Thinking about getting something small started

Hello all. I’m 22 years old from Washington state and have been roofing for about 4 solid years now and want to start something small so I can do side jobs legally. Only problem is I’m not really sure on how to get that process rolling. It would most likely just be me with the option of hiring laborers through the local express personnell if needed. What does it mean to be licensed and bonded exactly? Does it apply to what I’m trying to do? Someone point me in the direction I’m trying to go please. Thank you!

Well, first you need to get a remoderlers license and a llc. I would not suggest roofing or construction in the name so you dont have to pay outrageous payments and down payments.

Not sure about bonding its been to many years. but that sould get you going in the right direction.

I was interested in starting my own business about 5 years ago, then was offered a job as a roofing manager.

Anyways…Went to a local insurance company at the time and they quoted me a hare over $10,000 (no torch though) for yearly insurance, but only $2,500 down and the rest in monthly payments. And about $700 for a yearly bond. A little over $3,300 to start.

Your going to have to up your anti on the jobs to pay your taxes though.

I can offer some information - but being in PA - I’m not exactly sure how this would relate to Washington state.

Here in PA a contractor now needs to be “licensed” through the state - part of what is required for the license is proof of $50,000 General Liability insurance. Most companies here write GL at $300,000 per Occurence, $600,000 Aggregate per policy period - or $500,000/$1,000,000 or $1,000,000/$2,000,000.

As a sole proprietor in PA - the majority of insurers use 1 of 2 “rating basis” for a Roofer. Either Payroll per policy period or Number of Employees. Most use payroll and for a sole proprietor/partnership they only use $5,200 per owner regardless of how much you actually make. If you end up hiring employees then they will use the $5,200 for you - plus whatever you actually pay your employees. This directly affects your premium for the insurance and is normally audited at the end of the term to verify the estimated payroll used at the beginning was correct. If you had more payroll then you’d owe an audit bill - ir you had less you’d get a credit or refund.

As far as subs go - again - most insurers assume a certain % of work is going to be subbed. But be cautious as most get funny about much more than 50% subbed work. The “control” isn’t really there once you get up over that number and you’re treading into the “paper contractor” territory - which most insurers don’t really like.

Another thing to be concerned about with subs is your state’s definition of what constitutes an “employeeâ€Â

So I’m hooked Bill…Tell me more!

In our state we have two options for bonds. One is a lifetime bond…maxed out at about $6,500 last I checked or you can rent a bond per year (at the time, it was around $700 per yr)

If someone does come after your bond…Do they only get up to the max and nothing more? And even though you paid for the lifetime, Insurance co. won’t pay any more than that?

I’m not familiar with lifetime bonds. Who is requiring them from you? Is it some sort of State thing? PA doesn’t have that.

Normally if there’s a claim on the bond it’s for the face amount - then the bond company comes back after you as the person that guaranteed indemnity (usually both personally and as a business if you’re incorporated).

The bonds I normally do are for each job as contractors need them. For example a big electrical contractor needs a Performance and Labor & Material Payment bond for a US Post Office job - or the Roofer doing a job for the local municipality on one of their buildings.

Usually my bond companies require 3 years of financial info (both corportate and personal) and indemnity agreements signed by all corportate owners/partners (and spouses) personally.

I do have 1 company that does smaller bonds with a 1 page “quickie” app with minimal information but they’re max is $250,000 per job and $500,000 max bonded work. They’re like $30/$1000 - which is pretty expensive as bonds go - but it’s a lay up shot and the smaller guys that only need a couple bonds a year love it. If you do a lot of bonded work - getting a bonding line of credit set up with one of the big bond companies is worth the effort as the rates are a lot better doing it that way.

The liftime bond (I believe) is mandated by the state. In the event you flubbed on a roof, the homeowner has a resource to go to if you are out of business…otherwise any reputable company will take care of the issue before that transpires. The bond is something you have to pay out of pocket, then once the business has ceased, there is a waiting period before you can apply to get your bond back (5-8 yrs…not sure)

so my question remains…

Since a person has paid this amount and the insurance company pays out…let say…$2000. It sounds to my that they might be able to come after that amount to build back up the $6500 coffer.

What is your opinion?

Well assuming this Lifetime Bond is written like most other bonds - I’d guess the bond company will indeed come back after you for whatever they pay out.

I wish Ohio had licensing requirements. it would save the courts alot of headaches. It would save alot homeowners from getting screwed and of course our competition would be better and we could eliminate the Laid off Joe from claiming he is a roofer and can do 25sq job for 5k.