How to become a contractor: The real costs

Near the end of 2022, Statistics Canada reported that vacancies for both contractors and skilled labour roles were at a record high, and that there weren’t enough people to fill them. Enrollment in apprenticeship-based certification programs has been minimal or even stagnant in recent years. There’s a significant gap, and if you’ve got the skills, it’s an excellent opportunity to find work or flex your entrepreneurial muscle.

This overview shows what’s involved in starting a contractor business in Canada, including details about qualifications, managing your finances, choosing a business credit card, and building a home renovation company that’s set to thrive.

What do you need to become a contractor?

No two career paths are the same, but there are some general guidelines for becoming a contractor in Canada. Interest and a knack for being handy are key. You can complete a college-level skilled trades program (brick and stone masonry, cabinetmaking, plumbing or HVAC, for example).

Of course, a combination of hands-on experience and formal education is common in construction roles, and both elements are valuable on the job. Contractors may also have a university degree in civil engineering or a college diploma in construction technology, but extensive experience in construction is often a substitute for formal education in this field. Also, experience as a construction supervisor or a similar role is favoured, especially if you’ll be managing a team of sub-contractors.

Some contractors earn a master’s degree in construction project management, while others go directly into the trades after high school, upskilling and earning certifications over time.

But there’s more—depending on the type of work you’re completing yourself, professional trade certifications may be required. For example, electrical work requires trade certification in most provinces. Read more information on these regulations.

How do I set up my contractor business?

Each province and territory has its specific requirements for setting up a business, but they generally follow the same formula:

• Determining which licenses, certifications and other industry regulations apply to your business
• Deciding on a business structure (sole proprietorship, partnership or corporation)
• Finding out which sales taxes you’ll need to collect from clients (HST or GST)

You should also speak to a financial professional such as a small-business accountant or financial advisor about managing your finances as a new business owner. Once you’ve taken care of these necessities, you can start marketing your business to prospective clients.

What do I need to know about managing my finances as a contractor?

No matter what type of construction business you launch or buy, it’s important to have a bookkeeping system in place—between material expenses, insurance fees, client payments and more, you’ll have a lot of money going in and out each month. You’ll need a separate bank account and line of credit for your business, and it’s smart to have a credit card that’s solely for professional use.

Pro tip: Choose a credit card for contractors

Scotiabank has a small-business credit card that’s great for contractors: the Scotia^® Home Hardware PRO Visa^† Business Card, which can be used wherever Visa is accepted. Its variable interest rate is tied to Scotiabank’s prime rate, and credit limits of up to $500,000 are available (a limit high enough for larger, or multiple, renovations). The card’s interest rate and credit limit depend on whether the account is secured or unsecured, subject to approval and the security provided. The Scotiabank Prime Rate is the prime lending rate published from time to time by The Bank of Nova Scotia. (See the current Scotiabank Prime Rate.) The card has no annual fee, and it has an interest-free grace period of 21 days on new purchases.

And then there are the rewards. You’ll earn one Scene+^TM point for every dollar spent on eligible business purchases made at Home Hardware, which has more than 1,000 locations across Canada, or online at homehardware.ca.

For every 10,000 Scene+ points you collect, you can redeem $100 at Home Hardware. If you’re regularly buying construction and renovation materials, you can accumulate points quickly—and get a lot of free stuff. Points can be redeemed for groceries, travel, gift cards and more. Plus, as your contractor business grows, you can add supplementary credit cards at no cost. These are great perks for entrepreneurs who want to minimize spending while getting their home renovation business off the ground.

The business credit card also includes insurance protection on most newly purchased items charged to the account. Most newly purchased items are covered for 90 days by Purchase Security, and these items may be eligible for replacement, repair or reimbursement if they are stolen, damaged or destroyed by fire.

Cardholders also have access to optional business loan protection insurance, Scotia Business Loan Protect, which can help cover business loan payments, or provide a lump sum of money, if you or another eligible key person can’t work for health reasons or passes away. Scotia Business Loan Protect is underwritten by The Canada Life Assurance Company (1-800-387-2671, www.canadalife.com) under a group policy issued to the Bank of Nova Scotia. All coverage is subject to the terms and conditions outlined in the Certificate of Insurance, which you will receive upon enrollment.

You can apply for the Scotia^® Home Hardware PRO Visa^† Business Card online. Plus, until May 31, 2024, you can earn up to 15,000 bonus Scene+ points in your first year (that’s worth up to $150 in points value) by making at least $1,500 in eligible purchases at participating Home Hardware, Home Building Centre, Home Hardware Building Centre, Home Furniture locations in Canada and online at homehardware.ca in the first three months after opening your account. Cardholders also have access to online tools and services designed just for business owners. See Scotiabank’s website for full card details.

Building a successful career as a home renovation contractor

If you have the skills and motivation needed to become a contractor in Canada, you have the potential to build a lasting, rewarding career in home improvement. Over time, you might find that the Scotia^® Home Hardware PRO Visa^† Business Card is just as important to your contractor business as any other tool in your belt. After all, every dollar matters to your small business—so make them count.

Read full details about the Scotia^® Home Hardware PRO Visa^† Business Card.

More about home renovations:

• Are home renovations tax deductible in Canada?
• How much are solar panels in Canada?
• Heat pump vs. furnace—which is the better option in Canada?
• Multigenerational Home Renovation Tax Credit: What is it and do you qualify?

About Erin Pepler

Erin Pepler is a freelance writer based in the Toronto area. A frequent contributor to MoneySense, she is also the author of Send Me Into The Woods Alone: Essays on Motherhood.