How to Start a Floor Installation Business

Start a floor installation business by following these 10 steps:

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

We have put together this simple guide to starting your floor installation business. 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 Floor Installation Business 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 a floor installation business?

First, a floor installation business needs to be insured. Typically, General Liability Insurance coverage is between $361 and $839 in annual premiums. A small shop will also be needed. Depending on the shop’s size, rent can cost approximately $3,000 to $5,000 per month Startup materials, wages, and other expenses can be approximately $10,000 to $30,000—again, dependent on the business’s size.

What are the ongoing expenses for a floor installation business?

Expenses include equipment maintenance and raw resources. Typically, raw wooden flooring costs about $5 to $8 per square foot. However, high-end materials can cost between $10 and $20 per square foot.

Workers will also need to be paid, so expect to offer hourly wages of between $10 and $18 per hour. The previously-mentioned insurance premiums should be accounted for as well. Shop utilities, advertising costs, and marketing costs apply here too.

Who is the target market?

The best clients are those which provide consistent work. It is possible to be contracted by housing development companies that would like you to install flooring in their newly built homes. Apartment management teams, too, are fantastic clients. Because apartment management teams frequently have connections to other management teams, servicing part of a network may prove lucrative for the growing floor installation business. Your clients will also include individuals that would like you to redo or install new flooring in their home.

How does a floor installation business make money?

A floor installation business makes most of its profit installing hardwood, carpet, and tile floor. While other floor types can certainly be profitable, these three types of flooring are  most popular, and they will most likely make up the largest portion of your profits. A floor installation businesses can also trim, stain and repair previously installed floors. That said, maintenance services are limited. A floor installation business is—first and foremost—an installation business.

How much can you charge customers?

On average, a wood floor installation costs about $4,000. Laminate flooring installation costs approximately $2,400. Carpet installations generally cost around $1,600. Vinyl or linoleum flooring, the cheapest option for floors, typically cost about $1,545. These estimates increase or decrease depending on the area of the floor being installed.

How much profit can a floor installation business make?

The floor installation industry has an annual revenue of about $23 billion. However, the industry’s top providers account for five percent of this amount—or about $1.15 billion. Medium-sized floor installation businesses make, on average, about $230,000 per year. A small floor installation business’s owner can make decent money within the first few years, which is around $75,000.

How can you make your business more profitable?

You can boost your store’s revenue by offering speedy services. Because floor installation is pretty invasive, offering fast services helps. Focus on customer satisfaction, and offer a variety of flooring options. Reduce any management, warranty and cleaning expenses when possible, and prioritize your business’s word of mouth. At the end of the day, your business’s profits rely on its popularity.

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 floor installation business 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.

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate a floor installation business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

For 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.

Service Agreement

Floor installation businesses should consider requiring clients to sign a service agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership. Here is an example service agreement.

Recommended: Rocket Lawyer makes it easy to create a professional service agreement for your home installation business when you sign up for their premium membership. For $39.95 per month, members receive access to hundreds of legal agreements and on call attorneys to get complimentary legal advice.

Certificate of Occupancy

A floor installation business can be run out of a large storefront. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO).  A CO confirms that all building codes, zoning laws and government regulations have been met.

• If you plan to lease a storefront:
• It is generally the landlord’s responsibility to obtain a CO.
• Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a floor installation business.
• After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.

• If you plan to purchase or a storefront:
• You will be responsible for obtaining a valid CO from a local government authority.
• Review all building codes and zoning requirements for you business’ location to ensure your floor installation business will be in compliance and able to obtain a CO.

Business Owner's Policy (BOP)

The first type of insurance you want to check out is a business owners policy (BOP). A business owners policy. A business owner's policy is an insurance package especially put together for a specific type of business.  

Commercial Property Insurance

Commercial property insurance is the kind of insurance which will protect your business from unpleasant surprises, like fires, theft, natural disasters, among other things which affect your buildings, whether owned or leased, equipment, tools, and other valuables which you might have to pay for if not for your commercial property insurance.

You can usually get business interruption coverage as well. Business interruption will reimburse you for some of your lost income should your business have to close after a claim. For instance, if you have a fire and the business has to close while the fire and water damage is being cleaned up, business interruption will help you.

Commercial Liability Insurance

General liability insurance, sometimes called commercial liability insurance, is the coverage which can protect your business if someone hurts themselves on the work site and needs medical attention or decides to sue your business.

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?

Previous floor installation contractors are perfect fits for floor installation management. Someone with technical installation experience, maintenance experience, or electrical experience may find the job to be a good fit. That said, a successful floor installation business owner will have excellent management, financial, and marketing skills. Ideally, they’ll be similarly skilled in governing others, reaching out to potential customers, and handling ongoing projects.

What happens during a typical day at a floor installation business?

Business operators must take new requests, give quotes, market their services and conduct installations. Typically, flooring materials include hardwood, carpet, laminate, luxury vinyl, tile, and linoleum. Other day-to-day services can include refinishing floors, conducting emergency maintenance, installing vapor barriers, and matching different floors. From an administrative end, a floor installation business must constantly find new customers, explore industry material source options, and balance expenses with revenue to gain a profit.

What are some skills and experiences that will help you build a successful floor installation business?

Before starting a floor installation businesses, you should understand the ins and outs of tile, hardwood, laminate, and carpet installation. At least five years of experience as a floor installation contractor is suggested.

Management skills are also important. Once your business has grown, it is likely that you won’t be conducting many installations yourself.However, you will need to increase your business’s installation quality. Understanding local competitors, originality, quality, versatility and professionalism is highly important. You should similarly be well-versed in targeting modern techniques, products, installation methods, and tools—focusing on adopting them into your business’s architecture.

What is the growth potential for a floor installation business?

Small floor installation businesses have a lot of growth potential. In fact, the Floor Installation Association of North America typically holds a Convention & Trade Show to help individual contractors, entrepreneurs, and business owners strategize growth. Because a heavy system of review, awards, and recommendations exists across the floor installation industry, high-quality businesses don’t go unnoticed.

However, quite a lot of competition exists for small floor installation businesses. If a floor installation business offers consistent, high-quality jobs, however, they can expect to grow into a prioritized service provider in their area.