Construction and Contracting Business. Entrepreneur magazine

Construction and Contracting Business

records can result in overpayment of premiums.

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Know the ins and outs of your state! Some states exempt very small employers from carrying workers’ compensation; other states exempt owners who hold more than 25 percent of the stock of the company. Other states cap the amount of income of owners that is taxed. Learn the regulations in your state, and save yourself some money.

Wrap-Up

The business structure you select will have an important impact on the amount of taxes you pay, the amount of personal risk you assume, and the level of control you have over your business. Careful consideration, in consultation with your lawyer and accountant, must be made prior to choosing a legal structure.

The “government” may seem like a huge monster lurking in the shadows waiting to pounce on the unsuspecting business owner. However, with careful organization and proper accounting, it is relatively easy to satisfy the tax requirements of both state and federal governments. Ignorance of the law is no excuse for violating the rules.

It is important to understand the difference between an employee and a subcontractor for several reasons, especially when it comes to the IRS.

Even if you are not providing health insurance, the new health laws require that you provide such information to your employees. Providing decent health care benefits can give you a leg up on your competition when hiring top candidates.

Maintaining good records is critical to all business enterprises. It is far better to be prepared for the government or insurance audit that may never come.

CHAPTER 5

It’s Moving Day

So here we are in Chapter 5, “It’s Moving Day,” the time to make the big step toward success. At this point, entrepreneurs should have a clear understanding of the basic foundation needed to start a business.

They understand what a contracting business is and why it is important to the community and the economy.

They know if they have the proper background, credentials, and personality to become successful.

They have carefully researched and prepared a business plan and know how they will finance their enterprise.

They have established relationships with and have consulted with their lawyer, accountant, banker, and insurance agent.

They understand the requirements that must be met to satisfy state and federal government agencies. They’ve obtained the licenses they need and have established the required government accounts.

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State governments have a significant influence on businesses. Some states, as well as cities, are particularly friendly to small businesses. As of 2015, the five friendliest small business states were Texas, New Hampshire, Utah, Louisiana, and Colorado. The five friendliest small business cities of 2015 were Manchester, NH; Dallas, TX; Richmond, VA; Austin, TX; and Knoxville, TN.

Open Your Office and Shop

One of the first questions startup business owners ask themselves is, “Where should I set up my operations, and how much space do I need?” Many start in their own homes, either in the basement, a spare room, or in the garage. There are certain advantages to starting this way but also many problems.

The positive aspects are largely related to costs. It’s cheap. The structure is already there so you have no initial costs to construct or rent a building. You may have some remodeling to do, but most often this can be done at a reasonable cost. There are no rental expenses to pay every month and no landlord to deal with. It’s also very convenient to have your office at your home; no time is wasted commuting. Property maintenance and utility costs can be shared by the homeowner (you) and your business. Finally, home improvement expenses such as a new roof can, in part, be treated as a business expense. Many people in all kinds of businesses have found ways to work from a home base.

Now for the downside: The Internal Revenue Service has very strict rules regarding in-home offices, so watch your deductions carefully. You can deduct only that portion of your home, and even your utilities, used for business.

Family support is a crucial factor in deciding to run your business from your home. Because you can never really get away from the office, it’s easy to spend too much time at work. Conversely, it is also easy to turn on the television set and get away from work. The key is to be disciplined and manage your time effectively.

There are other things to think about when considering a home office. It’s important to be able to have a normal home life as well as a stimulating and successful business environment. Ask yourself these questions before you open an office in your home:

Do you have employees who will work full time in your home? How does your family feel about it?

Do you expect to meet with clients at your home? If you do not have a separate entrance to your office, how do your spouse and children feel about strangers walking through their home?

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