going legit in philly

[Steve Kumpf]

Hey guys,
I've been operating a shop and carpentry business for years on the side and I'm finally looking to go legit. I'm having a hard time finding out by myself exactly what i need to do on the state and local level as far as licensing and insurance and taxes. If anyone has experience with this, id really be in your debt. I'm doing this without financing or credit. Sole owner/proprietor as well. No employees either. My funds are extremely limited as whatever work i Get goes right back into the shop so i really just need to be pointed in the right direction. I know the odds, but this type of work is my passion. I know you guys can relate. Thanks.

[Brian J Jenkins]

Talk to an accountant and even a lawyer about setting up the business info. If you can't afford that, at least check out your library for books regarding starting a small business. In my city there is a local group that offers free clinics for mentoring small businesses.

Look into a limited liability company (llc) and there is another too. But it protects you in the event something happens.

[Jerome Stanek]

I took a small business course at a vocational school they helped set up a business and we went over what you needed for the state.

[Lloyd McKinlay]

Try looking into SCORE (Service Corp of Retired Executives), a non-profit associated with the Small Business Association. Looks like they have three chapters in your area.

[Jim Andrew]

You really need to know all the rules and regulations before you start, because the tax entities will fine you if you do not file on time, your zoning people will shut down your shop, just a lot to know. I know some guys who were renting a commercial zoned building, and the local government shut them down because it was the wrong"type " of commercial zoning. So check EVERYTHING out before you start. Our state decided it would be a great idea to charge sales tax on the profit of new homes, the rules were that at closing you were supposed to write out a check for their share of my profit. Of course, bills keep dribbling in for a month after you close, so I waited till I got the profit figured, then sent it in. Got a fine in the mail for more than the tax I sent in. The state repealed the law before I finished the next house, so only had to deal with it once.

[Yonak Hawkins]

Try looking into SCORE (Service Corp of Retired Executives), a non-profit associated with the Small Business Association. Looks like they have three chapters in your area.

+1 on SCORE .. they're a valuable resource. They should be able to answer all your questions and give you the pointers you need to start a business in your area.

[Paul Incognito]

Hey Steve,

I ran a similar carpentry business in the Philly burbs a long time ago. From what I recall, you'll need to be licensed in the city and any of the townships you're working in. In order to get licensed you'll need to provide an insurance certificate, and of course, write a check. We carry a $1,000,000 (that's right one million) liability policy. I don't remember what the minimum required is, but it's not that expensive.

Check with the city and/or townships when you get your license about taxes. They're usually happy to point you in the right direction and give you the paperwork you need.

I know what you mean about it being your passion. I love my job.

Hope this helps,
Paul

[Mark Bolton]

Hey guys,
I've been operating a shop and carpentry business for years on the side and I'm finally looking to go legit. I'm having a hard time finding out by myself exactly what i need to do on the state and local level as far as licensing and insurance and taxes. If anyone has experience with this, id really be in your debt. I'm doing this without financing or credit. Sole owner/proprietor as well. No employees either. My funds are extremely limited as whatever work i Get goes right back into the shop so i really just need to be pointed in the right direction. I know the odds, but this type of work is my passion. I know you guys can relate. Thanks.

Assuming when you say "on the side" you were obviously working unlicensed (contractors license), no business license, and so on? The simplest way is to go to your local licensing board and they will tell you what you need to obtain a license and start a business. You will likely have to go to the local tax office and apply for a business license and setup your tax status (exempt or non or combination) and then you if your going to do any work outside of your shop you will have to get licensed. I am not familiar with Philadelphia but generally you may have a couple classes of license based on the work you do. Home improvements, remodeling, General Contracting, and so on. You will have to decide which applies to the work you intend to pursue. Be prepared however, you said your on limited funds, If testing is required generally speaking the books alone for a contractors license can run close to 1000.00 nearly across the board. You will likely need an approved set of books to take in to the test with you.

https://business.phila.gov/Pages/ContractorLicense.aspx?stage=start&type=all%20business%20types&section=Licensing%20%26%20Regulations&BSPContentListItem=Contractor%27s%20License

From the above:
Contractor's LicenseA Contractor's License is required of any contractor who performs work in which the contractor is paid $500 or more. Applicants must annually reapply for a license and submit a bond. Your license cannot be issued without the required bond in the amount of $1,000.
Prior Approvals:


Commercial Activity License
Business Tax Identification Number
Worker's Compensation and Employer's Liability
Comprehensive General Liability
Motor Vehicle Liability
Performance Bond for a Curb Setter

Additional Information: See the application for prerequisites and other information. Additionally, new requirements for contractors began January 1, 2014, see them at Contractor Requirements (https://business.phila.gov/Pages/ContractorRequirements.aspx).
Cost: $100 for general contractor.

