Start a carpentry business by following these 10 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your carpentry business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Check out our How to Start a Business page.
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 are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a carpentry business?
Getting licensed and bonded is one of the initial costs of starting this type of business. It protects both carpenters and consumers from potential legal action. Licensing and bonding is state-specific, but the cost is typically a percentage of tens of thousands of dollars. These costs can seem daunting, but are highly variable, depending on your state’s regulations, personal financial history, and other factors.
All carpenters are also required to pass Occupational Safety and Health Administration (OSHA) safety courses. It is possible to start a small carpentry business with just a few hundred dollars if you already have at least a few basic tools.
What are the ongoing expenses for a carpentry business?
Ongoing expenses for a carpentry business include:
- License, bonding, and insurance fees
- Vehicle maintenance and insurance for transporting supplies
- Maintenance of tools and equipment
- Employee salaries or subcontracting fees
Who is the target market?
Preferred customers are those who have the financial resources to build or repair a home or business. Professional building contractors and real estate developers who can provide a large volume of business are also often preferred clients.
How does a carpentry business make money?
A carpentry business makes money by charging customers for the time, skill, materials and labor required to complete various types of building projects. Prices are calculated according to the level of skill and experience required as well as the quality of the materials.
How much can you charge customers?
An average carpenter may charge from anywhere between $13.00 to $31.00 per hour plus parts, depending on the type of job and the prevailing wages in the city where they are located. However, those with specialized skills may charge even more. Flat rates can be highly variable, as carpenters charge customers an estimated amount based on the straightforward nature of a project.
How much profit can a carpentry business make?
An experienced self-employed carpenter with highly specialized skills can earn as much as $50.00 per hour, or $104,000 per year.
How can you make your business more profitable?
There are a number of things you can do to increase your profit margins. One of them is basing your business out of your home. Check with your local zoning commission about zoning laws in your residential area. Utilizing local tool libraries is also a great way to earn more while saving up to buy more tools for more jobs. Donating your services to local charities for special projects is a great way to show off your skills while earning some appreciation and local recognition for your business, which can lead to an increased number of projects.
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 Carpentry Business Name Generator
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.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your carpentry business is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
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!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
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.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment 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.
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.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a carpentry business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
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.
In businesses where services are provided on an extended basis, a services contract is often put in place outlining terms and conditions of service. You may wish to require clients to sign a services agreement before starting a new project. This agreement clarifies client expectations and minimizes the risk of legal disputes by setting out payment terms and conditions, and service level expectations.
Labor Safety Requirements
It is important to comply with all Occupational Safety and Health Administration requirements.
Relevant regulations include:
- Appropriate hazard identification
- Injury reports
- Proper safety precautions when operating potentially dangerous equipment
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.
Learn more about General Liability Insurance.
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.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
How to promote & market a carpentry business
Having a website that potential customers seeking your services can easily locate is essential. Your website should provide a list of your areas of expertise, and if possible, some testimonials by satisfied customers. Some examples of good carpentry websites include a company logo, a phone number, and an email address. The more ways you provide potential customers to contact you, the better. Detailed information and photos about the services you provide should also be included on your website. Making business cards that include your website address available to construction companies and real estate agents in your area is a good way to introduce yourself to the local building community. Construction companies often require the services of finish carpenters and rental properties often need maintenance.
How to keep customers coming back
Satisfied customers are the best source of advertising for this type of business. Offering superior workmanship at reduced prices when beginning your business is a good way to build a reputation that will attract new customers. Creating a carpentry portfolio that includes examples of all the different types of jobs you have completed is another good form of advertising. Many carpentry business owners carry their portfolios, which include business references, with them when meeting with potential customers. This demonstrates the high level of professionalism necessary to inspire the trust required for customers to invite you and your team into their homes.
Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use.
Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.
Start A Carpentry Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
A carpentry business is ideal for those who enjoy working with their hands and building things. It’s ideal for those who enjoy preserving and restoring historic landmarks as well as creating new ones for future generations. Those who take pride in their work and a sense of satisfaction in helping customers utilize space more effectively will enjoy this type of business.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
What happens during a typical day at a carpentry business?
- Creating service contracts outlining the terms, conditions and timelines of projects to minimize the risk of legal disputes
- Reading blueprints, drawings and sketches to calculate specifications and requirements
- Preparing layouts that conform to building codes
- Measuring, cutting, and assembling building materials
- Building foundations, installing floor beams, walls, and roof systems
- Installing and fitting doors, stairs, and window frames
- Supervising apprentices
What are some skills and experiences that will help you build a successful carpentry business?
Some of the most important skills for a carpentry business owner to have include:
- Math skills, including geometry
- Attention to detail
- Ability to read blueprints
- Knowledge and skill in the use of various building tools and machinery such as planers, drills, and saws
- Accounting skills for calculating costs and managing employee time sheets
- Manual dexterity for operating tools and machinery
- Physical fitness for climbing and lifting materials
The National Association of Home Builders offers a Pre-Apprenticeship Certificate Training (PACT) program. Some companies also offer apprenticeships, which can last between three and four years. Successful completion of an apprenticeship program earns the title of journeyman carpenter. However, the number of apprenticeship programs is limited, so local community colleges offer basic carpentry courses and some offer scholarships as well. The more certifications and skills carpenters possess, the more they are able to charge.
What is the growth potential for a carpentry business?
A carpentry business can expand to the extent that it is able to provide franchise opportunities for other independent contractors.
TRUiC's YouTube Channel
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
How and when to build a team
Carpenters usually specialize, which is why it is a good idea to form cooperative relationships with other carpenters with different specialized skills. Being able to refer customers to those that can do the best possible job can be more valuable in building your reputation than accepting a job that someone else could do better. Mutual professional references can increase both income and customer satisfaction.
Building a team under the banner of your business may be necessary as your business grows and you are more able to take on larger orders. Hiring other carpenters you trust, and apprentices from local schools (all of whom need to be properly accredited) will be essential to maintaining the quality of your services.