How much does it cost just to keep the doors open?

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JoeNorm

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Just curious what it costs to have an active and insured business open?

This is bound to vary from place to place, that's OK.

I am not talking vehicles, overhead, etc. Just the license and insurance to be able to go out and do a job?

Are we talking hundreds$ a year or thousands$ a year?

thanks
 
JoeNorm said:
Just curious what it costs to have an active and insured business open?

This is bound to vary from place to place, that's OK.

I am not talking vehicles, overhead, etc. Just the license and insurance to be able to go out and do a job?

Are we talking hundreds$ a year or thousands$ a year?

thanks
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I suspect it varies widely from place to place. here in Illinois depending on just what it is you want to do you may need several different business licenses. I think you are required to have $1 million liability insurance to be a contractor. But, you can be a business without being a contractor.
 
Well first thing is insurance. I pay about 18k a year for insurance, but I’ve got about a million dollars of equipment, either trucks or inland marine. A one man show with a service van is probably going to pat about 1K for business insurance and about the same for insurance on the vehicle.

then you’ve got business licenses. Figure 500 per year or so,

bonding for your your contractors license will be a couple hundred dollars.

i have three licenses that require continuing education classes. 500-2500 per year.

so one to two thousand a month minimum, with out doing any work, or taking any draw, or any advertising.

i figure I’ve got to gross 20-30k a month to keep the lights on and pay the bills. And I dint have any loan payments to make. Everything is paid for. A friend of mine has loan payments of over 20k a month for equipment. I think his overhead is going to sink him.
 
You can search data out there on the interwebs for specialty contractors, like electrical contractors, in addition to gross revenue and region and find this out the average percentage for overhead.
ETA - sorry I re-read your post and this doesn't answer your question
 
ptonsparky said:
I think my business insurance runs about $1,000 per month including WC.
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A friend of mine has a tree cutting business. His $1 million liability policy is less than $500 a year. The liability insurance on his bucket truck is almost $2000 a year. I think he told me his business license was $30 or maybe $60 every 3 years.
 
I am Probably on the low end. Insurance, $1k /yr, bond, $150 yr, three electrical licenses, around $600 (not counting continuing education cost and time), state LLC filings/renewing maybe $200 yr. So around 2k per year. Of course that doesn't include vehicle (I have combo work/personal), or tools.
 
JoeNorm said:
I am not talking vehicles, overhead, etc. Just the license and insurance to be able to go out and do a job?
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Others above have mentioned the licensing, insurance, continuing ed costs, and tools. I know you said your not interested in vehicle or overhead costs, but I don't see how you can do work without those costs.

A vehicle is absolutely required. You're not planning on walking to these jobs pushing a wheelbarrow full of tools and materials are you? Even if you use your personal vehicle, there will be additional operating costs such as gas, oil, tires, and wear and tear that will cause maintenance. This assumes your personal vehicle is big enough for ladders and 10 foot sticks of pipe. Planning on using a trailer for those? Trailers aren't free either. Even if you already own one you are wearing it out using it. And pulling a trailer increases wear and tear on your car and costs extra gas. If you really are planning on pushing a wheelbarrow, keep in mind--wheelbarrows cost money.

How are you going to avoid overhead? If you buy some material, will you or your bookkeeper enter the data into Quickbooks? That's overhead. Doesn't matter if you or your wife are doing it. No overhead work should be done for free. You must pay yourself or the person doing it. You wouldn't let an employer make you work for free. Why do it to yourself? Looking at jobs? Overhead. Estimating and bidding? Overhead. Opening a bank account, paying bills, hiring, firing, payroll? Overhead. Taking service vehicle to repair shop, writing up advertisements, tax filings, trips to update business license, working with a web designer, buying office supplies; the list is endless.
 
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LarryFine said:
My spider-sense tells me he doesn't need help with those topics. not that he doesn't need to consider them.
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Your spider-sense is working. Thanks.

I am aware there are many costs of a business, I was particularly interested in the license/insurance costs.

thank you all
 
One of the most difficult things to do in our line of work is to do a break even analysis. However, every accountant you talk to will tell you that doing this should be one of the first steps needed to start your business. The first thing you'll have to consider is how much $$$ you need to stay alive. Once you know that you can try to work backwards and insert #'s that reflect how much business you need to perform, what your profit margin will be, what your overhead costs will be, etc and you'll probably come close to what a realistic # might be.

It might help to get a P&L statement from a fellow contractor (if you can) to see what his actual operating #'s were and then judge by that. Don't try to get too big too fast. Take on work that you can handle. Once you start to grow then you can expand, hire help, get new truck(s), etc. While big $$ commercial jobs look tempting you can get severely burnt if you are not well capitalized.

Good luck.:thumbsup:
 
JoeNorm said:
Just curious what it costs to have an active and insured business open?

This is bound to vary from place to place, that's OK.

I am not talking vehicles, overhead, etc. Just the license and insurance to be able to go out and do a job?

Are we talking hundreds$ a year or thousands$ a year?

thanks
Click to expand...


I agree with CopperDude, you have to factor in ALL your overhead costs of which insurance and licences are a part of.
But out of my own curiosity, I have to ask why you are asking this question in the first place?
Your municipality or whoever issues them in your area can tell you exactly what your licensing fees will be, and its easy enough to get a quote from an insurance broker for commercial liability insurance.
Are you trying to get general costs before deciding to open your doors for business or do you have some other objective?
Sure, we could all tell you what we pay for these things, but it's going to differ widely based on location, company size, number of employees, years in business etc.
If we can know the nature or root of your question, it would be a lot easier to give you a good answer.
 
Stickboy said:
I agree with CopperDude, you have to factor in ALL your overhead costs of which insurance and licences are a part of.
But out of my own curiosity, I have to ask why you are asking this question in the first place?
Your municipality or whoever issues them in your area can tell you exactly what your licensing fees will be, and its easy enough to get a quote from an insurance broker for commercial liability insurance.
Are you trying to get general costs before deciding to open your doors for business or do you have some other objective?
Sure, we could all tell you what we pay for these things, but it's going to differ widely based on location, company size, number of employees, years in business etc.
If we can know the nature or root of your question, it would be a lot easier to give you a good answer.
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You are making too much sense here! A crazy concept for us Electricians! lol
 
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