I already have a contractors license in my name, but I want to form a corporation. What do I do?
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Check your state laws to see if you may have the option to transfer license, bond and insurance from your name into a company’s name.
Benefits of Forming a Corporation
Corporations offer increased liability protection for builders and contractors. In addition, properly created corporations can be sold or otherwise transferred to someone else when you are ready to retire from the contracting industry.
Transferring a Contractor's License
Most licenses must be transferred through the local licensing office. In some jurisdictions, the form may be found on the department’s website, but for the most part you may want to physically make a trip over to the licensing office. In addition to the paperwork, a filing or transfer fee may be required. Also, some jurisdictions require an increased bond or insurance amount for a corporation, since the business shields you from personal liability.
What Is Required to Transfer a Bond and Insurance?
Transfers and increases in bond and insurance amounts are done directly through your insurance agency. Call your insurance agent for the proper forms and to ask any questions regarding the transfer process. In addition, always request proof of transfer for your records and for filing with your corporation.
After Transfering My License, Bond, and Insurance, What Next?
Contact the IRS for a tax ID. A corporation is an independent entity, so it is taxed independently. Visit the IRS office website to find your local IRS office.
Once you’ve obtained your tax ID, you’ll need to file and publish the necessary corporate documents with your state’s corporation division. Corporate forms are typically available from your state’s corporate division website and can be filled out and mailed in. There will also be a fee for setting up the corporation, so plan on including a check or money order with your application.
This article is a basic overview of the process of forming a contracting corporation. For further assistance with the process, consult a corporate attorney.