Contractor Startup Cost Checklist

Work through this in sequence, because each step usually depends on the one before it: form your business entity first, get your EIN from the IRS, open a business bank account, then apply for your contractor license. Some states want proof of insurance or a bond before they'll issue the license, so check your state board's exact order before you spend money out of sequence.

Don't skip the local layer — many cities and counties require a separate business license or home occupation permit even after your state contractor license is approved.

General liability insurance is the baseline almost every client and permit office will ask to see. Workers' comp becomes mandatory the moment you hire your first W-2 employee in most states, so don't wait until you're audited to get quotes. If your license or the jobs you're chasing require a surety bond, get quotes from at least two agencies — premiums for the same bond amount can vary by a few hundred dollars based on your credit.

Before you bid your first job you need: a way to write and send professional estimates, a business bank account and card so you're not mixing personal and business expenses, basic bookkeeping software, a phone number and email that isn't your personal Gmail, and a simple contract template reviewed by a lawyer or a state-provided sample.

Physical needs come last on this list on purpose — trucks, trailers, and tool inventory matter, but they don't stop you from legally operating the way missing licensing or insurance does. Buy the paperwork first, the equipment second.