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Ask Dave

Starting out

Jennifer's husband recently lost his job. Now, he's thinking about using his experience and connections to open his own company. Dave has some start-up advice to help them get things moving in the right direction.

QUESTION: Jennifer’s husband recently lost his job as a roofing and remodeling contractor. Now, she says, he’s considering opening his own roofing company and bringing in a former co-worker. Jennifer asks for Dave’s advice on how to proceed with setting things up.

ANSWER: His former co-worker should be what’s known as an employee. That’s the relationship. You could bring him in as a subcontractor, or you could just bring him in as an employee on a percentage of the jobs he brings in — which is kind of like being a subcontractor pay-wise.

I would open it as a sole proprietorship. I think you’ve got two major areas in this business. Your husband knows how to sell jobs. That’s going to be the easy part for him. But he’s got to line up some crews before he sells any jobs. So he needs to get out there, hustle up, and find three or four people who are willing to work with him and what kind of pricing they’ll give him. He needs to get that lined up, and if he’s buying supplies, he needs to swing by a supplier, set up accounts, and negotiate his prices on the shingles, nails and so forth.

When it comes to taxes and bookkeeping, just hold back 25 percent of your net profit each month in a separate account before you take it home. If you do that, you’ll be okay on your taxes until you get above $80,000 net profit. That’s probably not going to happen for a little while, so just start with a fourth and you’ll be in good shape.