How to Start a Plumbing Business

Start a plumbing business by following these 10 steps:

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

We have put together this simple guide to starting your plumbing 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 Plumbing 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 plumbing business?

The costs involved in starting a plumbing business are minimal. A used van or service truck is usually necessary. These vans can cost several thousand dollars for a used vehicle, up to $30,000 or more for a new vehicle.

A certificate can cost between $1,500 - $8,500 and take up to 12 months to get.

Equipment like assorted pipes and fittings, a large bucket to store fittings, pipe wrenches, reciprocating saw, circular saw, whole hog right angle drill, cordless screw gun, propane torch, cast iron pipe cutter, extension cords, pipe dope or teflon tape, a laptop computer, office equipment, and mobile phone are also needed. The total cost for all this equipment can exceed $5,000.

Used equipment can cost less but may require extensive refurbishing and maintenance before it can be used.

What are the ongoing expenses for a plumbing business?

Ongoing expenses in this business are minimal. Maintenance on vehicles, maintenance/replacement of materials/tools, insurance, and office expenses (rent, utilities, etc) are all that are required.

Who is the target market?

Clients are usually either commercial or residential customers. Plumbers usually get business either through referrals or targeted marketing, like direct mail. The easiest way for plumbers to get business is to buy a mailing list of individuals who have previously done business with plumbers or used plumbing services within the past 6 months to a year. Then, mail those people with an offer for promotional services.

How does a plumbing business make money?

Plumbing companies charge a flat rate (sometimes plus materials) for jobs. However, they may also charge per hour or premium surcharges for emergency, rush, or off-hours service.

How much can you charge customers?

Jobs can be priced per hour or as a flat rate. However, the average price for plumbing services tends to be between $160 and $430 for a typical job. This works out to an average per-hour rate of between $45 and $150. Customers are usually also charged a flat service fee regardless of the number of hours worked on the job. This is in addition to the hourly or per-job flat rate.

How much profit can a plumbing business make?

A master plumber running a one-person company making $45 per hour, working 8 hours per day can make up to $100,000 per year. If ongoing costs are between $10,000 and $20,000 per year, this leaves $80,000 as net profit. A typical plumbing company pays its plumbers between $20 and $40 per hour, according to the Bureau of Labor Statistics. This means each plumber costs the company roughly $50,000 to $75,000 per year in labor costs (including insurance and benefits). While this substantially reduces profits, it allows a company to scale.

Assuming the same $100,000 per year per plumber gross profit, a plumbing company could clear $25,000 to $50,000 per plumber, per year.

How can you make your business more profitable?

Making a plumbing company more profitable means scaling the business and possibly going into business with other tradesmen to offer comprehensive services. For example, a plumber might team up with an electrician to offer multiple services.

Profits can also be increased by contracting with construction companies. Remodels and renovations can become a major source of revenue for a plumbing company.

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 plumbing 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

In most states, it is necessary to obtain a plumbing contractor’s license, a plumbing permit, and/or a plumbing license. Certain other state permits and licenses may be needed to operate a plumbing company. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

Service Agreement

Plumbing companies should require 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 and service level expectations. 

Recommended: Rocket Lawyer makes it easy to create a professional service agreement for your plumbing 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.

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 ideal for individuals who enjoy working with their hands, aren’t afraid to get dirty, and have flexible work hours. Some plumbers are called into a job site on emergencies and must work late or even work on weekends. Plumbers, and a plumbing company, may also have to work on holidays.

What happens during a typical day at a plumbing business?

Day-to-day activities of a plumbing company include checking customer logs, fixing and maintaining plumbing lines, and billing customers for services rendered. Some companies also spend considerable time designing and building new plumbing systems if they work on new construction projects.

Plumbers also spend considerable time assembling pipe sections, tubing and fittings, using clamps, screws, bolts, cement, plastic solvents and caulking, solder and soldering guns, couplings, and welding equipment.

Plumbers also have to routinely do complex calculations on job sites which determine the safety and longevity of the plumbing they design, install, and maintain.

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

Plumbing requires certification in order to practice on the professional level. However, many plumbers start out as an apprentice working under an established plumber. It helps you learn the necessary skills involved in plumbing. This is what most plumbers do before starting their own business. Plumbing businesses are more accessible startup options, as the amount of capital needed is moderate. Expenses will typically include transportation (like a truck large enough to carry equipment), drain snakes, and other basic plumbing equipment.

What is the growth potential for a plumbing business?

A plumbing business can typically be started with one plumber. As demand begins to exceed the plumber’s ability, additional plumbers can be hired as employees or as independent contractors. Most plumbers maintain a local clientele, though some have managed to expand operations beyond their region.