If you just started your own contracting business, you have a lot to think about – finances and budgets are one of the things that is on your mind. Without a financial plan or budget in place, you will not be able to keep your company afloat. From overhead expenses to payroll, there’s a lot of expenses to running your own business.
As a Florida contractor licensing company, we wanted to share with you some tips on how to budget at the start of your new business.
- Estimate your projected spending for the year. From office space to materials, come up with a number. Being a new business, you may want to start off conservatively – there’s no need for fancy, expensive (unnecessary) items yet.
- You can determine the amount of revenue you will need for the year to pay for the spending and make a profit.
- Figure out your direct costs – these are costs related to projects such as labor, subcontractors, materials, rental fees, etc. Understand what it costs to pay for labor. With each employee, you must think about pay, taxes, workers’ compensation, liability insurance, holidays, vacation time, insurance premiums and overtime.
- Figure out your fixed costs such as rent, salaries, marketing, technology. These amounts are constant year to year but can go up, but not like your variable costs. Variable costs change as your business changes. Variable costs include travel expenses, supplies, repairs, uniforms, and tools.
- Determine your overhead costs from your fixed costs and variable costs. These are expenses that are general/admin expenses that are ongoing that do not have to do with your services.
- Determine how much you need to take in to break even. As a new business, it might take you a few years before you make a profit.
If you need a contractor’s license or if one of your subcontractors does, let us help you or them get licensed. You need a license to operate legally in many states, including Florida.
As a Florida contractor licensing company, we will work with you to get your contractor license application approved by the Board. The application process can be tricky, so leave it up to us to get the paperwork filed correctly! To get your contractor license, click Florida contractor’s license page to learn more or call 239-777-1028.