How to Start a General Contractor Company

How to Start a General Contractor Company

A general contractor company is responsible for providing the materials, labor and equipment required to complete a construction project. They may also contract specialized subcontractors for certain tasks, such as carpentry.

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Before you can start your new general contractor company, it’s important to get licensed and certified. This will give your clients confidence in your work and ensure that you’re up to date on the latest regulations. You may also need business insurance and worker’s compensation coverage, depending on the state you operate in.

Contractors must pass a state exam to receive their license, and the licensing process varies by state. The exam includes subjects ranging from business management and construction law to more specific topics such as plumbing, electrical, or HVAC.

Additionally, incorporating your business helps to protect your personal assets from liability in case your company is sued. To incorporate, visit a website such as MyCorporation to complete the necessary paperwork. Then, secure an EIN (Employer Identification Number) for your business.

Bidding Process

The bidding process is how GCs find work and build projects. It starts when the project owner shares blueprints, specifications, and other information about a construction project with GCs and others who are interested in bidding on the work.

After the bids are submitted, the project owner evaluates them based on various factors, including price and experience. Then, they choose a contractor for the project.

The GC may also offer a performance bond for larger projects, which guarantees that the project will be completed on time and within budget. The GC is also responsible for ordering materials related to the project and working with vendors to ensure that delivery times are met. They are in frequent contact with wholesalers and supply stores to help manage the procurement process.

Project Management

Project management involves a series of processes that are needed for successful construction projects. These include planning, scheduling, cost tracking and communication. Project managers are also responsible for identifying risks and determining a plan to mitigate them.

In the preconstruction phase, project managers prepare a project management plan for the construction of a structure. This includes estimating project costs to create a budget and monitoring expenses throughout the process. They are also responsible for establishing communication guidelines and acquiring project resources like labor and materials.

The GC and specialty contractors buy and order the materials, parts and equipment required for their portions of the job, and establish work crews and labor management plans. They also create a punch list, which includes all of the issues that must be corrected before closeout.


Many general contractor companies work with a variety of subcontractors to complete projects. For example, a GC may hire a site preparation contractor to bring in heavy equipment and prepare the construction site for building. A concrete specialty contractor might pour the foundation and footings of a project, or build concrete walls and patios.

Some GCs might also hire framing contractors to build the walls and roof of a project. A glass and metal contractor might install the windows and doors. Some GCs may even hire specialty contractors to handle specialized electrical, plumbing and structural work. Keeping a good relationship with your subcontractors is critical to ensuring that you are able to finish your projects on time and within budget. A bad relationship with a subcontractor can damage your reputation and cost you money.


General contractors must carry contractor insurance, which provides financial protection against a variety of construction risks. The basic general liability policy covers bodily injury and property damage that occurs at the company’s work sites. It also protects against the cost of legal fees and potential settlements that may result from a claim made against the company.

Typically, a general liability policy includes a $1 million per occurrence limit and $2 million in aggregate limits. If the business needs higher coverage limits, it can purchase an excess liability policy.

Some states require contractors to have specific policies as a condition of licensure. Other types of commercial insurance, like workers’ compensation, personal and advertising injury and pollution coverage are additional options for construction businesses. These policies can provide financial protection for a range of business issues including lawsuits, product and completed operations claims and theft of equipment.