8 Steps to Getting a General Contractors License in Washington State.
How do you start your own construction business? What are the steps to becoming a construction company in Washington state or being a general contractor? Here's a quick guide to get you through the process.
First off, you'll actually apply for your contractors license here, but before you do, you'll want to read through everything in this article.
Once you get your license, we insist you get your accounting ON POINT and prepare to mitigate taxes.
Diwan Accounting and Tax does small business taxes, bookkeeping, payroll and all accounting for small businesses here in Washington.
Our main focus is to help you reduce your taxes as a Washington state business owner, and make sure you never waste time or energy doing accounting tasks that aren't in your strengths.
We just handle everything for contractors and small business and we'll make sure you keep as much of your hard earned money as possible.
We've found a handful of additional articles and websites you might find handy. First off, here's where you'll actually register as a contractor. There are some guides here, here and here to corroborate our guide.
How to Get Your WA General Contractors License
In order to get your general contractor license in Washington state, first you're going to make sure that you actually need the general contracting license.
1 - Determine if you need a contractors license
What types of businesses need a contractors license in Washington State?
You’re going to need a contractors license if you’re building, developing, remodeling, demolishing, altering or repairing structures of buildings.
- You’re building or developing
- Demolishing or moving structures
- Constructing, remodeling, altering or repairing structures or building
Remember, people can look you up and verify a WA contractor, so you'll want to play by the rules here.
2 - Create a business name
You’ll need to create a clear, concise and unique business name. You can have a couple versions of your name, so long as you open a DBA, or a “doing business as” under that name. Many businesses will have an official name and then a more clear name for their DBA.
Your business name matters, and here’s some tips that we recommend:
Don’t choose a name that’s crowded or that other large companies already use, do a simple google search to find bigger companies using the name.
Think through your name and your domain together.
Short, clear and concise names are better than long ones.
Make sure there’s a clear connection between your domain name and business name.
Keep your domain as short, clear and easy to read as possible, try adding modifiers like your state or industry at the end of shorter names to differentiate.
Think through an official title that you would add - “Diwan Tax and Accounting” is an example. It should clearly state your core commercial keywords or industry.
You don’t need to actually name your business that, but you might use the title in your Google My Business, your bing places, your website, social media and other places.
Placing the core services along with your name will better associate you with the solution, to both people and to search engines and computers.
3 - Register your business with the WA Secretary of State
When you register with the Washington secretary of state, you will be given a UBI number that is necessary when registering for your general contractors license.
If your business was registered in another state, you’ll need to use a certificate of authority for a corporation, or a certificate of registration for an LLC.
All you need to do is submit articles of incorporation to the Secretary of State in Washington and you'll be all ready to go to the next step.
4 - Register with the WA department of revenue
You’ll need to register with the Department of Revenue, Employment Security Department and the Department of Labor and Industries IF you are going to make more than $12,000 a year or if you’ll have any employees.
This is all done by filling out the master business license application, which is a 4 page application required by the state of Washington.
5 - Acquire the EIN Number form the IRS
The Washington State general contractor application asks for your EIN, and if you're going to have any employees, you’ll need one as well.
How do you get your contractor business setup with the IRS? Do you need to notify the IRS that you’re forming a general contractor business in Washington?
You’ll want to register with the IRS, and acquire this EIN. It’s used in many different applications and business functions, including the general contractors application.
6 - Get bonded with a surety bond
Washington State requires a $12,000 surety bond for the general contractor business.
You’ll work with an insurance company to get underwritten for your surety bond and you’ll want to keep copies of the paperwork handy and scan them into your online storage systems to keep them easily accessible.
You’ll want to establish amazing books and show you’re worthy of trust if you plan on growing, because the process of getting approved for surety bonding is probably going to be a process you should get used to.
7 - Get your proof of insurance
Besides the $12,000 surety bond, Washington State general contractor will also be required to have $50,000 in property damage insurance policies and a $200,000 public liability coverage. You’ll need to list the Department of Labor and Industries as the certificate holder and you’ll need to use an original of the policy when doing your general contractors application.
You need to get insurance and then submit it when you’re applying for your Washington State general contractors license.
8 - Submit the General Contractor Application
The final step is to actually apply! How long does it take for your general contractors license to get approved? Washingtons state contractor approval processes often take a full 6-8 weeks.
9 - Setup a Business Bank Account
We have another article coming, but the most important thing for bookkeeping is to take your LLC papers to a good bank and establish a business checking account and probably open a business credit card to start building up your credit.
The basics of Accounting for Contractors:
- Setup a Business Bank Account
- Have all income first flow into the bank account
- Only use the business bank account for qualified business expenses
- Learn expense vs. depreciate or operational cost vs. capital asset (in short, items over about $2,500 are depreciated over time, not written off all at once)
- Pay yourself out of the bank account
- Remember only business mileage is deductible, and keep good records of trips using Everlance, Stride, Triplog or Hurdlr
- Setup a bookkeeping system to keep you organized
- Remember that every dollar you take out, will be subject to a series of taxes
You must remember that when you want to take money out and pay yourself, that money is taxed differently whether you're a Sole Proprietorship or an S-Corporation. We recommend that business owners start as Sole props, and consider using an S-Corp for reducing their taxes once they hit net profits of about $50,000 or above.
Remember, you'll pay 15.3% taxes on all money you pay yourself up to the social security limits, and then you'll owe state and federal income taxes after that (depending on the state).
You must save to anticipate taxes and we'll help you reduce those taxes dramatically.
Please book a no-cost consultation and we can show you how Diwan Accounting and Tax will make your life much easier as a contractor.