How to Start a Construction Company in Delaware | Essential Guide

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Delaware Construction Company

Starting a construction company in Delaware can be lucrative and rewarding for anyone with the right skills, resources, and determination. With a strong demand for quality construction services and a consistently growing population of 1,017,551 (2024 data), there is always room for new Limited Liability Companies to thrive in this industry. However, starting a construction company is a challenging task and requires careful planning, dedication, and hard work.

In this article, Webinarcare Editorial Team will discuss the necessary steps to Start a Construction Company in Delaware and provide valuable tips for ensuring your success in this competitive industry.

How to Start a Construction Company in Delaware

What is a Construction Company?

A construction company in Delaware is a business that specializes in the planning, design, and execution of construction projects. These projects can range from residential homes to commercial buildings and infrastructure projects such as roads, bridges, and utility systems. Delaware construction companies must adhere to local building codes, regulations, and licensing requirements to ensure their projects are safe, efficient, and compliant with state standards.

Delaware construction companies often offer various services, including general contracting, design-build, and specialized construction services. They collaborate with various stakeholders, such as architects, engineers, developers, and property owners, to bring projects to life. By employing skilled tradespeople, project managers, and other professionals, construction companies in Delaware work to deliver high-quality, durable structures that meet their client’s needs and contribute to their community’s development and growth.

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It is suggested that you speak with a legal professional before you begin setting up a construction company. They’ll understand what’s best for you and your future company. To safeguard your personal assets from business debts, you can always start an LLC in Delaware.

– WEBINARCARE EDITORIAL TEAM

How to Start a Construction Company in Delaware

To launch a construction business, you must follow the guidelines that include researching the construction industry, developing a business plan, registering your business, securing funding, purchasing equipment and material, hiring a skilled team, and marketing your construction company.

Step 1: Research the Construction Industry

Before diving into starting your construction company, it’s essential to understand the local construction industry in Delaware. Research your area’s market trends, major players, and potential competition. This will help you identify gaps in the market that your company can fill and allow you to make informed decisions about the types of services you want to offer.

Some key areas to research include:

  • Types of construction projects in demand (residential, commercial, etc.)
  • The average cost of construction projects in your area
  • Local building codes and regulations
  • Key stakeholders in the industry (architects, developers, etc.)
  • Licensing and certification requirements for contractors in Delaware

Step 2: Develop a Business Plan

A well-thought-out business plan is crucial for the success of any new business, including a construction company. Your business plan will act as a roadmap for your company’s growth and development, helping you make informed decisions and keep your business on track.

Some key elements to include in your construction company business plan are:

  • Company Overview: Describe your company’s mission, vision, and goals. Include the legal structure of your business (LLC, corporation, sole proprietorship, etc.) and your company’s name and location.
  • Market Analysis: Summarize your research on the local construction industry, including the target market, competition, and growth opportunities.
  • Services Offered: Clearly define the types of construction services your company will offer, such as general contracting, design-build, or specialized construction services.
  • Marketing and Sales Strategy: Outline how to attract and retain clients and your strategies for generating leads and closing sales.
  • Management and Organization: Detail the roles and responsibilities of your management team and any key personnel you plan to hire.
  • Financial Projections: Provide a realistic estimate of your company’s financial performance over the next few years, including projected income, expenses, and profits.

Step 3: Choose a Business Name

Selecting a name for your Delaware construction company is essential to forming. Your business name should be unique, memorable, and reflective of your products or services. There is a complete guide on Delaware Business Name Search for you to have a proper Delaware construction business name. 

In Delaware, if you do not wish to file your construction business company right away but want to hold the name that you have decided on, then you can reserve your Delaware construction business name for 120 days. You must file a name reservation application with the Delaware Secretary of State to keep the name. 

You can register your business under a different legal name if your preferred name isn’t available. Once you have chosen a name, you can submit an application for Delaware DBA (doing business as). In this manner, you can choose any name you desire for your business. A DBA allows a company to operate under the name of the person or entity who owns it. If you have decided to file for a DBA, you can file it in two methods, by mail and in person.

However, before filing a DBA, you should know that you need to renew your DBA every Indefinite, which costs $25.

You can check the availability of your desired business name by searching the Delaware Division of Corporations Entity Search‘s website.

