Becoming a Contractor

Contractors In Haifa coordinate many moving parts in complicated building and remodeling processes. They find and pay subcontractors, work with vendors and architects, purchase materials, and in general act as much-needed guides for homeowners through the process.Contractor

Choose contractors who are local and with whom you feel comfortable communicating. Ask for detailed, itemized estimates from the final candidates to compare prices.

Contractors are responsible for the management of details and procedures on construction projects. They handle questions, promote safety and work with clients to meet project objectives. They often negotiate contract terms, as well. To succeed as a contractor, one must have certain qualifications, including licenses and experience. The exact requirements vary from state to state, but usually include a general contractor license and specialty license for each trade. They also must have experience and references in the industry, and pass a business exam and a construction law test. Many contractors gain experience as an apprentice or in a related job before becoming licensed.

Qualifications of contractors are generally considered at the time they submit a bid for a project. This evaluation is often based on questionnaires, and answers can be influenced by the contractor’s desire to win a project. For example, if a question asks whether safety is a priority for the company, contractors may be tempted to answer yes to put themselves in a good light.

Another factor in evaluating the qualifications of contractors is their ability to perform the required work in a timely manner. To do so, they need to understand all aspects of a particular project and its unique circumstances. Contractors must be able to adjust their scope of work and rates to meet budget and schedule constraints, and they must negotiate effectively with customers.

Other important skills include the ability to communicate clearly and accurately with clients, staff and external companies. Problem-solving skills are also used when answering questions and resolving issues. Finally, contractors must be able to draft contracts and negotiate with staff and customers. In addition to negotiating terms, they must be able to secure fair payments for labor and materials.

Licenses

When you’ve gathered some work experience and gained a little knowledge of your industry, you may be ready to pursue licensure as a contractor. Licensing varies state by state but typically includes passing a competency test, providing proof of relevant work experience and verifying financial records. You will likely need to apply for worker’s compensation and liability insurance, as well.

Getting a license for general construction is usually the first step for contractors who want to bid on jobs with a value of $500 or more. You can also obtain specialization licenses if you have experience with specific skilled trades like electrical, plumbing or HVAC.

Many states require specialty contractors to pass an exam covering topics from business management to the specific building trades, as well as general construction laws. The number of required credits and the length of time to be licensed can vary greatly. Many contractor licensing agencies ask for the qualifying party, or principal owner of a contracting firm, to provide background checks for themselves and their employees. They will often also ask for financial information, a bond and proof of liability and workers’ compensation insurance.

Licensed contractors have lower overhead costs than unlicensed contractors. That lower rate is an advantage to clients, but it’s important to remember that an unlicensed contractor doesn’t carry liability and workers’ compensation insurance, which leaves you as the only person liable should something go wrong.

In New York, you need a home improvement contractor license to do any work on buildings and their surrounding land. You also need a specialty license to do residential subcontracting work in specialized fields such as roofing or masonry, and to perform mold remediation. You must also register your business, get a sales and use tax permit and pay  unemployment insurance taxes. Depending on the size of your company, you may be subject to other state and local tax obligations. Some states have additional requirements such as fingerprinting or submitting a criminal background check. The process of becoming a licensed contractor may seem lengthy and confusing, but it can help you gain the necessary skills and confidence to grow your own business.

Insurance

Contractors and tradesmen face a variety of risks and liabilities that can affect their businesses, including bodily injury, property damage, commercial auto claims and fidelity and surety. The size of a contracting business and the projects it takes on determine the type and extent of coverage needed.

Generally, contractors need to obtain general liability insurance. This provides protection against third party damages resulting from work-related accidents and incidents, as well as advertising claims involving defamation. Contractors may also need to carry workers’ compensation insurance, which helps pay for medical expenses and lost wages when an employee is injured or becomes ill while working on the job.

On larger commercial or public construction jobs, a general contractor may hire dozens or even hundreds of subcontractors to do the actual building work. As a result, the potential for risk is great that one or more of the subs will fail to perform their work on time or to specifications. Wrap insurance, which offers a single, large policy that covers all the contractors and subcontractors on a project, is available to help protect against this possibility.

In addition to basic liability insurance, contractors may need professional and pollution liability insurance. This type of policy typically offers broader coverage for contractors and can include third-party liability, first-party indemnity and property damage as well as environmental liability.

Many contractors have specialized equipment that they use to do their work, such as heavy machinery and vehicles. These items can be expensive to repair or replace, and a loss of any equipment could mean lost income. In order to protect these valuable assets, contractors can purchase equipment coverage that will help pay for the costs of repairing or replacing them in the event of an accident or theft.

Some contractors need additional coverage for specific exposures, such as data breaches and other fast-evolving cyber risks. Travelers has specialists who are experienced in helping contracting companies manage these types of risks. We can also help with contractors’ fidelity and surety needs, which are often required by clients or contracts. Our team is ready to discuss your unique business and needs with you and provide a complete contractors business insurance package to help protect your company.