How to Become a General Contractor in 5 Steps

How to Become a General Contractor in 5 Steps

FIVE benefits of energy contracting

  • You’re your own boss – you dictate when you work so if you want to take some time off, you can do so once your contract comes to an end. You can pick and choose the projects you like and fit your work around your other commitments. Work life balance is a huge plus!
  • Specialist skill set – the reason contractors are so highly sought after is that they have a niche specialist expertise that’s in demand. Your reputation and experience will grow and one project will lead on to the next – you’ll have energy companies queuing up for your services!
  • Variety of work – you’ll get to meet and collaborate with different people, teams and cultures. You’ll learn so much about yourself and accumulate a great amount of experience working in diverse environments and projects. This will make you an even greater asset for future opportunities.
  • Financial gains – contracting can be very lucrative with the most experienced professionals able to command top day rates. You will typically earn more than your permanent counterparts and can therefore afford to take more time off in the year as a result.   
  • Office politics – there is far less likelihood of getting stuck in a career rut due to lack of opportunities or promotions. Presenteeism too can often take a toll on a person’s mental health. And if money is an issue, you can choose to take on a better paid contract.   

While there are many benefits to taking the plunge as a contractor in renewable energy, it’s a decision that requires careful consideration. The main downside is that you are now responsible for running your own business and the time that goes into that. You’ll also need to understand all the latest legislation that affects those contracting in the public and private sectors, such as off-payroll working (IR35) so that you don’t get into trouble with HMRC.

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7. Watch out for the IR35 trap!

Of all the challenges you may face at some stage of your contracting career, ‘IR35’ is likely to be the most annoying. The IR35 rules, which became law in 2000, were put in place to clamp down on the practice of so-called ‘disguised employment’, where a permie would leave his job one day, only to return as a limited company contractor shortly afterwards; but unlike a ‘self employed’ person, the contractor in question would typically carry on performing a job in an ’employed’ manner – under the complete control and direction of his/her client.

Umbrella company contractors need not be concerned about IR35, as they are ’employees’ of their umbrella schemes. If you run a limited company and your contracts are caught by IR35, the financial consequences are significant, and all the tax benefits associated with working via a limited company will be eroded.

From 6th April 2021 onwards, private sector clients will become responsible for determining the employment status of contractors – in a significant overhaul of the current IR35 rules, following on from the April 2017 public sector implementation.

Understandably, you should read up on IR35 as a priority, and take steps to ensure that you remain IR35-free. There are plenty of experts out there to guide you through this process, and it is not expensive.

You should have each contract professionally reviewed before signing.

Start Small

Know your limits. If you haven’t done a particular kind of project before, do research before you agree to take it on. You don’t have to announce your lack of experience but you do have to be honest about it. Acknowledge it up front and then find other ways to make your clients feel good about it: explain what safeguards you have in place, show them your formal training credentials, or even refer them to a specialist. It may lose you the job now, but you’ll earn credibility in the long run.

Create a Safety Net

Becoming a general contractor involves risk, especially if you don’t have experience. That’s why you need to be extra careful with professional details. Make sure you have the right general contractor insurance, which is often required to get a license. Your clients might also ask you to provide them proof of insurance before they’ll work with you.

Make sure that you check Next’s industry-tailored general liability insurance, professional liability, and commercial auto coverage.

Name, Register, and Insure Your Contracting Business

 Erik Von Weber / Getty Images
Erik Von Weber / Getty Images

Before you open your doors and start taking on any clients as a contractor, you will need to:

  • Decide how your business will be legally structured—do you need to incorporate or can you operate as a sole-proprietorship? In many professions, being incorporated is a requirement. If you intend to incorporate, do so before signing any contracts with clients.
  • Decide on a business name and register it if required.
  • Insure your business as required. For example, will you need general liability insurance? Professional liability? Errors and omissions? A claim against your business that is not covered by insurance could be financially catastrophic, especially if your business is not incorporated. Be aware that home insurance will not cover business activities from home.
  • Get a business bank account.

How to get a contracting job

Depending on the kind of contracting work you do, the process for getting a job can differ. Though the process may vary, you can follow these general steps to get a contracting job:

1. Determine your skills, specialty and pricing

The first step to getting a contract job is developing the service you plan to offer. To do this, consider your skills, qualifications and tools. For example, if you're a skilled writer or an educated marketing specialist, you can offer these services for contract work. You may also be able to use skills and tools for landscaping, construction jobs, carpentry and other custom products. If you're a skilled make-up artist, you may do make-up for short film production or a wedding.

Once you know which services you plan to offer, you can assign pricing to each. To determine how to price your products, you can research other independent contractors and see what they charge for their services. Consider offering your services at a discount when you first build your client base. Focus on offering high-quality service and raise your prices as your skills and reputation improve.

