How to Start a Home Remodeling Business

There are over 588,000 home remodeling businesses in the US. The rate of home remodeling businesses has steadily grown year over year, as 91% of homeowners report that they need some form of renovation. Are you interested in learning how to start a home remodeling business? In this article, we will cover the necessary steps to starting your business and the proper home remodeling business insurance you need to protect your income.

How Much Does It Cost to Start a Remodeling Business?

Before learning how to start a remodeling business, it is important to learn how much it costs. Suppose you plan on being a part-time renovation business. In that case, you may only need between a few thousand dollars and $50,000, depending on what you invest in. A full-time renovation business will require $100,000 or more to start up front because you must pay for your subcontractors and major project costs up-front, like your material costs.

Business Expense Cost
Business registration $0-$1,000
Employee wages $27,000-$71,000
Equipment costs $1,000-$10,000
Marketing costs $200-$20,000
Building rent $1,000 to $3,000
Vehicle cost $5,000-$30,000
Insurance coverage $300-$3,000 

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Steps for Starting a Home Remodeling Business

This next section will cover the essential steps to take when learning how to start your own remodeling business. You must create your business name, register your business as a legal entity, and figure out what customers to appeal to.


Choose a Business Name

The first step to figure out when learning how to start a remodeling company is your DBA or “doing business as” name. Some tips for choosing your DBA include:

  • Make it memorable: Your business name should be easy to remember and spell so customers can easily look you up and recommend you to friends. You want to choose a name that is unique enough but still gives a solid image of the function and benefits of your business. Something like “High-class Remodels” is a name that lets customers know what you do and that you strive for quality.

  • Think of the future: You should take your time in choosing a name. Once the name becomes official, it will be hard to change. You want to choose a name you will still be proud of in a few years and when your business expands. Try to make your name timeless and still relevant, no matter the size of your business.

  • Keep it simple: Your name should be simple, easy to pronounce, and not hard to spell. This allows your business name to be searched online and easier to spread. Your business name should sound good when spoken aloud so that when people talk about it is pleasing to the ear of your potential customers.

Register Your Business

When learning how to start a house renovation business, the next step you need to accomplish is registering your business as a legal entity. Once you start doing business under your business name instead of your personal name, you must be officially registered in the area you operate in. Some business structure options for your business include:

  • Sole proprietorship: A sole proprietorship allows you to be the sole owner of your company. You will retain all the profits your business makes but will also be personally liable for business debts. Sole proprietorships are extremely simple and inexpensive to start. They also allow you to avoid the corporate tax requirements of a corporation’s business structure.

  • Partnership: A partnership is similar to a sole proprietorship, but two or more partners own it. Like a sole proprietorship, these partners are personally liable for business debts but also shoulder the burden with each other. Partners also share the profits of a business.

  • Corporation: A corporation is a distinct legal entity that shareholders own. As a shareholder, you are protected from business debts and liabilities. A corporation is taxed twice, once on its profits and a second when its shareholders collect dividends. Corporations are more expensive to start and have stricter rules and regulations to follow. One major benefit of a corporation is that it can raise capital by issuing stocks and equity.

  • Limited liability company (LLC): An LLC combines the best aspects of a sole proprietorship with a corporation. Your LLC protects you from business liability but has pass-through taxation. This means you will not suffer the double taxation requirements of a corporation.

Find Your Target Customer

A critical decision to make when researching how to start a home renovation company is deciding what customers to appeal to. There is a common saying in marketing that says, “When you speak to everyone, you talk to no one.” This saying illustrates the importance of focusing on a specific customer demographic and solving their needs instead of trying to appeal to everyone. Some typical customer groups for home remodeling businesses to consider include:

  • Customers with older houses: Houses in America are getting older. It is estimated that 92% of US homes were built before 2000.  These houses will eventually need minor and major remodeling to update systems to the modern era. Also, older homes must be remodeled to adjust their floor plans to accommodate modern sensibilities.

  • Customers with disposable income: For most people, a house renovation is something they need to save money for. Targeting disposable-income customers makes them more likely to convert to your services. These customers are more willing to pay a professional to do the job than try to do it themselves.

  • Homebuyers: People shopping for homes in the housing market might look for home remodeling contractors to fix up a house they have their eye on. Sometimes homebuyers will save money by buying a house that needs work for less money on the expectation that they can use that saved money to pay for a remodel.

