How to Start a Handyman Business

Updated on January 31, 2020
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For as long as homeowners experience creaky floorboards, leaky pipes, or light fixtures that need replacing, there will always be a market for a friendly neighborhood handyman. There are tons of tasks both big and small that most people encounter around the house. Not all of them are gifted with a wrench and a toolbelt. As such, if you’ve spent any time in a trade and are looking for a change of pace, you may be wondering how to start a handyman business of your own.

Starting a handyman business can be a great way to pick up year-round work, whether you’re looking to do jobs on the side or want to go all-in with a fully fledged enterprise. Determining how to start a handyman business can be a great way to supplement income during the off-season from your trade of choice, giving you a wealth of prospective work that doesn’t mean braving the cold (or dealing with a few months without steady income). Best of all, it’s relatively easy to start a business as well: All you’ll need is a bit of time, the patience to wade through some paperwork, a sense of local laws and permits, and the business acumen to be your own boss.

Here’s what you need to know if you want to start a handyman business of your own. We’ll go through the prerequisites for your business, talk about insurance and license needs, and cover the financial considerations you might have to factor in, including business financing.

Step 1: Draft a Business Plan 

Every kind of company, regardless of industry, should start with a business plan. Whether you’re starting a handyman business, a construction company, or even a bakery, you should start with a set of clear objectives and financial expectations before you get your packout box ready to go on your first call.

A good business plan should help you detail a few essential parts of your company and its goals. These include:

  • The market you’re going to serve (where do you want to do business?)
  • The competitive landscape (what kinds of businesses are you up against?)
  • What your financial needs are to get started and operate
  • Where you see your business going in three to five years (your long-term plan)

Although your business plan will be specific to your own company, strategy, and economic concerns, the overall plan will look similar to other businesses and industries in terms of structure and components. That means you can look toward business plan templates or business plan software to guide you through the process and help craft a professional document. Not only will your business plan serve as a roadmap as you build your handyman business, but you will also need it if you decide to find funding down the road, as lenders or potential investors will want to see your proof of business concept.

how to start a handyman business

Step 2: Register Your Business

Every commercial enterprise should begin with a good business plan, but nothing is more important than getting your business registered with any local and state governing bodies required. This is especially true for contractors and handyman businesses, which are usually beholden to more regulation and liability concerns. 

Depending on where you set up your handyman business, you might have to contend with specific laws within the municipalities in which you operate. These can include local or county licenses or state-wide requirements that enable you to work on your clients’ homes while staying on the right side of the law. But here are a few basic requirements to start with as a reference.

Determine Which Business Entity Works Best for You

The first real step toward starting your handyman business is choosing a business entity. If you’ve ever seen a business name with an LLC, Inc., or other suffix, you’ve already come across a couple of the most common kinds of entities out there. These are just scratching the surface, however, as there are a ton of options to mull over.

Limited liability companies (LLCs) are the most common business entities out there. LLCs offer tons of flexibility for entrepreneurs in terms of management structure and paying taxes, while also offering liability protection for stakeholders. 

Alternatively, small business owners may also establish S-corporations and C-corporations, which create even more financial distance between an individual and his or her business (albeit with more rules around corporate governance).

Since anything related to construction, home improvement, and building codes can create additional liabilities and considerations, there may be certain business entities that work better for your business than others. We recommend you consult with a business attorney or tax professional if you’re unsure which business entity to choose for your handyman business. Once you’ve chosen the right business entity for you, you can register it with your local secretary of state’s office.

Acquiring Licenses and Permits

Every local and state government handles licensure and permitting differently, so your locality may have different rules than those covered here. Most have a few ground rules in common, however, so we’ll cover the basics and leave more specific advice to legal experts—who you should consult before you start your handyman business either way. 

Most places require contractors to be licensed in order to operate legally. This may or may not apply to you as a handyman, but odds are that you’ll also have to register before you can legally work on your clients’ property. Although you won’t normally be taking on major projects like framing out an extension or rewiring someone’s older home, you’re still beholden to the same rules as large-scale contractors. In some rare instances, you may be able to get a “minor work exception,” which allows for some small-scale jobs to be done without a contractor’s license.

Before doing any work whatsoever, be sure you’re fully aware of all regulatory requirements within your area of operation as well as the municipality in which your business is established. When in doubt, contact a lawyer who has the expertise to make sure you’re covered. The expense of hiring a legal expert will pale in comparison to the kinds of fines and lawsuits you could face if you don’t.