[Paul Incognito]

Good points Mark,
I haven't run into the need to take a test anywhere I've been licensed. But the need to buy books is a good point. New Castle County requires you to buy the current code book. It's a couple hundred bucks. You should have that whether it's required or not.
And I forgot about the bond. Not sure about Philly, but NCC has 2 levels of contractor licensing, permit endorsed and non permit endorsed. If you want to be able to pull a building permit, you need to be bonded. That's another couple hundred.
Really, all it takes is money...:)
Paul

[Mark Bolton]

Good points Mark,
I haven't run into the need to take a test anywhere I've been licensed. But the need to buy books is a good point. New Castle County requires you to buy the current code book. It's a couple hundred bucks. You should have that whether it's required or not.
And I forgot about the bond. Not sure about Philly, but NCC has 2 levels of contractor licensing, permit endorsed and non permit endorsed. If you want to be able to pull a building permit, you need to be bonded. That's another couple hundred.
Really, all it takes is money...:)
Paul

Paul,
In both states I have been licensed testing is required. I did a little reading when I posted that and shockingly it seems PA has no testing requirement. Very scary. Im currently in WV which you'd think would be the wild west but contractors licensing here requires two tests. A business and law test (and associated text book purchases) as well as a contractors licensing test for whatever class your going for. This can range anywhere from siding and replacement windows on up to GC/Res. GC. Again, perhaps 8-10 text books running 80-150 each. This is then followed by a 180 question test which must be completed in 4 hrs. The test is open book but must show all math long hand.

I think the testing is actually a very good thing but each state can see fit as it chooses. I noticed PA requires a minimum 500K liability. I suppose as opposed to testing they make the individual carry enough insurance to cover some, if not all, of the mistake when they get in over their head.

One part of me applauds no testing and the other part of me says I would in no way want to be a homeowner having work done there :rolleyes:.

[Jerome Stanek]

Paul,
In both states I have been licensed testing is required. I did a little reading when I posted that and shockingly it seems PA has no testing requirement. Very scary. Im currently in WV which you'd think would be the wild west but contractors licensing here requires two tests. A business and law test (and associated text book purchases) as well as a contractors licensing test for whatever class your going for. This can range anywhere from siding and replacement windows on up to GC/Res. GC. Again, perhaps 8-10 text books running 80-150 each. This is then followed by a 180 question test which must be completed in 4 hrs. The test is open book but must show all math long hand.

I think the testing is actually a very good thing but each state can see fit as it chooses. I noticed PA requires a minimum 500K liability. I suppose as opposed to testing they make the individual carry enough insurance to cover some, if not all, of the mistake when they get in over their head.

One part of me applauds no testing and the other part of me says I would in no way want to be a homeowner having work done there :rolleyes:.

Here in Ohio you don't need a license but I know about the West Virginia one as I had to get it to work there. It was a pretty tough test.

[Mikhail Lermontov]

I personally would worry to go legit when I have to go legit.

[Keith Hankins]

Holy crap, In Philly? You'd better find out who's palm to grease!

[Paul Incognito]

Paul,
In both states I have been licensed testing is required. I did a little reading when I posted that and shockingly it seems PA has no testing requirement. Very scary. Im currently in WV which you'd think would be the wild west but contractors licensing here requires two tests. A business and law test (and associated text book purchases) as well as a contractors licensing test for whatever class your going for. This can range anywhere from siding and replacement windows on up to GC/Res. GC. Again, perhaps 8-10 text books running 80-150 each. This is then followed by a 180 question test which must be completed in 4 hrs. The test is open book but must show all math long hand.

I think the testing is actually a very good thing but each state can see fit as it chooses. I noticed PA requires a minimum 500K liability. I suppose as opposed to testing they make the individual carry enough insurance to cover some, if not all, of the mistake when they get in over their head.

One part of me applauds no testing and the other part of me says I would in no way want to be a homeowner having work done there :rolleyes:.
I don't disagree that the testing is a good thing. There are a lot of contractors out there who have no business owning a hammer.

They don't test in Delaware either. They did start a new licensing fee a few years ago that they thought would weed out the "fly by night" guys. All they did was start charging $400 for a license. And they make you buy a code book. If you want to be able to pull a permit the license doesn't cost any more, but you have to get bonded.

Paul