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How to Start a General Contracting Business

What it takes to legally start a general contracting business in the US — licensing, structure, EIN, taxes, insurance, and your first customers. The steps are the same everywhere; the forms and fees depend on your state, so pick yours below for the exact links.

Typical startup cost
$5,000–$25,000 (licensing, bond, insurance, software) plus working capital
Licensing
state + local — varies
Best structure
LLC for most
First customers
referrals + local search

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  1. Check the licensing for general contracting work

    A general contractor license is required in most states above a project threshold, typically involving an exam, proof of experience, a bond, and financial statements. This is the part that varies most by state — some require a state license or registration before you can advertise, others leave it to the city or county. Confirm both your state board and your local government before you take a job.

  2. Decide what the business needs to open

    Managing residential remodels and light commercial builds — coordinating trades, permits, and schedules. The setup areas that usually matter for a general contracting business: State general contractor license + exam, Bond + high liability, Subcontractor network, Contracts and change orders, Draw schedule / cash flow. Typical cost to get operational: $5,000–$25,000 (licensing, bond, insurance, software) plus working capital.

  3. Pick a structure — sole proprietor or LLC

    You can start as a sole proprietor with no filing, or form an LLC (usually $50–$300 depending on your state) for liability protection. For hands-on trade work where something can go wrong on a customer's property, most owners choose the LLC.

    LLC filing fee and steps by state ↗

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  4. Get a free EIN from the IRS

    An Employer Identification Number is free and takes a few minutes online. You need it to open a business bank account and to hire.

    IRS — Apply for an EIN ↗

  5. Register for state taxes and get insurance

    Register with your state's tax agency if you'll collect sales tax, then line up general liability insurance and a surety bond — most contracts and license boards require proof of coverage.

  6. What general contracting businesses charge

    Cost-plus (10–20% over trade and material cost) or fixed-price bid with a contingency. Draw schedule tied to milestones. Design-build and consulting/pre-construction fees are additional revenue. Tied to the housing market and interest rates — remodels hold up better than new builds in a downturn. Repeat clients, architect referrals, and a portfolio reduce the bidding treadmill.

  7. Get your first general contracting customers

    Architect and designer referrals, past clients, and a portfolio of completed projects. Reputation and a reliable sub network are the assets. Design-build and repeat clients reduce the sales grind.

    Getting customers for a general contracting business ↗

  8. The mistake most first-year general contracting owners make

    Under-capitalizing the gap between paying subs and getting paid by the client. You often front materials and the first week of labor before the first draw clears — a job that's profitable on paper can still bankrupt you on cash flow.

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Frequently asked

How do I start a general contracting business?

Check the licenses for general contracting work in your state, pick a structure (sole proprietor or LLC), get a free EIN from the IRS, register for state taxes, open a business bank account, get general liability insurance and a bond, then set up a Google Business Profile and line up your first jobs. The order and the exact forms depend on your state.

Do I need a license to start a general contracting business?

A general contractor license is required in most states above a project threshold, typically involving an exam, proof of experience, a bond, and financial statements.

How much does it cost to start a general contracting business?

Plan for $5,000–$25,000 (licensing, bond, insurance, software) plus working capital to get operational, plus $50–$300 if you form an LLC (varies by state). An EIN is free, and general liability insurance runs a few hundred dollars a year for most solo operators.

What should I charge for general contracting?

Cost-plus (10–20% over trade and material cost) or fixed-price bid with a contingency. Draw schedule tied to milestones. Design-build and consulting/pre-construction fees are additional revenue.

How much do general contracting businesses make?

It depends on your rates, your utilization, and your area. See the income and pricing breakdown for a general contracting business for typical owner take-home and what to charge.

How much does a general contracting business license cost?

It depends on your state and exactly which license applies — a state professional license commonly runs $50–$300 plus any exam or renewal fee, and a local city/county business license is often another $25–$100. That's separate from the $50–$300 LLC filing fee if you form one. Use the License Finder tool with your state for the exact fee for general contracting work.

How much does general contracting business insurance cost?

General liability insurance for a solo general contracting operator typically runs $300–$800 a year, more with commercial auto coverage or a higher liability limit, plus a surety bond that usually costs $100–$500/yr. Most contracts, landlords, and license boards require proof of coverage before you can start.

Where do the first general contracting customers come from?

Architect and designer referrals, past clients, and a portfolio of completed projects.

Official sources

Fees and timelines are commonly-cited figures last reviewed September 2026 and can change — always confirm on the official site. This is educational information, not legal or tax advice.

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AI-generated guidance is for educational purposes only and is not legal, tax, or investment advice. Disclosures · Trust center