Being a good plumber and running a plumbing business are two different trades. The first one you already learned. This is a plain walk through the second, in roughly the order it comes at you.
One thing up front: licensing, insurance requirements, tax treatment and contract rules vary by state and sometimes by city. Everything below is the shape of the problem, not legal or financial advice. Check your own state board and talk to an accountant before you commit to anything.
Licensing comes first and takes longest
Most states want documented years under a licensed plumber, then an exam, then a separate contractor registration to work for the public. Some require a qualifying individual tied to the business entity, which matters if you plan to hire. Start this before anything else, because the waiting is measured in months and nothing else can happen without it.
The entity and the boring paperwork
- Form the entity. Most small shops end up as an LLC. An accountant will tell you whether an S-corp election is worth it at your revenue, and the answer changes as you grow.
- Get an EIN and a business bank account on day one. Running the business through a personal account is the single most expensive bookkeeping mistake there is.
- Sales tax registration if your state taxes materials or labor. Collecting it wrong is a problem you discover years later with penalties attached.
Insurance, and the kind people skip
- General liability. Non-negotiable, and most builders and property managers will ask for a certificate before you set foot on site.
- Commercial auto. Your personal policy doesn’t cover a work truck. Find out now rather than after an accident.
- Workers compensation once you hire, and in some states on yourself.
- Tools and equipment coverage. A stolen van full of tools is a business ending event for a one-truck shop.
Money before the first invoice clears
This is where most new shops get hurt. You buy material on day one and get paid in thirty to sixty days, sometimes longer on builder work. The gap is real money and it doesn’t care that the job was profitable.
Before you start, know three numbers:
- What it costs to keep the doors open for a month with zero revenue. Truck payment, insurance, phone, software, fuel, your own living costs.
- How many months of that you’ve in the bank. Three is tight. Six lets you turn down bad work, which is worth more than it sounds.
- Your fully loaded hourly cost. Covered below, and it’s the number everything else depends on.
The mistake that sinks year one
New shops price against what the competition charges, or against what they used to get paid per hour as an employee. Both are wrong, and both feel reasonable at the time.
Your hourly rate has to carry your wage, payroll taxes, the truck, insurance, fuel, tools, software, the phone that answers, the accountant, unbillable hours, and profit. Add that up for a year and divide it by the hours you can genuinely bill, which for a one-truck shop is a lot fewer than forty a week. The result is usually a shock, and it’s the correct number.
Price below it and you buy yourself a very busy year that ends with nothing in the account. The full working is in building a plumbing price book.
Decide how you charge before your first call
Flat rate or time and materials is a decision to make in advance, not in a customer’s kitchen. Flat rate gives the homeowner a number before work starts and rewards you for getting faster. Time and materials is fairer on jobs nobody can scope from the doorway. Plenty of shops use flat rate for known work and time and materials for diagnostics. The trade-offs are in flat rate vs time and materials.
Getting the first customers
- Google Business Profile. Free, and it’s where a homeowner with a leak actually looks. Fill it in completely and ask every happy customer for a review.
- The people you already know. Builders, remodelers, real estate agents, property managers, and the plumbers you trained with who are too busy. Your first year of work usually comes from this list, not from advertising.
- Answer the phone. Unglamorous and the most reliable advantage a small shop has. A homeowner calls three companies and hires whoever picks up.
Look like a real company from job one
A written estimate with your license number on it, delivered before you leave, does more for a new shop than a logo does. It’s also the thing that separates you from the handyman the customer was comparing you to. There’s a free plumbing estimate template to print, and if you’d rather not handwrite them, BidRise builds the estimate from your prices while you’re still at the house.
Write the plan down
Not a fifty page document for a drawer. A short one you’ll actually use, and that a lender will read if you need a truck loan. What to put in it’s covered in the plumbing business plan guide.