When considering running a construction company, it is important to consider all hidden costs that are not considered when writing up contracts with potential clients or bidding on projects from potential partners. Damon Becknel, an experienced entrepreneur and land developer, believes that understanding these hidden costs help any business owner determine whether starting a construction company is the correct decision for their situation or not.
Taxes
Many construction companies fail to consider one such hidden cost when beginning their business is taxes. Construction companies are businesses, and as such, they must pay taxes on the profits earned from any jobs they take on. The US government requires individuals to pay a type of income tax called self-employment tax to make up for the fact that an individual does not have an employer paying a portion of his or her social security and medicare taxes. In addition to this form of income tax, construction companies also have additional tax requirements depending on where they live and what kind of entity they choose to be. Tax requirements vary drastically depending on whether a construction company is run as a sole proprietorship, a partnership, or S corporation.
Fees and Permits
In addition to tax liabilities, construction companies must consider the cost of filing fees and permits that go into starting any sort of business. These fees vary depending on the location and size of the company, but they tend to be more than most people would expect. When first filing for incorporation or researching how to start a construction company, it is important to note all potential fees and taxes that will need paying to ensure long-term success.
Accounting and Legal Costs
As with any other business, construction companies need to have accurate books that are up-to-date at all times. This means they need to include their tax liabilities and the accounting of every job they complete. This is where legal issues can arise if false information is included on these books or if tax returns are not filed correctly or on time by the construction company owner. A lawyer specializing in running construction companies can resolve many of these problems before they become too problematic. However, it still needs to be taken into account when starting a new business.
Ongoing Training
Running a successful construction company requires more than simply hiring employees and bidding on jobs; there must be continued training throughout an owner’s career. OSHA requires that all construction companies take measures to ensure the safety of employees and coworkers. OSHA also requires that individuals in managerial positions be trained and certified to handle hazardous materials, confined space entry, and crane operations. Construction companies often spend a great deal of time and money ensuring OSHA requirements are met so employees can work efficiently while keeping everyone safe.
In addition to training from OSHA, construction companies need to have their managers up-to-date on specific types of jobs they might encounter while working on a project. For example, suppose a construction company has five managers specializing in different types of projects such as malls, schools, gas stations, etc.. In that case, each manager needs to know how the different types of projects are constructed to ensure that employees working on that project know how to properly construct it.
Final Thoughts
Construction is a career that requires training and certification throughout one’s professional life. This means there are thousands of dollars in hidden taxes, fees, and costs that every construction company owner needs to consider before beginning their business.
