For a variety of reasons, including safety and accountability, most states in the United States require contractors to be licensed to work legally. For those starting or growing a construction business, it’s important to know about which types of licenses exist, why they’re necessary and how to obtain one.
Here are a few of the multiple reasons why licensing is often a necessity rather than an option, including the basic safety of both the contractor and the customer:
If contractors do not have a license, they can lose jobs and pay fines in some states. [Read more about how virtual reality is changing construction.]
Most states in the U.S. require contractors to have a general contractor license to work legally. Others don’t require any license, no matter what type of work you do. You only need to register with the state contractors’ board or the local department of labor.
In many states, there are a few different types of general contractor licenses. Sometimes, the license you need depends on the value of the job that you’ll be doing. For example, in Arkansas, you need a residential builders’ license for any jobs worth over $2,000, a residential remodeler limited license for work up to $50,000 and a commercial license for all jobs more than $50,000. In Mississippi, you’ll only need a license for jobs with a value of more than $50,000, but in California, you need a license for any job worth over $500.
In other states, the license you need depends on whether you are working on residential or commercial buildings or other types of projects. Some states require licenses for residential work only or remodeling and renovations but not for new build work. For example, Minnesota requires a license for residential building and remodeling jobs, but not for commercial contractor jobs. However, all contractors must register with the state.
While each state has different requirements for getting a license, here’s a brief list of what you can expect when acquiring a license in most states:
Most states issue their general contractors’ licenses through either the state contractors’ board or the department for labor, so those should be your first inquiries. It’s also important to check your local county or municipal boards for local licensing requirements.
A “specialty contractor” license refers to contractors who are licensed as experts in one particular field. Most states use the Construction Specifications Institute codes to divide construction work into 16 specialties, although California recognizes more than 40 different types of contractors. In these states, specialty contractors like carpenters, painters, electricians and roofers each have different licensing requirements.
You can find out whether you need a license to work as a carpenter, painter, roofer or heating, ventilation, and air conditioning technician in your state by checking with your state’s licensing boards and departments. Like with general contractors, you may need to get another license at the local level, through the municipality or the county, so check your local requirements as well as your state requirements.
You’ll need to check the license requirements for your state to know exactly what to do to get a specialty contractor license. But you might be asked for some or all of these requirements:
Most of the states that demand a specialist contractor license require you to apply for just one specialization. That means that if you’re thinking of becoming licensed as a carpenter, for example, you’ll have to give up on all electrician jobs. Other states allow you to carry out any specialized work as a handyman as long as the value of the job is under a certain amount.
Some states consider being a handyman as a specialist contractor field on its own but most states don’t classify it as a specialization. In most states, either you’ll be able to work as a handyman without a license or you’ll need a general contractor or remodeler license.
While a specialty contractor license refers to contractors who are licensed as experts in one particular field, a general contractor license is for those who complete or oversee entire projects. Two types of general contractor licenses exist: Class A general engineering contract license and Class B general building contract license.
Specialty contractors have Class C licenses and are often better for contractors who work in a specific niche. Those with a specialty contract license often work as subcontractors or are hired for smaller projects within their niche. Specialty contractors will oftentimes be hired to complete jobs, such as painting or lighting, for projects that general contractors oversee.
If you’re a general contractor looking for an easier way to estimate construction costs for projects, consider using construction estimating software.
Although getting a license requires some effort, there’s no need to be worried. Read up on the requirements for your state and specialization, get the experience and pass the exams that you need and get to work.
Evyatar Sagie contributed to this article.