Things You'll Need

Instructions

Get Your Ducks in a Row

1

Determine a name, motto and mission statement. These three items will define the company's identity and provide guidance on how you will organize. The Subchapter S Corp. and limited liability company are the most popular options. Both protect your assets from claims that might be filed against your company, and offer significant tax advantages, too.
2

If friends or relatives are joining as partners, work out an agreement spelling out their rights and responsibilities within the new company structure. Download sample forms online, which you can modify to fit your needs. If the paperwork load feels overwhelming, hire a certified public accountant.
3

Apply for an Employer Identification Number (EIN), which you will need to report income from your clients. Next, register your company with a "doing business as" (DBA), or fictitious name certificate through the county clerk's office. You also will need a DUNS number, a nine-character number that identifies your company for business credit reporting.
4

Develop a business plan. It need not be lengthy or complicated, but it should be thorough. Outline how your business should function, the milestones that you plan to reach and when you expect to turn a profit.

Think About Your Start-up Funding

1

Talk with local bankers to see what types of loans they offer, and under what conditions. Without lines of credit or alternative start-up funding, no business can survive for long. If your own credit is good, you might need to get a loan in your name until your company gets established.
2

Open a bank account in your company's name to pay bills and write checks. Keep it separate from your personal checking or savings accounts. If necessary, you can loan yourself money--using a written agreement to govern the proceedings--and reimburse the expense later. This is a legitimate practice.
3

Invest in both a general auto and equipment liability insurance policy, and a policy for workman's compensation. These programs protect against personal injury and property damage claims. Without them, clients will probably not let you near a job site.
4

If your company will handle architectural or engineering and design work, get a professional liability insurance, or errors and omissions, policy. You are then shielded against claims arising from miscalculation or other errors made during a project.
5

If you intend to bid aggressively on public sector projects, realize that performance bonds--which guarantee the standards and timeliness of the work--are required. Start working with surety companies to qualify your company for providing bonds.

Get Everything in Writing

1

Develop clear, straightforward contract forms. Include descriptions of the work, the schedule and payment terms. Get everything down in writing--never work without a contract. Do not allow exceptions to this policy, even for well-meaning friends and relatives.
2

Balance your estimates carefully. As a new company, you might have to bend a little on pricing for a steady work flow, but do not low-ball yourself. Include all equipment, labor, material and overhead costs to get a better handle on your actual take-home profit.
3

Learn about all the legal risks that you could bear in a contract. Understanding how you plan on addressing damage claims or client disputes will go a long way in strengthening your position as a contractor.

Line Up Your Talent Pool

1

Line up your talent pool when a project starts. Hire subcontractors for the more specialized aspects of a project. Make sure they are insured and licensed, with appropriate experience levels for the jobs they will do.
2

Consider brokered labor, which refers to the practice of having a middleman bring in people--usually on a per-hour or per-day basis--for specific tasks. This makes the broker responsible for the insurance and withholding taxes that would otherwise fall in your lap.
3

If you feel confident about making a payroll--and want to exert greater control over projects--hire your own employees. Recruit them through classified newspaper ads, online postings, fliers in grocery stores or other people's recommendations.
4

Do not overlook marketing. Create brochures and business cards that you can hand out. Join local merchants' groups to increase your networking opportunities. Never miss the chance to talk up your business. Without a clever marketing approach, even the highest-quality work is worthless.