You Need More Than Just Your Contractor License Bond
5 Benefits of Incorporating Your Business
Incorporating your contracting business offers several benefits that will give you a competitive advantage.
Protection for your personal assets. If you have unresolved business debts, personal assets such as your equipment or work vehicles cannot be taken as payment.
Instant boost of credibility for your business. When your company name includes “LLC” or “Inc.”, it indicates that your contracting business is a professional one, and can attract new clients and partners.
Other businesses within your state cannot file your exact business name (applies to most states). This prevents another company using a similar name, causing confusion for your clients and weakening your brand.
Tax benefits such as allowing you to write off expenses such as health insurance and life insurance premiums.
Easier access to loans. Banks are more willing to provide lending to incorporated businesses, which can be extremely important if you are a smaller contractor that does not have the cash needed to start your business.
Protect Your Business with Insurance
There are several types of insurance coverages that have their own benefits. Whether you are a large contractor with many employees, or a small contracting business, these types of coverages can benefit you:
- General liability insurance: this is an important type of coverage for contractors, as it can protect you from lawsuits and other financial liabilities that result from accidents, e.g. injuries to customers, employees or vendors.
- Property insurance: provides protection for property damage that results from fire, water and some weather events.
- Installation insurance: covers your client’s property from damages incurred when you are installing equipment.
- Commercial auto coverage: insures your vehicles used for commercial purposes.
If you’re a larger contractor, you may also be interested in these coverages:
- Workers compensation and employers liability: workers compensation helps cover medical costs and lost wages for an employee who gets injured and misses work. Employers liability protects you from being sued for claims arising from workers compensation claims. These coverages are especially needed if your company is incorporated.
- Umbrella insurance : extra protection for your general liability insurance.
- Employment practices liability: protects you from certain employment related claims made by employees. For example, if a manager harasses or discriminates against an employee (or is alleged to have done so), this coverage provides a defense and possibly claim payment on behalf of your business.
- Medical insurance: provides medical benefits for employees participating in your company’s health program.
You’ll want to contact a property and casualty insurance agency that specializes in contractor insurance for additional information and to get your coverages in place.
You can also get fidelity bonds, which can protect your clients or your business. A business service fidelity bond will protect your clients from dishonest acts by your employees such as theft. An employee dishonesty fidelity bond guards against your own employee’s dishonest acts such as theft, embezzlement and forgery.
Sharpen Your Skills with Licensing and Training Schools
You’ll likely need a surety bond and a license to start a contractor business since most states require both. Read our step-by-step process to getting a surety bond for your license. Once you have your contractor license bond and insurance in place, you may want to consider getting certifications for your specific field of work. If you’re interested in getting certifications, you will likely have to meet education and work experience requirements, in addition to passing an exam.
Although many contractors get their initial training through hands on experience as an apprentice of licensed and certified contractors, it’s becoming more common for contractors to get formal education in their field, the most common type being a bachelor’s degree. Degree course work will help you increase your skill set and often includes training in construction blueprints, electrical systems, building equipment, structural foundations, building codes, construction legalities and cost calculations.
Beat Your Competitors with Local Search Marketing
Once you have all of your licensing, insurance and certifications in place for your contracting business, you can increase your number of clients through local search marketing. Local marketing and advertising is steadily growing to be the preferred way to gain a strong presence in the local business scene. Every month, billions of searches are done online for local businesses in the U.S.
Local search marketing may sound difficult, but it’s not as complicated as it sounds, especially with the great resources on the web that can help you get started. Before you do anything else, take this questionnaire to see if local search marketing can benefit your contracting business. If you find that local search marketing is a good fit for you, use this visual guide to determine which local marketing options are right for you.
Your local business listing is one of the most vital pieces to your local search marketing plan, and you can use this guide to find out how to get your business listed properly. Online reviews for your business are also crucial since they are usually displayed clearly when someone is searching for contractors online. Learn how you can get positive reviews from your customers and how to manage your company’s reputation.
If you don’t have enough time to do local search marketing on your own, you can hire a company that specializes in this important marketing tactic. View this list of recommended local search marketing companies that can help you get your business seen in the local market and increase your client base.
Author: Eric Weisbrot
Eric is an industry expert that specializes in taking complex surety concepts and explaining them in terms that make sense to the general public. He also manages the JW Surety Bonds website and works with various partners to help further educate the public on suretyship using various mediums.
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