Get an EIN

Before you can do certain activities like opening a business bank account and hiring employees, you must acquire an employer identification number (EIN) from the IRS. This number identifies you as an employer and helps you make business tax returns. The steps to get an EIN include:

  1. Apply: You can apply by visiting the IRS website, fax, or mail. Applying for an EIN is free.

  2. Fill out the form: You must answer questions about your business activities and give the IRS your address, business name, and other related information.

  3. Pay attention to guidelines: If filing online, you must complete the form without 15 minutes of inactivity, or you will have to start again.

  4. Record your EIN: After you have submitted your application, you will have access to your EIN. File this number away and keep a copy of the completed form in your business records.

Create a Website

In our digital age, creating a website and having a presence online is required to succeed. 76% of customers will look up a company online before deciding to visit them. The steps to starting a website include:

  • Acquire a domain name: You can buy a domain name from a domain registrar like Google Domains or by purchasing a name from a domain holder. Try to match your domain name with your business brand.

  • Find a web host: Web hosts are responsible for allowing web traffic to your site and storing your website data on physical drives. Without a web host, people can’t access your site. Popular web hosts include GoDaddy and BlueHost.

  • Design your site: You can use a service like Wix or Square Space to design your website based on a template. Your business may also want to pay a professional web designer to create your website from scratch if you want custom features like a forum for your customers to discuss home remodeling topics.

  • Fill your site with content: Your website must contain relevant content for your target searchers. By posting reviews of your business and articles about home remodeling topics, your customers will discover you naturally through search engines.


Open a Business Bank Account

One benefit of having a legally recognized business is having access to business bank functions. A business bank account allows you to process customer transactions and take out business loans. Some common types of business bank accounts include:

  • Business savings: You can deposit business earnings into a savings account to earn interest over time.

  • Business checking: Your business checking account is a way to separate your business expenses from your personal expenses. It also allows customers to send their payments to an official sounding account instead of your personal bank account.

  • Merchant services: A merchant services account allows you to process debit and credit transactions for clients with a small transaction fee.

Hire Employees

Depending on your project and business scope, you may need to hire employees. Some common types of workers you need for a home remodeling business include:

  • Subcontractors: A subcontractor is someone you hire for a project for their expertise. For example, you may hire a plumbing contractor if a home remodel project involves a house’s water pipes.

  • Bookkeepers: Your bookkeepers keep track of your business debts and obligations and help balance the flow of money going in and out of your business.

  • Business assistants: A business assistant supports your business by managing daily tasks like ordering supplies and answering phone calls for clients.

Advertising Your Home Remodeling Business

It is highly recommended that you implement an advertising and marketing strategy for your business. When starting out, you want to quickly increase your brand’s exposure to as many potential customers as possible so you can generate ledes and start your business on the path to profitability.


Influencer Marketing

You can build instant brand loyalty and trust by associating your brand with a popular influencer on social media. Influencer marketing has a high return on investment, and influencers are highly trusted among younger generations. A downside of influencer marketing is that if the influencer’s reputation takes a hit, it will also affect your company’s reputation.


Email Campaigns

An email campaign is among the highest return-on-investment options for marketing. LinkedIn estimates you can receive $40 for every dollar you spend on email marketing. You can deliver a personalized message to your target audience through an email campaign and open a direct line of communication with them.


Pay-Per-Click Ads

Pay-per-click ads are a quick way to increase your brand exposure online instantly. You can adjust pay-per-click ads in the middle of your campaign, making them a good way to test out marketing strategies.


Search Engine Optimization

Instead of paying for ads, you can utilize search engine optimization (SEO) to increase organic, high-value traffic to your website. Producing content on your site targeted towards your customer’s keywords will allow your website to rank higher on a search engine. People searching for home remodeling-related topics in your area will be more likely to discover you and hopefully use your services.




Equipment Needed for Your Home Remodeling Business

The equipment you need for your remodeling business will vary based on the project you are working on and its scale. Below are some common types of equipment you will need on various projects and their cost.

