How to Start a Carpentry Business

Looking to start your own business? If you’re handy, you may be considering the work of a carpenter. Regardless of whether you’re looking into commercial or residential, you’ve got skills, and you’re ready to put them to good use. But before you launch your own company, there are a few steps to take.

1. Pick your specialty
2. Choose a business structure
3. Open a bank account
4. Get insurance
5. Find customers

Picking a specialty

As someone who is into woodworking, you know the primary differences in carpentry are rough carpentry vs. finish carpentry. From there, you might tend towards structural work. Or maybe you like constructing floor joists. You may also consider cabinetry, framing, roofing, or trim carpentry.

Whatever your choice is, lean into it! Dedication and hard work is going to help you start and grow your business.

Choosing a business structure

Many businesses opt to register their business with the state. However, you may elect to work as a sole proprietor. In this case, you would not be required to have an FEIN, or Federal Employer Identification Number.

Business entities that require registration:

  • LLC
  • Limited partnership
  • Limited liability partnership
  • Corporation (Any kind)

Information necessary for registration include:

  • Business name
  • Location
  • Ownership
  • Management structure

The cost of registering a business typically costs less than $300, although the fee can vary based on your state and structure.

Opening a business bank account

Once you have your FEIN, you can open a bank account for your business.

Common business accounts include:

  • Credit card account
  • Checking account
  • Savings account
  • Merchant services account

You’re probably familiar with most of these types of bank accounts. If you’re not as familiar with merchant services accounts, it’s an account that enables you to accept both credit and debit card transactions from your clients.

There are a few perks that come with opening a business-related bank account, like protection. Business banking allows for limited personal liability protection. How? By separating personal funds from business funds.

Need some extra cash? Business banking typically comes with an option for a line of credit. Keep in mind, this should usually be saved in the event of an emergency.

When choosing bank, there are many factors to consider, like:

  • Fees
  • Minimum balance requirements
  • ATM access
  • Online and mobile banking
  • Wiring, transfer, and payment capabilities
  • Extra features like bill pay, invoicing, and integrations

Check out these recommended banks for business accounts.

Business insurance for carpenters

Now your business is set up and your bank account is ready to go. But before you start working with clients, you’ll definitely want to consider commercial insurance for your business.

Pros of business insurance:

  • Protects you and your company in the event of an accident, error, or claim
  • Covers costs associated with injury, property damage, and liability claims
  • Eliminates the stress of having to deal with claims out-of-pocket

Cons of business insurance:

  • Can be cumbersome to understand what coverages are best for your business
  • Extra costs associated with your company
  • Potential to still have to pay out-of-pocket if your limits are not high enough

It doesn’t matter if you’re a one-person contractor, or have a team working with you – commercial insurance is highly advised for carpenters. The more physical a person’s job is, the greater the risk of accidents and injuries. That’s where workers’ compensation insurance comes in. And, the more you’re working in the public, the greater the probability of bodily injury and property damage claims. General liability insurance is a great policy to have for these types of risks. Not only that, you rely on your materials and equipment to perform your work, and that’s why inland marine insurance is a perfect fit for carpenters.

Carpenter workers’ comp insurance

You’ve probably heard of it before, but in case you aren’t totally familiar with what workers’ comp insurance is, you’re in the right place. This policy protects you, your employees, and your business in the event of a workplace injury. If you or a team member get hurt on the job, workers’ comp will cover medical expenses associated with the accident.

Rather than having to pay for costs out-of-pocket, workers’ compensation covers emergency room visits, trips to the doctor’s, physical rehabilitation, and more. Other perks? If you are hurt to the point where you require time off work to recover, your lost wages will be supplemented by this policy. That way, your business won’t have to foot the bill.

In the unfortunate event someone dies from an accident, funeral expenses are covered. Additionally, lawsuits regarding workplace negligence are also taken care of under this policy.

Feeling like a risk taker and not up for workers’ comp? Due to many state regulations, you may not have the option to skip over this policy. Especially if you have employees. Even if your state doesn’t require you to carry this coverage, the party hiring you may still mandate that you have a workers’ comp policy of your own.

Even if a hiring party has their own workers’ compensation policy, they may want you to have your own policy so the liability is taken off of themselves.

How to save on workers’ compensation:

Check out more on workers’ comp costs.

General liability for carpenters

General liability insurance is just that: general. In a really good way. This overarching policy protects you financially in the event of third-party bodily injury, property damage, and personal/ advertising injury (such as libel and slander). Basically, if you own a business you should have this policy. Especially if you’re out in the public.

On a jobsite, there are many different kinds of tradespeople. Let’s say some of your tools are sprawled out, and another person trips on them. They fall and break their arm. They can file a claim against you, expecting you to pay for the medical damages. Without general liability, you may have to pay for these expenses personally. With the proper protection, your policy will cover the third-party bodily injury damages.

Here’s another coverage highlight: property damage. You’re working at a commercial property and your very heavy table saw falls and cracks the very expensive, very new tile that was just laid down. Rather than having to cover replacement and repair costs, general liability insurance would foot the bill.

Have bad vibes with your client? Be careful if you’re publicly ripping on them (verbally, or written). If they catch wind, you may find yourself facing a slander or libel lawsuit. Luckily, general liability covers miscellaneous court costs.

Carpenter inland marine insurance

Speaking of commercial property, it’s great to have! But, if you’re further than 500 feet away from your primary business premises, the coverage ends. To protect your tools, materials, and equipment in transit and on job sites, you’ll want to consider inland marine insurance.

In a nutshell, this policy protects your business against losses while transporting movable commercial property. Inland marine protest gear while driving, at temporary storage sites, on location… really anywhere that’s outside of your actual business location. If something happens, this policy will cover replacement and repair costs.

Commercial insurance for carpenters

While some policies are “must haves”, there are many coverages that can be helpful for carpenters, in addition to workers’ comp, general liability, and inland marine.

Other helpful insurance policies for carpenters:

Finding clients as a new business

One of the best ways to gain new customers is through word of mouth. Yep, referrals are a great way to build a client base. We’ve all relied on our circle for recommendations, and you definitely want to be on your friends, family’s, and past customers top of mind in the event someone in their world is on the lookout for a carpenter.

Another way to meet prospects is to go to industry events. Maybe you’ll meet another tradesperson who has been looking for a carpenter to work with. It’s all about “building” relationships! (No pun intended.)

Offering discounts for potential clients is a great way to get new people in the door. Clients may be enticed by a special offer. If they like your work, they’re likely to be a repeat customer. Not only that, it’s possible they might send you a referral!

That’s a wrap

Now that you have a few pointers on how to start your carpentry business, you’re ready to go do what you do best! But before you do, don’t forget your business insurance. With Pogo Insurance, we compare quotes from over 30 carriers to offer you the best coverage at the right price. Get a free estimate.

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