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Step 4: Register Your Construction Company

Register your business with the appropriate government agencies before officially starting your construction company in Delaware and obtain any necessary licenses and permits. 

Hire a Registered Agent

A Registered Agent is a person or entity responsible for receiving legal documents and official notices for your construction business. The qualifications of a Registered Agent vary depending on the jurisdiction, but generally, they must meet the following criteria:

  • Age: The Registered Agent must be at least 18 years old.
  • Residency: The Registered Agent must reside where the company is registered or authorized to do business in that state. In some jurisdictions, a domestic corporation or limited liability company (LLC) can act as its Registered Agent if it has a physical address in Delaware.
  • Physical Address: The Registered Agent must have a physical street address, not just a post office box, where the company is registered. This is where they will receive official correspondence and legal documents on behalf of the company.
  • Availability: The Registered Agent must be available during normal business hours (9 a.m. to 5 p.m., Monday through Friday) to receive and sign official correspondence and legal documents.
  • Good Standing: If the Registered Agent is a business entity, it must be in good standing with the state and not be in default, suspended, or revoked.
  • Compliance: The Registered Agent should know Delaware requirements and deadlines for the company, such as Annual Reports and Delaware franchise tax filings, and ensure that the company stays compliant. 

You can serve as your Registered Agent, appoint a friend or family member, or hire a Professional Delaware Registered Agent Services.

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File For Certificate of Formation or Certificate of Incorporation

If you form an LLC for your construction company, you must file the Delaware Certificate of Formation, which costs $90. However, you must file the Certificate of Incorporation if you form Delaware Corporation for your construction company. The Certificate of Incorporation filing fee costs $89 for filing online, fax and by mail. It is crucial to provide accurate and complete information on this document, as errors or omissions may result in delays or rejection of your filing.

  • Online Filing: Get the online form from Secretary of State, fill it up, and submit. Don’t refresh the page during the process. It will erase everything.  
  • Offline Filing: Send the form by mail to Delaware Division of Corporations, 401 Federal Street, Suite 4 Dover, DE 19901 or Fax it to 302-739-3812

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Create an Operating Agreement

Operating Agreement is a document that contains all of your company’s organizational details. Drafting an operating agreement in Delaware is optional. Yet, having one as an internal document is strongly advised. 

Recommended: Creating an Operating Agreement is like having a personal legal guide at hand; it’s efficient, thorough, and ensures the smooth and compliant operation of your business. With LegalZoom’s operating agreement, it will protect your rights as an owner, keeping misunderstandings at bay and your business on the path to success. That’s why we recommend using –

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Obtain an Employer Identification Number

You must first obtain Delaware Employer identification number (EIN) from the IRS if you will open a bank account or hire an employee for your Delaware construction company. 

The application of an EIN in Delaware can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that the Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

Recommended: Professional services have the EIN included in their LLC formation package. We recommend using –

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Step 5: Obtain the Necessary Licenses and Permits

Starting a construction company in Delaware requires several licenses and permits. Some of the most common licenses and permits you’ll need include the following:

  • Business License: Your local city or county government may require Delaware Business License. The business license fee in Delaware ranges from $50 – $300.
  • Contractor’s License: A contractor’s license is required in most states for construction businesses that perform specific types of work, such as general contracting, electrical, plumbing, HVAC, or other specialized trades. Requirements for obtaining a contractor’s license may include passing an exam, providing proof of experience, and obtaining bonding and insurance.
  • Building Permits: Construction projects typically require permits issued by the Delaware building department. Building permits ensure the construction project complies with local building codes and regulations.
  • Occupational Licenses: Some states may require occupational licenses for specific types of work, such as asbestos abatement, lead paint removal, or the installation of fire protection systems. Check with your state’s licensing board to determine if any special licenses are required for the work your construction company will perform.
  • Delaware Sales Tax Permit: A sales tax permit from the Delaware Division of Revenue allows you to collect sales tax. Currently, the Delaware sales tax rate is 0% since Delaware has no sales tax.
  • Environmental Permits: Depending on the nature of your construction projects, you may need to obtain environmental permits, such as stormwater discharge or air quality permits.

Step 6: Secure Funding

Starting a construction company requires significant capital to cover equipment, materials, and labor costs. To secure funding for your Delaware business, you must explore various financing options and determine the best fit for your needs.

