# Newbie with a contractor question



## wooderson (Jan 21, 2011)

Up until now, my woodworking experiences have consisted of building small furniture in my own garage for my own family. No money or business involved. No insurance, no licenses, no nothing but myself, power tools, a radio, some wood, and several beers. Everything I've built so far has come out looking pretty damn good.

Now, I have the opportunity to turn the hobby into some money. A neighbor of mine does home theater installations. He has a customer that needs a simple cabinet with a shelf on top. This cabinet/shelf would fit perfectly into a nook in his wall and be fixed to that wall. The project seems simple enough. I build it, paint it, and install it. In fact, the customer is actually willing to paint it themselves because I admitted to having little painting experience. It seems like a great first project. Plus, it could lead to more work both with the neighbor and with the customer. What concerns me is all the legal/business mumbo-jumbo.

Do I need a contractor's license?
Do I need a business license?
Do I need to be insured?
How the hell do I write a contract?

What's scares me the most is being sued if something were to go wrong. Let's say hypothetically that I damage a gas line (the installation is right next to a gas fireplace) and the house burns down at some point. Without liability insurance I could be sued for everything I own, correct? Could I possibly get the customer to sign a "release of liability" and therefore avoid the need for the insurance? Since this is my first job, I'd like to see how it goes before I go out and get all the insurance and licenses. Then, if I decide that this is something I'd like to continue doing, I'd go and do all the necessary insurance/license stuff.

As a sidenote, this is all taking place in Southern California in a pretty expensive neighborhood. Not sure if the laws are the same from state-to-state, but any info anybody could give me would be greatly appreciated. I am researching this stuff on my own but it'd be nice to hear it from someone who has actually been through it. Thanks.


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## cabs4less (Nov 2, 2010)

well for one shelf i wouldnt worry about it and if you dont feel cormfortable hangin it don't plain and simple i sell cabinets to other states where i dont have a lincence and thats legal as long as i dont deliver or install but there is loop holes for that also but if you want to get srious about it just call your local court house its thier job to infrom you and then call an acoutant who can tell you what paper work you nedd to keep. And as far as contracts yes always do you paper work first and make them sign and pay at least half up front.


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## Jack_T (Feb 6, 2010)

The laws definitely vary from state to state. The licensing law can even vary by town. It sounds like your friend has a real business. Perhaps you should discuss some of your concerns with him. You may also want to consider doing this as his employee, let him have all the business dealings with the customer. You function as his employee for this job. Your wage is whatever the two of you agree. That way you should be covered by his insurance for this job. If you like it and it looks like you want to do more of it, do it the right way, form a limited liability company, have insurance, use contracts, and always pull permits if they are required.


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## ScottN (Jan 24, 2011)

Did you get this job from a referral form your neighbor or is your neighbor having you do this. Reason being if you are going to be a sub of your neighbor you might be able to fall under his insurance. If your dealing with the home owner and YOUR doing the install…you might want to consider getting some insurance. Call your ins rep and run it by them, I'm sure they can help you out ,even if its a one time thing.Or see if you could have your neighbor install it.
My insurance is a 1,000,000 coverage and runs me about 90 a month.


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## TopamaxSurvivor (May 2, 2008)

I would do it as the neighbor's employee until you decide if you want to continue. You will be investing some long Yankee Green to get a business set up.


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## LeeBarker (Aug 6, 2010)

I like Steve's real-world suggestion: focus your energy on building and finishing and sell it to the contractor.

We all got started somehow. The point is, you are very wise in considering the legal end of things and asking the questions.

When this little gig is done, contact your local community college or chapter of SCORE (actually they are readily available on line, but face to face is much better) and get some help in walking through exactly what you need to be legal.

Then do the math: How many jobs at what % profit for how many months would you need to pay yourself back and pay yourself?

You need two unsung skills to really make it in business: the ability to spin out the possible scenarios, and a similar amount of gumption to be able to respond keenly when the actual turn of events is None of the Above.

Kindly,

Lee

Meantime, build that piece and have fun doing it!


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