Learn How To Start Or Grow A Handyman Business
4 Steps to Licensing Your Handyman Business

4 Steps to Licensing Your Business

Starting a handyman business is an exciting time! But, just like anything else, there are some not so fun tasks required to establish a legitimate, legal business. Obtaining the necessarily licenses is one of them.

This is often frustrating, confusing, and boring. It’s even boring to write about!

But…it’s necessary.

I’m going to attempt to make this process easy for you. Maybe even fun (if that’s possible). At the very least, I’ll save you some time, and maybe even some cash while helping you avoid legal issues down the road.

The process may take a couple of days, but you’ll be glad you did it once your finished.

Disclaimer – I’m not an attorney and am NOT qualified to give legal advice. This is for informational purposes only and should not be considered all-inclusive. Consult with a qualified attorney for all legal advice and decisions about your business. And most of all, please don’t sue me for trying to help you, emkay?

Step #1 – Create a Business Entity (State Business License)

Any business, regardless of what it sells, needs to create an entity with the state in which it operates. That’s a fancy way of saying you need a business license.

What To Do:

First you need to decide on what type of entity you will create – usually an LLC, a Sole Proprietorship, or a S Corporation for most small service businesses. This will take some research and deliberation.

For my handyman business, I chose an LLC (here’s why). However, that doesn’t necessarily mean you should. In this podcast, Randal DeHart suggests forming an S Corp and makes a great argument for doing so.

Remember, one size never fits all. Consider your own unique situation when making your decision.

Many small business owners choose to operate as Sole Proprietors, but this isn’t recommended because it provides almost no protection for you or your assets in the event of a legal issue. You are liable for anything that goes wrong with your business, while an LLC or S Corp protects your personal assets to a certain degree. (Basically, if you accidentally burn down your customers home, you might lose your business, but you won’t necessarily have to lose your home, car, and retirement money with the proper business structure.)

Once you’ve chosen the type of entity you’d like to create, you have three options for registering with your state.

  1. You can visit the Secretary of State’s website for your state and register it yourself (cheapest option, but may be more difficult).
  2. You can hire an Attorney to do it for you (most expensive).
  3. You can got to LegalZoom.com and have them guide you through the process (affordable and easy).

Step #2 – Get an EIN (Employer Identification Number)

If you form an LLC or a corporation of any kind, you’ll also want to register for an EIN. This is done through the IRS and is used when filing your taxes. An EIN is essentially a social security number for your business.

This step is super easy and only takes a few minutes and can be done online at irs.gov.

Wondering if you need an EIN? Click here to find out and apply for one if you do.

Step #3 – Get the Appropriate City Licenses

In addition to filing for a state business license (step #1), you’ll need to get a city business license as well. As you might have guessed, this is different for every city.

I actually didn’t know I was supposed to do this until after I had been in business for over 6 months! I got lucky and didn’t get fined, but it would have been nice to know back then. Hopefully this article helps you avoid that mistake.

What To Do:

Go to your local chamber of commerce for the city you’ll be operating in. I recommend going in person so you can talk to somebody and get some help. I was totally clueless when I went so I just asked them what to do. They helped me complete the forms on the spot and within an hour I had a city business license.

You may even be able to do this online depending on your city. Also, if you plan on offering services in multiple cities, you will likely need multiple licenses.

Step #4 – Get a Contractor’s or Handyman License

If necessary in your state, make sure to get the appropriate licenses for the services that you’d like to offer. In many cases, this will actually be the first step.

For details on how to get a handyman license or to learn if you even need one, read this article: Handyman Licenses and Laws: How to Avoid Getting Stung. It will give you some basic advice and point you in the right direction.

And That’s It!

Filing paperwork and trying to navigate all of the laws and licenses around starting your business can be a pain in the ass. But, don’t let it hold you back from getting started.

Usually, it will only take a couple of days and cost a few hundred bucks. But once it’s done, it takes very little time and effort to maintain, especially if you’ve hired a good bookkeeper or accountant.

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  • Mickey McDowell July 30, 2015

    Hi Dan,

    I recently went through the processes you talk about in your article. The one requirement and the most costly one before getting the licensed in the State of NJ, is insurance. After getting a few quotes
    I wound up joing the ACHP insurance program and saved a couple sheckles through them. Now the challenge is finding that bookkeeper!

    • Dan Perry August 2, 2015

      Yes, ACHP is a great place to get insurance. Thanks for sharing that.

      • Paul October 19, 2016

        Hi Dan – your handyman startup website is awesome. You are amazingly generous with the free and very helpful information you provide. I do think it might be helpful to have your thoughts in more detail regarding general liability insurance. You might want to include a blog topic going into more detail on that. I’m having difficulty finding any independent reviews of the ACHP insurance product. Could you or any of your bloggers please point me to a review site that would show satisfied customers, how the program compares to others, and the satisfactory resolution of complaints? I’m not finding much on the internet about it. So far I have quotes for RI and MA of about $1k/year, which is more than ACHP’s $300 – 600 per year plus their association dues with their added benefits, making it seem to be a pretty good deal.

  • Steven October 8, 2015

    I’m in the process of forming my business at this point in time. By the way I’ve been following this blog for awhile and have never commented but wow. This site has shown me that starting a small business the way I want to is very simple and I thank immensely. I have gone through legal zoom and although I had to shell out some money I feel it was a good deal for me to have qualified legal people set up the heavy stuff of my business while I can focus on working 50 plus hours a week still. I got a very good deal through them and all the legalities are in place. I have an accountant that is on the same page and gets what I’m doing. I’m not a spokesperson but a very satisfied customer. I’ve been in the construction/maintenance business for well over a decade and because of this site I’ve found my own business is closer than I ever thought. With that I say thanks to you and your great readers/followers

    • Dan Perry October 8, 2015

      Wow, I’m humbled by this…and I’m happy to see you making your dreams happen. Good luck in business Steven!

  • lucio Delgado December 3, 2015

    I live in California, my question is that I don’t quite understand the difference between contractors license and a LLc, ? Also will a llc let me advertise my work ?.

    • Dan Perry December 4, 2015

      An LLC is a type of business entity. It’s basically created as a way to structure your business for taxes and protection for your personal assets. All businesses, regardless of whether or not they are in the construction or home repair industry, must form some sort of business entity. An LLC is just one option.

      A Contractor’s license is there to ensure that unqualified people aren’t out there damaging people’s homes. It’s there to ensure a quality standard in the construction industry. Otherwise, anybody could just call themselves a home builder and really cause problems.

      If you live in California, you are going to need a handyman license to do small repairs before you can advertise work. Forming an LLC doesn’t qualify you to work on homes.

      • lucio Delgado December 5, 2015

        I’ve been searching for a handy man license in California but I can’t find anything for it they want a construction license, I think I might not be searching right is there anything you can suggest we’re I can find more information thank you.

        • Tim Kessler February 7, 2016

          The state of California does not have a Handyman’s license. You just can’t do any job that is more than $500 in labor and materials.

          • Eli October 19, 2016

            Does anyone know if Texas has a license for a handyman?

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