When seeking funding, be prepared to present your business plan and financial projections to potential lenders or investors. This will demonstrate your commitment to your company’s success and help build their confidence in your ability to repay the loan or generate a return on their investment.

However, consider applying for your construction company’s Delaware Small Business Loans.

Step 7: Purchase Equipment and Materials

Once you have secured funding for your Delaware construction company, you must purchase the necessary equipment and materials to begin operations. This may include items such as:

  • Construction vehicles (trucks, excavators, etc.)
  • Power tools and hand tools
  • Safety equipment (hard hats, safety goggles, etc.)
  • Building materials (lumber, concrete, etc.)
  • Office equipment and supplies (computers, printers, etc.)

Invest in high-quality equipment and materials, as this will help you deliver exceptional results to your clients and build a strong reputation in the industry. Consider purchasing insurance for your equipment, as this can help protect your investment in the case of theft, damage, or accidents.

Step 8: Hire a Skilled Team

Your Delaware construction company’s success will largely depend on your team’s skills and expertise. Hire individuals with experience and knowledge in the construction industry to build a strong workforce. This may include:

  • Project managers
  • Construction laborers
  • Skilled tradespeople (electricians, plumbers, etc.)
  • Architects or engineers
  • Administrative staff (accountants, receptionists, etc.)

In addition to hiring qualified employees, invest in ongoing training and development programs to help your team stay current on industry trends, technologies, and best practices. This will improve the quality of your services and help you attract and retain top talent in the competitive construction industry.

Step 9: Market Your Construction Company

You must develop a comprehensive marketing strategy to attract clients and grow your Delaware construction company. This may include building a professional website that showcases your services, portfolio, and testimonials from satisfied clients; creating and distributing print materials, such as brochures, business cards, and direct mail advertisements; networking with industry professionals, such as architects, developers, and real estate agents, to generate leads and referrals, and utilizing social media and digital marketing strategies to reach a wider audience and drive traffic to your website.

By consistently promoting your Delaware construction company and showcasing your expertise and quality work, you can build a strong reputation in the Delaware construction industry and attract a steady stream of new clients.

Benefits of Forming a Construction Company

Forming a Construction LLC is best for a start-up company since it offers the following advantages.

Limited Liability Protection

LLC provides limited liability protection to its owners, also known as members. This means that the personal assets of the LLC members are separate from the company’s debts and liabilities. In the construction industry, where accidents, property damage, and contractual disputes occur, limited liability protection is crucial to protect business owners’ assets.

Pass-through Taxation

An LLC typically offers pass-through taxation, meaning the company’s profits and losses are reported on the owner’s tax returns. This avoids the double taxation corporations may face, where the company and its shareholders are taxed separately. Pass-through taxation can lead to potential tax savings for the Delaware construction company’s owners.

Flexibility in Management

LLCs have a more flexible management structure than corporations. They do not require a board of directors, and the owners can choose how to manage the company through member or manager management. This flexibility allows Delaware construction companies to adapt their management structure as needed.

Simpler Record-Keeping and Compliance

LLCs still require formalities; they typically have fewer record-keeping and reporting requirements than corporations. This can save time and resources for Delaware construction companies, allowing them to focus on their core business operations.

Credibility

Forming an LLC can provide the Delaware construction company with increased credibility and professionalism in the eyes of clients, vendors, and financial institutions. This can be beneficial in securing contracts and building a positive reputation in the industry.

