How to Start a Home Inspection Business?
Well choice, recent combined study of the National Association of Realtors and the American Society of Home Inspectors (ASHI) has showed that approximately seventy seven percent of home buyers hire home inspection service before going to buy a house.
What is a Home inspection service?
An independent examination from licensed professionals of home structure, design and layout can be referred as a home inspection service and the person who has training and certification to do home inspection called home inspector. Normally peoples hire such services at the time of sale and purchase of a house.
Steps to initiate your idea of home inspection business
Feasibility study
Your feasibility study must cover the accurate estimates of the financial aspect, operational aspect, marketing aspects, accountancy aspects and growth aspects. It is a very important stage so please ensure the involvement of high profiled professionals from different fields.
Decide legal structure for your home inspection business
It is recommended to hire a legal firm or an attorney or CPA to decide the right business structure for your home inspection business. Every business structure has its own pros and cons.
- Corporation: Every corporation has a separate legal entity status of its members. Members have to appoint directors to transact business. Taxes are paid at the corporate level and further at the individual level of dividend payments to its members. You may also elect S-corporation status to pass through double taxation.
- Limited Liability Company (LLC):You may also incorporate an LLC with at least one member. In LLC members enjoy passing through of taxation with the advantage of limited liability like in Partnership and sole proprietorship. It may be called a hybrid form of a sole proprietorship, partnership and corporation.
- General Partnership: For a partnership , you should have at least two partners with one general partner.
- Limited Partnership: You can start as a Limited Partnership, Limited Liability Partnership or Limited Liability Limited Partnership. This is a type of partnership with limited liability. You can register Limited Partnership with one person.
- Sole Proprietorship:This is the simplest form of a business structure. DBA / Trade name / fictitious business name should be registered with the county or the secretary of state to conduct business.
Tax registration, Licenses and Permits for Home Inspection Business
After forming the legal structure of your home inspection business, you may have to consider followings:
- Federal Tax Identification Number: Check with Internal Revenue Service (IRS) its applicability to your home inspection business and apply for an appropriate tax ID.
- State Tax Registration: Don’t forget to consider the state tax law's applicability for your home inspection business, such as sales and use tax, income tax, turnover tax etc.
- Licenses & Permits: Normally home inspection business requires getting licenses and permits from the State, so licenses and permits should be purchased from the State in which you are wishing to operate.
Operational Matters
It is recommended to incorporate followings and get ultimate benefits:
- Strategic Financial Management: Strategic refer to long term and financial management is a subject which deals with decision of the best capital mix, funds availability, funds flow, and funds management. If you are not good in this subject it is recommended to hire a CPA or other professionals according to the size and structure of your business.
- Infrastructure: In this phase you have to plan and develop complete infrastructure and purchase the necessary tools, machinery and other kind of assets.
- Staffing: In USA home inspector has the appropriate certification to inspect homes. Hire skilled and competent home inspector and other support staff according to the size of your home inspection business. If you are home inspector you may operate a complete home inspection business solely.
- Strategic Marketing: Your marketing should be good enough to build your image and reputation. You may incorporate web based online tools, cell phone base application, posters, social media, radio, television, etc. there are lots of marketing channels, but you have to select most appropriate and effective marketing channel to boost up your business. You may also choose to hire the services of a professional marketing company for the promotion and branding of your home inspection business.
- Accounting: You can hire your own staff or outsource record keeping and proper recording of all monetary transactions of your home inspection business. You cannot ignore proper recording and accounting. Mostly every State law requires maintaining such records for reporting and taxing matters.