Equipment Usage Cost
Safety gear Protects your head, eyes, and limbs from danger $50-$200
Air compressor Powers tools like nail guns and sanders $800-$3,000
Shop vacuum Clean messes and picks up debris like nails and dirt $100-$1,000
Tool belt Holds tools like hammers, screwdrivers, fasteners, and tape measures $25-$50
Tape measure Used to make accurate measurements when making cuts and figuring out space in a room $10-$200
Hammer Drive nails into a house and pull old nails out $10-$500
Fastener Metal hardware like bolts and screws allow you to secure different objects together. $5-$50 per box
Excavator Necessary for digging through dirt and demolishing old walls and structures $200,000-$600,000 for a new model
Crane Allows you to reach high places like a client’s roof or facade exterior on a higher-level floor. $20,000-$100,000
Ladders With a ladder, you can access higher areas in the interior and exterior of a home. $50-$500
Putty knife Lets you patch holes in a home by applying wood filler and drywall. $5-$20
Lineman’s pliers Used to straighten and strip wires together and otherwise manipulate different wires into position. $10-$80

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Insurance Requirements for Boosting Income

To protect the income of your home remodeling business, you must purchase adequate insurance protection. Your business may one day encounter a lawsuit from a client or a devastating weather event that damages all your equipment. Without a good insurance policy, an event like this can potentially bankrupt your business. The following policies are required to boost your take-home income and ensure it doesn’t go to paying legal bills and equipment repair costs.


General Liability Insurance for Home Remodeling Businesses

General liability insurance protects you from third-party claims related to bodily injury, property damage, and advertising injury. For example, suppose a customer gets hurt due to your remodeling services. In that case, this policy protects your business if they sue you. 

Thimble is an excellent choice for buying general liability insurance. They provide short-term general liability insurance options that you can choose the duration of. You can set the policy period down to the month, day, and hour. This allows you to pay for only the needed coverage during a project. Thimble has an A+ score from the Better Business Bureau.


Professional Liability Insurance for Home Remodeling Businesses

Professional liability insurance covers the consequences of errors or oversights you make in your business. For example, you may fail to provide the agreed services to a client who decides to sue you. Hiscox is our pick for professional liability insurance. They allow you to save money when you bundle multiple policies together. Hiscox offers a 14-day refund guarantee if you are unsatisfied with your insurance policy. They have an A rating from AM Best.


Commercial Property Insurance for Home Remodeling Businesses

Commercial property insurance protects your business building and equipment from physical damage. It typically covers events like fire, theft, vandalism, wind, lightning, water damage, and explosions. CoverWallet is an online insurance platform that is an excellent place to buy commercial property insurance. You can choose from over ten top-rated partners like Hiscox, Markel, Progressive, and Travelers. They allow you to get quotes quickly without committing to buying a policy. The Better Business Bureau gave CoverWallet an A+ rating.


Commercial Auto Insurance for Home Remodeling Businesses

Your commercial auto policy protects business-owned vehicles when you use them for work-related activities. The policy provides accident liability protection and can help you repair damaged vehicles. Tivly is our pick for commercial auto insurance. They offer customers a selection of over 200 insurance partners. Tivly narrow your choices through a quick phone call until you are left with the perfectly matched policy and insurance provider for your needs. You can purchase commercial auto policies with gap insurance, rental reimbursement coverage, and more.

Workers’ Compensation Insurance for Home Remodeling Businesses

Workers’ compensation insurance is required in most states when bringing on employees to assist you with your remodeling services. This policy protects your employees by paying for medical treatments for work-related injuries and illnesses. It also provides income when a worker cannot work due to an injury. The Hartford offers workers’ compensation insurance with many extra benefits. They employ nurse case managers on your policy that help employees determine the logistics of getting treatment so they can recover quicker. The Hartford allows your employees to access a network of over 65,000 pharmacies to access the prescriptions they need.


Business Owner’s Policy for Home Remodeling Businesses

A business owner’s policy (BOP) is often considered one of the most comprehensive business insurance options. It combines multiple types of coverage into one convenient policy. BOPs will typically include general liability and commercial property coverage. NEXT is our top pick for a business owner’s policy. Their BOP offers the same protection as their general liability policy but with the added benefit of commercial property insurance. NEXT offers transparent pricing on their policies, so you don’t have to worry about hidden fees eating away at your costs. They have an A- (excellent) rating from AM Best.

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