Becoming own GC in Philadelphia

[Chris Burns]

Hello BP Forum!

I am interested to learn more about the process to become my own General Contractor in Philadelphia for investment rehabs which are single family or two-family units that I own, and would like to get your advice and opinions on some of the choices involved.

Per the L&I web site, I understand that I should register as Home Improvement Contractor and have a Commercial Activity License:

Contractor Requirements All work must be performed by a licensed Philadelphia Contractor with the following exceptions

Work may be performed by an owner residing on the premises of an existing one or two family dwelling.
Work may be performed on an existing one or two family dwelling by a registered PA Home Improvement Contractor maintaining a Philadelphia Commercial Activity License.

So in this case, I wouldn't need to be a full-fledged licensed Philadelphia Contractor, correct?

Thus my questions are:

• Would you advise forming an LLC for my contracting "business" which will not have any customers to start other than myself. Or would a sole proprietorship work better? I am primarily concerned about optimizing for tax benefits here rather than customer liabilities. However I should be concerned about vendor liabilities, which brings me to my next question.
• What kind of insurance would I need to have?
  • The requirements for a licensed Philadelphia Contractor include $500k general liability, $300k automobile, and $100k/$100k workers comp accident/employee and $500k total policy limit
  • Would I need all of these? I don't plan to have my own business automobile. 
  • And wouldn't I want to shift the worker's comp burden onto any sub contractors I hire, thus meaning that I really should only carry general liability insurance?

Any other advice or concerns you think I should be aware of?

Thanks in advance!

Chris