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Maybe you started out as the household handyman and slowly developed a knack for plumbing or maybe you apprenticed as an electrician from your teens, but either way you have honed your skills to that of a true craftsman and realize it’s time to step up your game. Whether you are or are considering becoming a general contractor or a specialized trade, getting your contractor’s license can substantially increase your trustworthiness to prospective clients, not to mention boosting your business potential from weekend spending money to an impressive annual income. This isn’t something to pursue lightly though as the licensure process requires a great amount of dedication, studying, and follow-through, as well as meeting certain stipulations and paying for the testing and/or certifications. Hopefully this article can help shed some light on a somewhat-intimidating process and help you feel better prepared to don your thinking cap (or hardhat).
Do I need a license?
First and foremost, what are your business aspirations? Are you content to be a weekend warrior who slaps up a few coats of paint or fixes the elderly neighbor’s leaking pipes? If so, you’re probably fine just to run a side business. If however, you want to focus on your trade as your primary source of income or increase your business reputation as a solid and reliable company to do business with, a contractor’s license can prove invaluable. Most states have certain stipulations as to what actually requires licensure in regards to the dollar amount of the job at hand. Some states identify certain project costs as a requirement for licensure while other states have classifications of responsibilities and the extensiveness of the project to deem what license would be required. As with most things you can find plenty of companies online that are there to help “ensure” you can pass the tests but the most reliable place to find out the ground rules are with the actual state you hope to be licensed with. All states have a government appointed board or commission of some sort who are in charge of licensure requirements, testing, and certification. It’s fairly easy to find these with a simply internet search based upon your state or the state in which you hope to be certified. Make sure you fully understand any and all fine print in regards to your actual trade. For example, many states have a set of requirements to be a general contractor but slightly different terms for a subcontractor trade (such as masonry, electrical, plumbing, etc.) or to be a construction manager. Some offer “umbrella” licenses, some require independent certifications. It might seem tiring to read all of the legal wording and boring government documents, but being completely armed with the knowledge of what you need to do and how to do it is crucial to your success in the licensure process.
How do I get a license?
Again, this will vary hugely from state to state, but all states have a very set process which you’ll have to follow in regards to your testing and approval for licensure. This information can also be found usually found with the standards and requirements for applying so as you search out the fine print of what is required to be licensed, also make notes on this process as well. If you know of or are friends with a reputable contractor or someone who recently received their license, they could also be very helpful in guiding you in the process. Back to those internet companies…There are numerous institutions and websites who can help you prepare for the testing you’ll have to complete. Some are solely internet based, some mail out materials, and some offer classroom instruction. You definitely don’t want to go take the test and be totally unprepared so finding some sort of study help and guidance is highly advisable. However, make sure that you are dealing with a reliable source and not “Joe’s Contractor License and Cosmo School”. Obviously there are lots of businesses that would love for you to hand over your credit card information so they can help you prepare for the test and then they prepare to max out your card, so be aware. In general though, you’ll be able to tell the reputable businesses by their standards and the materials they can help you study with. It is definitely not a requirement to use an outside study-source to be able to pass the tests, but if you are the kind of person who just knows how to get jobs done and isn’t so familiar with formal rules and regulations, this could really be an asset in helping you prepare. If you aren’t interested in an outside source, consider again asking a friend or mentor for direction as well as looking on your governing state’s website for study and reference materials. Most libraries and bookstores will have general resources as well.
There will be certain applications, paperwork, order of procedure, and deadlines for each state so make sure, again, that you know the requirements and what papers need to go where and when. The actual testing might take place only a few times a year or in only one or limited locations, so make sure you plan accordingly for these details. Also, make sure that you have your legal details worked out and decided on as well, as you’ll have to apply as a sole proprietor, LLC, etc. and in some cases might have to provide more detailed plans or information on your business’s current standings or future projections.
What benefit will I get from a license?
As mentioned before, if you really want to break into the big-time projects you’ll be required to have a license so that the state knows you are truly competent and clients have a certain standard to expect from your work. You will also be eligible to bid on government, municipal, industrial and private contracts which, we all know, can make serious money or provide long-term on-going work. You’ll enjoy a more respected professional “renown” as people will find reassurance in your abilities knowing that you have met and surpassed the state’s standards as opposed to someone who can only claim their abilities. Also, most companies that offer insurance and bonding look more favorably on a licensed contractor since they can rest assured that the state or governing board has weeded out the most dangerous and incompetent applicants. You also will be provided protection from penalties and restrictions, as unlicensed contractors caught performing jobs that should be done only by someone licensed can be fined, forbidden to continue working, or a combination of the two. Not that most of us don’t bend a rule now and again, but it pays to be on the “up-and-up” in this line of work. Also, consumers aren’t actually required to pay someone who isn’t state-licensed, plus there are certain benefits and assistances provided to contractors who might need help with small business plans, finding insurance, or need mediation to settle a dispute with a client.
I’m licensed, now what?
Start making money! Seriously, enjoy your accomplishment and use it to boost your business as you can now move onto more complicated and lucrative projects. Do not abuse the privilege because not only will your reputation be forever tarnished but if you misuse or misrepresent yourself and/or your business it can definitely end in jail time. In some states, if you bid on a project, collect payment in partial or in full and fail to complete the project within the parameters or the contract or agreement, it can be considered a felony. Also, make sure you are well aware of what will be required to keep your license up to date. Just because you’ve been a well-known contractor for 15 years doesn’t mean that the state will just assume you’re going to continue operating. Different states have different amounts of time before licensure will expire and many states will mail out a renewal reminder or application a few months before expiration, however it isn’t the state’s responsibility to make sure you stay current so be sure to set a reminder or mark your calendar well in advance to renew any and all licenses as needed. Obviously in our digital world, many states have online applications and/or renewals so you might be able to renew your license without ever leaving home. A contractors license might seem intimidating to earn, but it is truly an investment in your future and definitely boosts your chances of success so do whatever is necessary to successfully complete the licensure requirements, to keep the license current, and above all, to maintain your reputation as a contractor.
My name is Jeff and I created this blog in 2007 to help and inspire contractors and home service providers. It’s come a long way since then.