Starting a contracting business is mostly the legal and financial setup, then getting your first three jobs in the door. The trades work itself is the part you already know how to do. This guide walks through the order operations that keep most new contractors from losing money the first year.
Most one-person contracting businesses start as an LLC. It separates personal assets from business liability, requires modest annual filing, and is recognized by every state. A sole proprietorship is simpler but leaves your personal assets exposed. An S-Corp election can save on self-employment tax once you're earning more than ~$70K but adds payroll complexity.
Every state regulates contracting differently. Some (California, Florida, Arizona) require a state license with exam and bond before you can bid above a small dollar threshold. Others delegate to local cities. Look up your state's contractor licensing board and read the requirements carefully — working without a required license is the kind of mistake that voids your contracts and your insurance.
General liability and (if you have employees) workers' comp are non-negotiable. style="max-width:780px;margin:0 auto;padding:48px 24px;font-family:system-ui,-apple-system,sans-serif;line-height:1.55;color:#0f172a"M GL is the baseline most clients require. Workers' comp is state-mandated the moment you have W-2 staff. A commercial auto policy covers your work truck. Plan on $200-500/month for the basics; more for higher-risk trades like roofing.
Open a business checking account and a business credit card on day one. Never mix personal and business spending — bookkeeping gets ten times harder later, and the IRS treats commingled funds as evidence you're not a real business.
Pick accounting software you can stick with. QuickBooks Online is the industry default and connects to almost everything (including FieldKrew). Wave is the free alternative if you're cash-constrained.
Most new contractors lose money quoting. A consistent quote template — line items, labor breakouts, exclusions, and a tight scope — beats a hand-scribbled estimate every time. Make it look professional; customers buy from people they trust.
Your first jobs almost always come from your network: friends, family, former employers, former coworkers, and trades you already know. Tell every person you've ever worked with that you're available. Do those first 10 jobs at fair (not cheap) prices, deliver beyond expectations, and ask for referrals on the spot.
After the network is tapped, the next reliable channel is lead generators (Angi, HomeAdvisor, Thumbtack) and Google Business Profile reviews. Local Facebook groups punch above their weight in residential trades.
You need: a way to track leads and quotes, a way to schedule jobs, a way to invoice and collect payment, and a way to log expenses. That's the whole list for year one. FieldKrew does all of those for $49.99/mo on Pro (free to start). Don't buy six separate tools when one will do.
Depends on the state and the trade. Most states require licensing above a job dollar threshold (often $500- style="max-width:780px;margin:0 auto;padding:48px 24px;font-family:system-ui,-apple-system,sans-serif;line-height:1.55;color:#0f172a",000). Working without a required license can void contracts and insurance. Check your state contractor licensing board.
Realistic minimum is $3,000- style="max-width:780px;margin:0 auto;padding:48px 24px;font-family:system-ui,-apple-system,sans-serif;line-height:1.55;color:#0f172a"0,000 covering LLC filing, license fees and bond, insurance for the first quarter, a basic toolkit, software subscriptions, and some marketing. Truck and major equipment add to that depending on trade.
Most new contractors should be LLCs. The cost is minimal (often $50-300 to file) and the personal asset protection is meaningful the first time a job goes sideways.