Starting a construction company can be an exciting and rewarding experience for those with a passion for building. Before you get started on your entrepreneurial path, it’s important to develop a business plan. The plan should consider your business goals, target market, financial projections, and costs. There are a number of costs associated with starting any business so it’s critical to do your due diligence. Below you will find helpful information about the startup costs for construction companies and how accountants help.
Startup Costs for Construction Companies and How Accountants Help
Because a construction company is such a massive undertaking, there are a number of costs to get started. Not only will you have regular business startup costs, but you will also need to get the necessary licenses and permits to lawfully do business in your area. Consider the following startup costs for construction companies.
Insurance can help protect your business from a number of issues so it’s important to purchase liability insurance. This can help protect your business from lawsuits, damages, and other issues that may arise during the regular course of business. The cost of liability insurance differs depending on the size and scope of your business. It’s advisable to budget at least $3,000 annually for liability insurance.
Workers’ Compensation Insurance:
Even if you have just one employee, it’s important to get workers’ compensation insurance. In fact, it is required so you can protect your employees in the event that they get injured. Similar to liability insurance, the cost of workers compensation varies depending on the number of employees you have and the type of coverage you purchase. You should budget at least $1,000 annually for workers’ compensation insurance.
A construction business requires a lot of equipment. Some businesses purchase all of the equipment, while others lease it. This includes equipment such as vehicles, tools, machinery, and office equipment. This can vary dramatically from company to company to research your unique area accordingly. It’s best to budget around $20,000 for equipment-related expenses.
Business License and Permit:
Based on the business structure you choose you will need to get the necessary licenses and permits. This can differ depending on if you register as an LLC or a corporation, so research your state and local laws regarding business licenses and permits. The cost can vary between the two, so it’s advisable to budget a few hundred dollars (maximum $1,000) for these. Navigating your startup costs can be difficult so it can be helpful to have someone skilled in accounting for construction as you get your business off the ground.
Due to the ways in which businesses operate modernly, it’s helpful to have a website. This not only provides a place for people to find you, but can also boost your credibility. A professional website can attract customers so creating a high-quality website is key. The cost of a website can vary, but budget at least $500 for this.
Construction Company Accounting
Running a construction company comes with a number of duties, both behind an office desk and outside. As an entrepreneur, you will likely be taken outdoors for construction projects with little time to do financial and administrative tasks behind a desk. This is where an accountant can provide so much help as you start and continue running your construction company. They can help you prioritize your startup costs and help you manage your accounting tasks as you scale your business.
If you are starting a construction business, consider Indevia bookkeeping for all of your accounting needs. They offer customized bookkeeping and accounting services to meet your unique business needs. Contact their office today for more information!