Step 3: Insure Your Business

Every company can benefit from having business insurance of some kind. Even the simplest businesses reap benefits from umbrella and liability insurance policies; this is even more true for handyman businesses, carpenters, electricians, plumbers, and general contractors. 

Whenever a client’s property is involved, having good insurance is essential. And with the risk of getting hurt on the job, having a fix fail, or experiencing any number of unforeseen problems, you’ll want comprehensive business insurance to protect your company. General liability insurance is essential for handyman businesses, as these policies can cover accidents, worksite injuries, and other common problems that may otherwise leave your business exposed to lawsuits or expenses as a result. You may also want to look into other insurance policies that are specific to your company’s scope of work or niche. 

how to start a handyman business

Step 4: Finance Your Business

Unlike some businesses, starting a handyman business isn’t crazy capital intensive—you likely won’t need to purchase tons of equipment or lease retail space. That being said, there are still plenty of things you may need to purchase to get your business started: a vehicle, branding, marketing, tools, and more. And, if you don’t have the money outright, you may need to look into your business loan options to help provide you with some of the capital for these expenses.

When you’re looking at small business loans, one important thing to remember is that lenders will consider your time in business and track record to determine whether you’re a strong candidate for a loan. Your cash flow is important, too. Obviously, that’s all a little tricky if you’re just starting out. We’ll go through some specific loans with handyman businesses in mind that are just getting up and running, but do keep in mind that the longer you’re in business, and the more you build up a strong credit history, the more options you’ll have open to you with regard to business financing.

Business Credit Cards

A great place to start if you’re just getting out of the gate is a business credit card. Most entrepreneurs have these, since they’re great financing tools for expenses here and there, and you can earn rewards, such as cash back and points, which you can invest right back into your business as you spend.

You might not think of a business credit card as having the power to get an entire handyman business up and running, but you’ll be surprised what you can accomplish with one. If you have good credit, you’ll want to consider a 0% introductory APR business credit card, which gives you an intro period under which you don’t have to pay interest on the balance you carry. This intro period can be up to a year, during which time you can think of it as an interest-free loan. Just keep in mind that once the introductory period is over, a variable APR will set in depending on the market Prime Rate and your creditworthiness.

Whether you use a business credit card as a financing tool or not, you will definitely want to open both a business bank account and credit card for your handyman enterprise to separate your personal and business finances. Not only will this make your taxes exponentially easier, but separating your finances will also help keep your personal assets safe in case your business finds itself in legal trouble down the road. 

Business Line of Credit

Similar to a business credit card, a business line of credit can help you build your business. With a line of credit, you work with a lender to secure a credit line, which you can “draw” against to access capital as you need it. Like a credit card, you only pay interest on what you use; unlike a credit card, you can generally access higher capital amounts and lower interest rates.

Note that you likely won’t be able to get approved for a business line of credit the day you start your company—most lenders like to see at least six months in business. But, once you’ve been in business for a little while, you can apply. This is a very helpful business loan for both new and established entrepreneurs alike, since it can be used very flexibly for a variety of expenses.

Equipment Financing

Another business loan to consider is equipment financing, in which you provide a lender with a quote for a piece of gear you want to finance, and, if you’re approved, they’ll provide the money to facilitate the purchase. This can be hugely helpful for handyman businesses that need many tools and other types of equipment in order to get the job done.

Obviously, this isn’t the kind of flexible capital you’d find in a business line of credit, or even with a credit card. But there are advantages for financing fixed assets directly. For instance, those who don’t have perfect credit may find easier access to equipment financing, since the loan is what’s called “self-secured,” which means that the asset you’re financing provides security for the financing. 

How to Start a Handyman Business: The Bottom Line

Hopefully, you’ll see that starting a handyman business isn’t actually crazy intensive—you should be able to begin work not long after you start the process. But, even though the steps are easier than starting, say, a construction business, it’s still important to go into the process of establishing your business with knowledge: Be well informed so you do it once and do it right.

Vice President and Founding Editor at Fundera

Meredith Wood

Meredith Wood is the founding editor of the Fundera Ledger and a vice president at Fundera. She launched the Fundera Ledger in 2014 and has specialized in financial advice for small business owners for almost a decade. Meredith is frequently sought out for her expertise in small business lending. She is a monthly columnist for AllBusiness, and her advice has appeared in the SBA, SCORE, Yahoo, Amex OPEN Forum, Fox Business, American Banker, Small Business Trends, MyCorporation, Small Biz Daily, StartupNation, and more. Email: meredith@fundera.com.
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