Related: How To Calculate Contractor Rates (With Equation and Example)

2. Create a website and professional contact page

After you've determined which services you'll offer and your pricing plan, you can create a professional website. As an independent contractor, it's likely that you don't have a storefront, which makes it important for you to communicate your services and qualifications through your website. You can include information pages about yourself that include any degrees or accolades. It's a good idea to create a compelling landing page that encourages the viewer to stay on your site, learn more about your services and eventually contract a job from you.

On your website, include a professional contact page to hold your email address and other contact information potential clients may need. You can include a form for visitors to complete with their information and inquiries to make the process more efficient. For your contracting business, be sure to have a professional email address. This is usually some combination of your first and last name, ideally at your own website. You can sign up for a website domain and email server online.

3. Market yourself and build your client base

Using your website and other materials, you can market yourself to find and maintain your clients. You can sign up for sites that facilitate contract work to start, as they have platforms dedicated to customers and those offering their services. Consider finding clients on these sites to help build your client base. For example, to market your writing or consulting business, consider writing guest posts on other websites or blogs and contributing articles to online writing platforms.

You can also consider cold emailing, cold calling and other direct methods for finding clients. For example, you may visit businesses in your area to market your skills and earn a contract with them. You might also obtain phone numbers or email addresses for companies and contact them with a pitch for your services. As you scale your contracting services and take on more clients, consider working with a professional marketing service to reach a broader audience and improve your contracts and compensation.

4. Refine your skills and increase your prices

As you develop your contracting services, you can further refine your skills and increase your efficiency. Depending on what your services are, this may include purchasing higher-quality tools or hiring an assistant to help you with your tasks. For example, if you are an independent contractor photographer, you may purchase better camera equipment or hire someone to help you with posing, props and scheduling. You might also invest in software that can help you manage your finances and process payments from your clients.

Any of these improvements may mean you can increase your prices to match the quality of the service you offer. For example, if the photographer invests in a better camera and equipment that allows them to offer specialty prints or other novelties, they may charge more for their wedding or event packages.

Related: 10 Steps To Be a Successful Freelancer

Latest Updates

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Be Your Own Accountant, for Starters

 Hero Images / Getty Images
Hero Images / Getty Images

During the startup phase of your business, ​you can save money on accounting fees by using free time to organize your books, create systems for invoicing your customers, and learn basic accounting.

Accounting software can greatly simplify your bookkeeping chores. Many of the new cloud-based accounting software packages such as FreshBooks and Zoho offer ideal starter packages for self-employed contractors that include invoicing, expense tracking, simple reporting, and mobile applications for around $10 per month.

If you are loath to do your own bookkeeping, you can always hire a bookkeeper or accountant to perform these duties once you become busy with clients.

Step 3: Go through training

All licensed contractors have some training they need to complete beyond experience in the industry or formal education through a trade school, college, or university. The first step in this process is the get in touch with your state’s contractor licensing board.

Contact your state’s contractor’s license board

Each state has a contractor’s license board, but you may be wondering what exactly a construction contractor board is. The answer to this question is relatively simple: the board is the government body that administers licensing for construction contractors in the state, including the exam requirements for each type of contractor license available.

For example, California’s contractor’s license board offers a vast amount of information about the licensing process, who is required to take an exam, and study guides for the contractor’s exam online. All states have a contractor licensing board which can be found through a quick online search or by contacting the state’s department that handles contractor licensing.

Pass your exam successfully

Once you have contacted your state’s contractor licensing board to determine the licensing requirements, you will able to quickly determine if an exam is needed or not. Most states require an exam completion when projects exceed a certain dollar amount, regardless of the education or experience obtained by the potential contractor. Passing the licensing exam requires some self-study, specifically aimed at understanding current building codes, state laws relating to construction and contracting, and business management education. Take the time to prepare for the exam before scheduling it so you can pass it successfully the first time around.

4. Applying for a contract role

To secure your first contract, you’ll need to get your CV up-to-date. Contract recruiters are primarily interested in your current skillset and experience. You should list these at the top of your CV, and keep the document to a maximum of two pages if you can (this is a rough guide). Be concise, and remember that you’re being hired for your skills, to fill a project requirement. Keep the ‘additional information’ you may have included in your permanent CV to a minimum. Tailor your CV (within reason) to each role you apply for.

It goes without saying that you should take time to make the CV presentable; spell check everything and use uniform fonts. You want to make sure your CV stands out from the crowd. Agents tend to be divided on whether or not you should include a covering letter or not, but our view is that you should do anything to improve your chances of securing the role.

These days, LinkedIn is also a vital tool in the contractor’s armoury. Set up a profile if you haven’t done so already, and make sure your traditional CV and online profiles match. More and more recruiters used pre-screening firms to find out more about applicants, so clean up your online footprint if there could be any unflattering information out there about you if you perform a search on your name.

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