Starting a contracting business, in the right order.

Step one: hire a bookkeeper. Yes, first.

This is my #1 piece of advice, and I give it before I say a word about insurance. As tempting as it is to do everything yourself, a skilled bookkeeper or accountant will save you time, money, and a lot of headaches now and into the future — and I can't be that person for you. What a good one does from day one:

• Tracks payroll by class of work — the code your work comp price is built on. Wrong code, wrong price, sometimes for years.
• Collects and files a certificate from every sub before the first check goes out.
• Keeps job costs clean, so your taxes, your audit, and your bids all come from real numbers.

Trying to cut corners on payroll reporting, audits, or payments leads to consequences that cost far more than doing it right from the start.

Already have a bookkeeper? Send them this →

Set up the business itself

Pick your entity (sole proprietor, LLC, S-corp — your accountant helps you choose; that's a tax decision, not an insurance one), register it with the state, and get your EIN from the IRS. The EIN is free and takes ten minutes — never pay a filing service for it.

Get registered (Idaho) or licensed (Utah)

Idaho registers contractors rather than licensing them: any job of $2,000 or more requires registration with the Idaho Contractors Board, and registration requires proof of at least $300,000 in general liability plus work comp if you have employees.

Utah licenses contractors by trade through DOPL — and since March 30, 2026, the general liability floor is $1 million per occurrence / $3 million aggregate. Below that, DOPL won't issue or renew the license. Nearly every GC contract asks for a million in both states anyway. The Utah-specific rules in one place →

W-2 or 1099 — decide for real

There's a lot of pressure to 1099 everybody. Here's the truth: if you direct how and when someone works, they may be considered an employee — even if you pay them as 1099. Construction is one of the most-audited industries for exactly this. And the worst case isn't the audit: if a “1099 guy” gets hurt and turns out to be a misclassified employee, you lose the protections work comp would have given you, and the lawsuit is open-ended. The 1099 route looks cheaper this month; done wrong, it's the most expensive decision on this page.

The full 1099-vs-W-2 breakdown — both states, all the tests →

One-person shop? Know how the waiver really works

Utah has a real one: the Workers' Compensation Coverage Waiver, for owners with no employees — about $50, renewed every year, and void the moment you hire anyone. Idaho doesn't have a general exemption certificate, despite what you'll hear — a sole proprietor with no employees generally doesn't need coverage on themselves, and employee-versus-contractor questions get decided case by case on who controls the work.

The trap either way: a sub's waiver protects them, not you. If you hire that sub and can't produce their current paperwork at your audit, what you paid them gets counted as your own payroll — at your trade's rate.

Certificates from every sub, every time

No certificate, no check — make it a rule before your first job, because it's much harder to start later. Your own certificate of insurance is your ticket to work, too: most GCs won't let you on a site, or pay you, without one. One useful note: you don't need your subs' certificates to start a policy — only once you begin operating.

Steal my sub-certificate email template →

Get insurance-ready

• General liability is your foundation — but it doesn't cover your tools. Tools and materials on the jobsite and in transit take their own coverage.
• Classify your work correctly, or pay the price. The class code sets the rate; the rate compounds for years.
• Don't confuse a surety bond with insurance. A bond protects your client by guaranteeing your obligations. Insurance protects you and your business from accidents and lawsuits. You may need both; they are not the same thing.

Understand your first audit before it happens

Your work comp premium all year is an estimate. The audit is the true-up: real payroll, real job classes, and whatever your records can prove. Clean records sorted the way the audit reads them leave the auditor nothing to argue with. Messy records mean the auditor makes the assumptions — and they don't go your way.

The mistakes I see most

• Doing your own books until the first audit forces the issue.
• 1099-ing the crew because everyone else does.
• Paying a sub before their certificate shows up.
• Buying the cheapest policy without knowing what it leaves out.
• Letting a policy lapse — your insurance history follows you.