How Do I Get Started?
Many builders slide into business naturally as “sole proprietors.” You automatically become a sole proprietor when you contract for your first project. You are now in business, and you are the sole owner or proprietor of the business.
What is important to realize is that if you are operating as a sole proprietor, legally speaking, you are the business. The business’ earnings are considered your earnings for tax purposes. You pay social security and income tax on the entire earnings of the business, not just the portion you take for personal use. Moreover, you and your businesses are one and the same before the law. You can be held personally liable for any of its obligations.
Instead of going it alone as sole proprietors, some builders team up with a friend and form a legal partnership. Partnering up can be tempting. Construction is a turbulent business, and it may appear that it would be comforting to head into it arm-in-arm with someone else. Unfortunately, while partnership may be just a legal form, the partnering that goes along with it can involve a serious emotional entanglement.
Whether you elect to go into business alone or to partner up, you can “incorporate” your company. If you do, so far as the law is concerned, you and your company are no longer one and the same entity. Oddly enough, for legal purposes, your incorporated company, or “corporation,” has become a separate “person” or entity of which you (or you and a partner or even other investors you have recruited) are the owner(s).
Portions of this content was sourced and/or published in:
- Barbara J. Jackson, Construction Management Jumpstart
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