as basic record keeping and IRS taxes including sch C and self-employement taxes.
.
A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
No offense, but the "I don't need a an accountant" comment was just about the stupidest thing I'd ever heard. Anyway, in addition to the good advice you've received thus far, read the following books: the first is "Smart Business for Contractors: A Guide to Money and the Law" by Jim Kramon, Taunton Press. Not sure what year it was published, but I know for a fact that it's been updated since then, so be sure to get the recent edition. The second is "Running a Successful Construction Company" by David Gerstel, Taunton Press. The last edition came out in '02, if I'm not mistaken. Two EXTREMELY indispensable resources for all contractors. Particularly, ones like you, who are about to take"the plunge."
Remember, just because you may be able to frame a stud wall more plumb, level, square, and faster than anybody else on your side of the Mississipi River or whatever it is you may claim to be the best at, doesn't mean that you know it all. In light of the "I don't need an accountant" line, I willing to bet the ranch that your business acumen isn't much sharper than a marble. Also, everytime a contractor ignornant in the ways of sound business management, goes under, our reputation in the public's eye gets more and more tarnished, thus making it that much more difficult for the rest of us to earn the respect that we rightly deserve, much less be successful at what we do.
I don't mean to sound like a dick. It's just that I've seen the businesses and lives of too many of my buddies, all excellent craftsmen, but whose attitudes toward business matters were as cavalier as yours seems to be; devastated because their egos and "pigheadedness" (hallmarks, unfortunately, of a lot of us contractors) got in the way of accepting the sound advice that can be found in these books and many other resources, be they the seasoned contractors themselves or the printed word.
Have a good 'un
J.D.
P.S. you can find both these books on this site or at your local library. Chances are, they're there.
That may have been the rudest reply I have ever recieved. If you would have taken the time to ask why I don't need an accountant instead of laying into, you would find out that ny wife is a liscensed CPA. So thanks for the advice. And as far as the books, I already have them. You can read everything in books, but I would rather hear from someone that has lived it. Thanks for your time.
so U do admittedly need an accountant.
U just happen to already have one on retainer.
Jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
So you don't think that the gentlemen who wrote those books have "lived it?" If that's honestly what you think, you obviously haven't read them. What's more, what's the difference between reading the advice given to you via this website and reading the advice found in those books? I gotta say, you make a pretty weak argument, my friend.
Edited 9/29/2008 5:35 pm ET by joshd
Maybe I did not phrase my original question correctly. I wanted to know the various routes people took when starting thier company. How difficult was it? Would you do it again? Any regrets? After my first post, it seems no one read past my "accountant" comment. I have read the books and so on. I have taken several seminars from some authors of the books that have been mentioned. (The Twelve Commandments of the Small Business is a good one) I feel that I am very capable of the business end as well as the tool end....
So I guess I just wanted to know what guys would have done differently if they could do it over.
Every job needs to make money.
Get your material money up front, you can overcome labor but its much more difficult to come up with someone elses material bill.
any doubt run down and cash there check.
Be legal in everything no fun looking over your shoulder like a crook.
Work every job like your building for your mother and do extra, The little extras will be worth its weight in gold for future jobs.
Run dont walk for bids from references there the good ones.
When you give a price look em right in the eye like you have done this a thousand times and a thousand times people said yes, One hint of doubt and you will lose them.
Do one job at a time and dont leave untill your done, If you start 5 jobs you will be running around putting out fires..
God speed my friend