How to Start an Architecture Firm

Start an architecture firm by following these 10 steps:

1. Plan your Architecture Firm
2. Form your Architecture Firm into a Legal Entity
3. Register your Architecture Firm for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your Architecture Firm
6. Get the Necessary Permits & Licenses for your Architecture Firm
7. Get Architecture Firm Insurance
8. Define your Architecture Firm Brand
9. Create your Architecture Firm Website
10. Set up your Business Phone System

We have put together this simple guide to starting your architecture firm. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

• What will you name your business?
• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?

Luckily we have done a lot of this research for you.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Architecture Firm Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name, we recommend researching your business name by checking:

• Your state's business records
• Federal and state trademark records
• Social media platforms
• Web domain availability.

It's very important to secure your domain name before someone else does.

What are the costs involved in opening an architecture firm?

Costs to start an architecture firm vary. You can start from home for about $5,000. Renting a professional office will cost between $300 and $1,500 per month. A computer will set you back about $2,000. Design software costs up to $1,200. Something like Draftsight is free, while AutoCAD LT will have an upfront cost.

A printer will cost between $100 and $500. Plotter will cost up to $2,000.

What are the ongoing expenses for an architecture firm?

Ongoing expenses for running a firm are minimal and essentially include just utilities and replacement computers as needed.

Who is the target market?

Ideal customers are large clients with deep pockets. Some of the best clients for an architecture firm will be local and state governments. Alternatively, a large company that needs extensive planning and design work done will be an excellent client.

The worst or non-ideal clients are those that have relatively small or multiple overlapping projects where the architecture firm will not be able to complete the entire project due to scheduling conflicts. These types of projects are usually designed to be taken on by multiple firms so that no one firm has control over a single project. However, they also make it difficult to profit from the work.

How does an architecture firm make money?

Architects make money by charging a fee for designing buildings, permanent and temporary structures, and for design consultations on construction projects. Some architecture companies also assist civil engineers on city planning.

How much can you charge customers?

Architecture firms charge clients one of several ways and, depending on the number and skill level of the architects you have working for you, the fees can vary considerably.

The principal of the organization can make $135-$175 per hour. Project managers earn up to $100 per hour. An Intern Architect II with up to 8 years experience can earn up to $80 per hour. Intern Architect I with between 3 and 5 years experience can earn $65 per hour.

Overall, fees range from $60 to over $100 per hour for a typical residential project. If the firm charges a fee as a percentage of the total project cost, this will range from between 15% to 20%. If the firm wants to charge per square foot of the project, then anywhere between $0.75 and $4 per square foot is reasonable. The exact per square foot charge depends on location and local market rates.

How much profit can an architecture firm make?

Profit targets vary by company and location, but generally a firm should be able to achieve a 15% to 20% or more profit margin.

How can you make your business more profitable?

Making the firm more profitable usually involves partnering with larger firms, working more closely with contractors, and increasing the firm’s advertising budget.

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your architecture firm is sued.

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money later on.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

Federal Business Licensing Requirements

The US General Services Administration maintains policies and criteria regulating architecture and engineering design practice and building technology, building systems, products, and materials.

State & Local Business Licensing Requirements

Legal requirements vary by state, but architecture firms are typically required to employ a certain number of licensed architects, at least one of which has been licensed within the state. Obtaining an architect license typically involves some degree of education, work experience, and an examination. Some states require the obtainment of an additional architecture firm license.

In addition, certain local licensing or regulatory requirements may apply. For more information about local licenses and permits:

• Check with your town, city or county clerk’s office
• Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

Is this Business Right For You?

This business is perfect for individuals who love to work with their mind and have good attention to detail. Long hours are part of the job and companies that put in proposals for major projects don’t always hear back right away so business owners need to be good at managing cash flow.

What happens during a typical day at an architecture firm?

Day-to-day activities of the company include designing for new projects and meeting with construction crews on current projects. Some architectural firms are very involved with the construction side of a project while others focus primarily on design.

Answering emails is also a big part of the job. Clients today often relay messages and send project details as email attachments. Another aspect of the job is meeting minutes and managing project scope. Because some clients may attempt to exceed the scope of their project, the architectural firm needs to maintain scope integrity and become de facto project managers.

What are some skills and experiences that will help you build a successful architecture firm?

Architecture firms need skilled architects and a strong marketing department to make money. In short, they need design talent, engineering ability, social awareness for new LEED projects, legal knowledge and awareness for designing under current building codes, and business aptitude.

While you do not need a degree, it helps.

Educational programs vary, but in general cover several aspects of engineering with varying levels of expertise attained with each degree or certification.

Get a professional degree from an accredited institution, like the National Architectural Accrediting Board (NAAB). These degrees include Bachelor of Architecture (BArch) and Master of Architecture (MArch) degrees.

The BArch is given to students who have studied for at least 5 years in an accredited architecture school. High school graduates who haven’t earned an undergraduate can apply, however. You will need “core” classes to get this degree, like math, social science, science, and humanities.

The MArch for Students With a Non-Architecture Bachelor's Degree is given to students who have undergraduate degrees in other disciplines but want to switch to architecture. It takes 3 to 4 years to earn their professional MArch this way.

The MArch for Students With a Pre-Professional Bachelor's Degree allows students to earn pre-professional degree in architecture like a Bachelor of Science or Bachelor of Arts in Architecture or in Architectural History. From there, you may apply to a MArch program to get your degree in architecture.

What is the growth potential for an architecture firm?

You can start an architecture firm with just one employee: yourself. However, some firms hire as many architects as they can afford so that their company can take on additional and larger projects. A larger firm may also partner with smaller firms to take on large projects and to remain flexible.