FAQs

What are the steps to incorporate a construction company in Delaware?
The steps to incorporate a construction company in Delaware include filing the necessary documents with the state, obtaining any required licenses, and registering for taxes.
What types of construction companies can be formed in Delaware?
Delaware allows for a variety of construction company structures, including partnerships, LLCs, and corporations.
Does Delaware require construction contractors to be licensed?
Yes, contractors in Delaware must hold a general contractor’s license.
How do I obtain a general contractor’s license in Delaware?
Contractors seeking a general contractor’s license in Delaware must apply through the Delaware Division of Revenue.
Are there any required exams for Delaware contractors?
Yes, Delaware contractors require specific exams, depending on the type of work they will perform.
Is there a difference between a business license and a contractor’s license in Delaware?
Yes – a general contractor’s license covers specific types of contracting work, while a business license is required of all partnerships, LLCs, and corporations.
What are the fees associated with obtaining a Delaware contractor’s license?
The fees to obtain a Delaware contractor’s license vary depending on the type of work for which you are licensed.
Does Delaware require contractors to pass bonding requirements?
Yes, contractors in Delaware may be required to obtain and maintain bonding to ensure payment for work completed.
What is the minimum insurance coverage required for Delaware construction companies?
Delaware construction companies must have at least $300,000 in liability coverage and $100,000 in worker’s comp coverage.
Are there any restrictions on the types of construction work that can be done in Delaware?
Delaware follows national and state guidelines on safe construction work, and construction work must meet local building codes.
What types of zoning laws apply to construction companies in Delaware?
Delaware zoning laws set certain requirements for property usage and may impact location choices for construction companies.
Are there any environmental regulations that impact Delaware construction companies?
Delaware requires construction companies to obtain permits and follow regulations surrounding the release of hazardous materials.
Can a construction company run other business activities alongside construction work in Delaware?
Yes – Delaware allows construction companies to provide other types of services in addition to contracting work.
What are the naming requirements for Delaware construction companies?
Delaware typically requires that construction company names include the word “Construction,” “Building,” or “Contractor.”
What is the Delaware Division of Revenue and why is it important?
The Delaware Division of Revenue is a government agency responsible for processing tax filings, business licensing, and other business-related activities.
Do Delaware contractors need to have a business address?
Yes, contractors in Delaware must maintain a physical business address located within the state.
Is there anything unique about forming a construction company in Delaware compared to other states?
Delaware is a popular location for incorporation due to its business-friendly laws and regulations.
Can a construction company operate in multiple states?
Yes, construction companies can typically operate in many states, but may require multiple licenses and permits.
What is the defined process to legally change a name of a construction company in Delaware?
To change a Delaware construction company’s name, businesses must file certain forms with the Delaware Division of Corporations.
Are there any additional tax registration requirements needed for Delaware construction companies?
Companies operating in relevant taxes, such as sales and use taxes or withholding taxes transmit reports outlining information pertaining to quarterly income, gross receipts, estimated taxes, and more to comply with Delaware tax laws.
What happens when a Delaware construction company is sued?
The process for a construction company lawsuits work similar like others, however specifics rules apply in Delaware courts.
Are there any requirements for Delaware construction company records?
Delaware construction company records must be kept properly and within compliance to government regulations.
Does Delaware have specific requirements surrounding contracts for construction work?
Delaware has construction lien laws that require certain contractual conditions.
Can non-US citizens open a construction company in Delaware?
Yes, non-US citizens have the same rights to draw on formation concepts and technologies that US citizens receive.
When do Delaware construction companies need to file taxes?
Delaware construction companies typically are required to file annually to keep in line with state and federal tax laws.
Do contractors in Delaware need to pay estimated income taxes?
Delaware contractors are required to pay estimated income taxes throughout the fiscal year.
Does Delaware tax personal property, and does it impact construction companies?
While property taxes in Delaware vary by location, Delaware construction companies may be subject to personal property taxes depending on how they are structured.
What types of insurance policies are required for Delaware construction companies?
Comprehensive Liability Insurance is typically required, while Worker’s Compensation, Warranty and E&O insurance provisions are also best to obtain.
Are there incentives available for businesses continuing long term investment projects in Delaware?
Delaware rewards businesses meeting certain investment requirements thinking to better establish partnerships.
What does it take to start a construction company in Delaware?
First, you’ll need to register your company with the State of Delaware and obtain any necessary licenses and permits.
Is a business license required to start a construction company in Delaware?
Yes, you’ll need a Delaware business license to legally operate your construction company in the state.
How do I register my construction company in Delaware?
You can register your construction company in Delaware by filing the appropriate paperwork and paying the registration fee with the Delaware Division of Corporations.
