Once you decide to apply for your contractor license, the real hard work begins.
This can seem like an overwhelming task at first, especially if you’ve never had to go through this process before, but with careful planning and preparation, you can get it done quickly and easily.
Here are seven things you should consider before getting your contractor license.
1. Why Do You Need A Contractor License?
In order to protect yourself and your business, you need to make sure that you are operating legally. Depending on the type of business you have, you may need one or more business licenses and permits.
Before you can get your contractor license, you first need to determine if your business needs one. Depending on the type and size of the project, some states and municipalities require contractors to have a license with surety bonds.
If you’re not sure if your business needs a license, check with your local city or county clerk’s office. Remember, trustworthy contractors are those that have all the required licenses. So not having the proper licenses may mean that you are not considered reliable and may not get much business.
2. Decide What Kind Of Business Licenses You Need
Before you can apply for your contractor license, you need to decide what type of business entity you will be operating as. Will it be a corporation, sole proprietorship, or LLC? Each type has its own pros and cons, so this is a crucial decision.
If you are unsure which kind of business structure is best for you, consult with an attorney.
In addition to deciding on the best structure for your company, it’s important that you decide on the types of work that your company will do before applying for your contractor license.
3. Start Learning About the Contractors Board or Government
Depending on the type of business you want to start, you may need to get a contractor license. And to get your contractor license, you’ll need to start by learning about the contractors’ board or government department that issues them.
Here are seven things you should consider before getting started:
● What type of business do you want to start?
● Where are you located?
● What type of license do you need?
● How much does the license cost?
● What are the requirements for getting the license?
● How long will you need to get the license?
● What happens if you don’t have a license?
4. Check Your State Requirements
Every state has different requirements for contractors, so the first thing you need to do is figure out what yours are. The best way to do this is by contacting your state’s licensing board. They should be able to give you a list of the requirements you’ll need to meet.
For example, in North Carolina and Virginia, you’ll need to get liability insurance before getting your license. Other states may also require that you have public liability insurance, which protects against damages from accidents on construction sites.
Some states also have minimum age requirements. In Georgia and Wisconsin, applicants must be at least 18 years old. Whereas, in Maryland, you must be at least 21 years old. And in Pennsylvania, they must be at least 18 years old but under 27 years old.
So, considering your state, the rules and regulations may vary for getting your desired contractor license.
5. Take The Tests
Before you can even apply for a contractor license, you’ll need to take and pass two exams—a business and law exam, as well as a trade exam.
The business and law exam cover general contracting topics like business organization, contracts, estimating, insurance, and safety. The trade exam tests your knowledge of the technical aspects of your chosen contracting trade.
Before attending the exam, make sure you have the following things in your preparation.
● Determine the type of contractor license that you’ll need.
● Research the requirements for that license.
● Make sure you meet the requirements, which usually include passing an exam.
● Register for the exams and pay the fees.
6. Obtain Proof Of Insurance
As a licensed contractor, the first thing you need to do is obtain proof of insurance. This will ensure that you’re protected in the event of an accident or damage to property. But depending on the business type, one should pick up the right types of insurance.
There are a few things you should keep in mind when obtaining insurance:
● Make sure the policy covers both general liability and workers’ compensation.
● The policy should be valid for at least one year.
● The insurance company should be licensed in your state.
● The policy should have your business name and address listed as the insured party.
● You should have a certificate of insurance that lists the coverage limits and effective dates.
● Keep the original copy of the policy in a safe place; you’ll need it when you apply for your license.
7. Start Tracking Your Licensing Timeline
You can’t just wake up one day and decide you want to be a licensed contractor. It’s a process that takes time, patience, and planning.
Depending on the type of contractor license you’re applying for, the process could take anywhere from a few weeks to several months. Here’s a timeline of what you can expect!
● Research the requirements for the specific license you need.
● Start gathering the required documentation.
● Submit your application and documents following the appropriate procedures and pay other associated fees.
● Wait for your application to be processed.
● Schedule and take any required exams.
● Complete any additional requirements, such as completing an apprenticeship program or passing a background check.