Can I operate a construction company in Delaware without a license?
No, you’ll need to obtain the appropriate licenses and permits to legally operate a construction company in Delaware.
What are the licensing requirements for construction companies in Delaware?
Depending on the type of construction you’ll be doing, you may need a Delaware contractor’s license, a home builder’s license, or other specialized licenses.
What insurance do I need to start a construction company in Delaware?
General liability insurance is required for any construction company in Delaware. Additional insurance may be needed depending on the type of construction work you’ll be performing.
How much does it cost to start a construction company in Delaware?
The cost of starting a construction company in Delaware will vary depending on a number of factors, including the size of your company, the types of projects you’ll be completing, and the equipment and supplies you’ll need.
Does Delaware have specific laws or regulations for construction companies?
Yes, Delaware has laws and regulations that govern the operation of construction companies in the state. You’ll need to comply with these regulations to operate legally and avoid fines.
Where can I find information on Delaware’s construction laws and regulations?
The Delaware Division of Construction will be able to provide you with information on the state’s construction laws and regulations.
How do I choose a name for my Delaware construction company?
You’ll need to choose a name for your construction company that complies with Delaware’s naming rules and regulations. You can check with the Division of Corporations to determine if your desired name is available.
How long does it take to start a construction company in Delaware?
The time it takes to start a construction company in Delaware will vary depending on the specifics of your business. Generally, a few weeks to a few months is a common timeline.
Do I need to register my construction company with the IRS in Delaware?
Yes, you’ll need to register your construction company with the IRS in order to pay taxes and comply with federal regulations.
Are there any tax breaks or incentives for construction companies in Delaware?
Yes, the state of Delaware offers a number of tax breaks and incentives to construction companies, including training reimbursement and tax credits for new job creation.
Can I file for my construction company’s incorporation online in Delaware?
Yes, you can file for your construction company’s incorporation online with the Delaware Division of Corporations.
What do I need to do to get my Delaware contractor’s license?
You’ll need to pass a qualifying exam, have a minimum of 3 years of experience in the industry, and provide proof of insurance to obtain a Delaware contractor’s license.
Is there a waiting period to obtain a contractor’s license in Delaware?
There is no waiting period to obtain a contractor’s license in Delaware; however, you must meet all the requirements to apply.
How difficult is it to obtain a home builder’s license in Delaware?
Obtaining a home builder’s license in Delaware is not overly difficult as long as you have the required education and experience.
How often do I need to renew my Delaware contractor’s license?
Delaware contractor’s licenses must be renewed every 2 years.
Can I operate my construction company in Delaware without workers’ compensation insurance?
No, Delaware law requires all construction companies to carry workers’ compensation insurance for their employees.
Do I need a lawyer to start a construction company in Delaware?
While it’s not necessary to have a lawyer to start a construction company in Delaware, it may be beneficial to consult one for legal advice.
How can I learn more about starting a successful construction company in Delaware?
You can visit the Delaware Contractors Association or the Delaware Small Business Development Center for resources and advice.
Is it important to have a business plan before starting a construction company in Delaware?
Yes, having a solid business plan will help your Delaware construction company succeed and ensure that you’re operating within your budget and goals.
Can I operate a construction company out of my home in Delaware?
Yes, you can operate a construction company out of your home in Delaware, but you’ll need to comply with zoning laws and regulations.
What’s the best way to market my Delaware construction company?
There are many effective marketing strategies, including word of mouth, social media, and advertising. It’s important to choose a method that suits your business and target audience.
Can I hire employees for my construction company in Delaware?
Yes, you’ll need to follow Delaware employment laws if you hire employees for your construction company.
How can I make sure my Delaware construction company is successful?
To ensure success, it’s important to provide quality work, excellent customer service, and stay up to date with industry trends and regulations.
Is it necessary to have experience in the construction industry to start a construction company in Delaware?
While prior experience in the construction industry can be beneficial, it’s not always necessary as long as you have the appropriate education or training, or are willing to hire experienced professionals.
Can I obtain funding for my Delaware construction company through business grants or loans?
Yes, Delaware offers a variety of financing programs and resources to help support small construction businesses, including grants, loans, and mentoring programs.
Do I need a specialized contractor’s license to do HVAC work in Delaware?
Yes, you will need a specialized contractor’s license to perform HVAC work in Delaware.

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Conclusion

Starting a construction company in Delaware can be challenging yet rewarding for those prepared to invest the time, effort, and resources necessary for success. By following the steps outlined in this article and dedicating yourself to providing exceptional service and quality work, you can create a thriving construction business that stands out in the competitive Delaware market.

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