How to Get a Contractor’s License & Become Licensed to Work Legally

water heater

We’re often asked – how do you get a contractor’s license and become able to perform the work a contractor does?

The answer is, it depends. It depends on the type of work you are wanting to do and the state that you desire to work in. If you are a contractor with a license in one state, that may not automatically make you eligible to do the same type of work in another state.

To view the requirements for the different types of work, we have made articles that address the requirements on a state-by-state basis – you can also simply find the state you live in in the menu on the navigation bar to the right.

This article will explain the more overall steps, and you will then need to dig in deeper to find out the more specific requirements. Some states have a lot of licenses licensed at the state level, like California for example, while others have more lenient licensing requirements determined at a local level.

For instance, California has 44 different contractor classifications that they use, and you will initially only be able to apply to one of the prior to passing the necessary exams.

If you want to do work in another state than the one you’re currently licensed in, you will need to see if the two states have reciprocity programs and how you go about getting the right license there too. Doing work without the necessary licenses will normally result in a fine for first time offenders, but if you get caught again, the punishment becomes a lot more severe. Even if a homeowner owes you money, you may not be able to sue to get it if you did the work while being unlicensed, which is just another reason why it is so important to get the right licenses and certificates.

In addition to some states being more strict in which contractors they license, the individual requirements to obtain the different certifications will also vary, which is why reciprocity programs are often not available.

There is generally both an exam on law & business, which covers different areas, as well as the skill you’re applying for a license in. So if you are hoping to become a licensed electrician, you not only have to prove that you know the electrical trade, but that you know the legal aspects too. Some states will have the applicant prove the financial ability to sustain the business, as well as post a bond.

Since a lot of trade licenses require that you can prove a significant amount of experience, the contractor boards approving your application for taking a trade exam will usually require proof of experience from former or current employers.

checklist

There are some requirements that are nearly identical between states, while others will vary. The ones that generally are the same are included below:

  • Prequalification for state projects: If you want to bid on a state project, prequalification is generally required and will be obtained through the Department of Transportation for the respective states.
  • Out-of-state corporations:¬†If you’re an out-of-state corporation wanting to do business in a state, you will need to register with the Secretary of State and obtain the necessary licenses.
  • Proof of no disqualifying criminal history: You may have to explain previous violations and citations, and certain criminal offenses will disqualify you from obtaining the desired license. The background checks may vary depending on the state.
  • Passport-sized photos: You need to provide the photos to be printed on your license.
  • Be able to show your occupational licenses: You need to be able to show any licenses you have.
  • Be legally allowed to work in the country: The different contractor boards will require you to present proof that you have legal residency in terms of U.S. citizenship or work permits.
  • Age: You will need to be 18 to obtain the licenses and have either a high school diploma or something of equivalent status.

Other requirements to obtain the necessary licenses often include:

  • State license bonds: You will need liability and workers’ compensation where you do business, but there are often bond requirements too. A contractor bond can be used by a homeowner when they have been financially affected by the work done by a contractor. It’s also a sign that you will do your absolute best at not making unethical decisions in the work provided.
  • Business licenses: A lot of cities require that you register as a business intending to take on work in a specific geographical location.
  • Tax authorities: Each state has different requirements and amounts they will ask you pay. Be sure to meet the requirements they present to you.

Prior to taking the necessary exams, you will need to submit an application to be approved to take the exam. Once it has been approved, you may proceed to take the required exams.

What Work Can You Do Without a License?

Although there is often a lot of talk about unlicensed versus licensed contractors, a lot of states will allow you to do some work without the need to be extensively licensed, the question is just what work that is and how much of it you’re allowed to do. Things like asbestos abatement, like the removal of asbestos siding, is pretty harshly regulated in a lot of states such as New York, whereas handyman work is often substantially less regulated, often allowing contractors to work on projects that are $500 or less.

And it makes sense why the rules have been put together in such a manner because they’re very different types of work. While asbestos is a material that is safe for as long as it is simply in its solid form without having been broken, if it breaks that is when the trouble starts happening since the air-borne asbestos particles can cause severe harm when inhaled. You’ve probably seen all those legal commercials for¬†Mesothelioma lawyers, which is a disease that can be developed as a consequence of contact with and inhaling of this dust.

On the other hand, handyman work, which may include things such as staining the cedar siding or installing a new door, does not need the same care and carries significantly less risk also.

Our best advice is that you research the individual requirements in your given state and take it from there. When you have first researched what the state-level requirements are, you should go ahead and also make sure that you live up to the city-wide regulations, since a lot of cities may at the very least require that you register with them to offer your services.

Research the Individual Requirements for the Different Trades

It could be that one type of license requires 1,000 hours of experience as an apprentice while the requirements for a different kind of trade has significantly different requirements, which is why we encourage you to specifically focus on the requirements for the type of trade that you’re interested in.

The Importance of Living Up to the Requirements and Continuously Doing So

Some people might be thinking that all it takes is for you to live up to the requirements, but it’s not quite that simple. You will need to understand how you also avoid potentially having your license revoked. Having it revoked would mean that you are currently in fact doing work without the proper licensing which is often pretty severely punished too, and increasingly if you’re doing it repeatedly too.

The first offense may not be punished all that much, but subsequent penalties will be substantial.

Making Sure That You Renew it When it’s Time

You will also need to make sure to properly renew the license you have so as to make sure it stays valid for that reason. It’s usually fairly simply, although it could require that you take additional continuing education as part of the renewal process, which is usually very straight forward.

Again, while it may seem tedious having to renew the license it’s one of the costs of doing business and is something that you will need to do to keep doing work legally. Getting penalized because you forgot to renew your license would be a shame.

Will Getting a License Impact You Negatively?

There might be negative consequences stemming from you getting licensed in a specific category, but although the advantages for you choosing to get a license should of course outweigh the disadvantages. While there are certain trades that you can do without a license as long as the project is a relatively small one, other trades require a license as soon as you get started because they require such expertise that your knowledge needs to be tested before you start.

The issue with getting a license is that it might sometimes limit you in the type of work you want to perform, although it again depends on the state that you currently live in and the correct advice is therefore dependent on what has been determined there. You could also be living in a state that doesn’t restrict you as a consequence of you getting a license in a specific trade.

The real question is what direction you want your career to be heading in. If you can’t do those little side jobs as a consequence of specializing, and it’s one of the things you really enjoy, then you simply might want to hold on a little bit with getting the license, but if you want the potential to make more money, specializing in a given trade is often the way to go about it.

Of course, needless to say, if a license is required for the work you’re planning on doing, our only recommendation is of course that you follow the appropriate legislation and get properly licensed.

General Contractor Licenses

While general contractors will need to know a thing or two about a lot of different things related to home improvement, a lot of states do not actually have a specific license named as such, although it doesn’t mean that the work that they’re doing isn’t regulated. Oftentimes the different states will simply have a different name for it, although it in fact does cover the responsibilities that a general contractor usually has. Very commonly the licenses go under the name of a construction contractor or something similar to it.

Residential vs Commercial

It’s also important to mention that some license categories may cover one of the two, but not the other. What this often means is that someone who has been licensed to do residential work may not necessarily do commercial work too, and knowing the limitations of the license is also important.

Limitations Within a Specific Trade

As well as distinguishing between residential and commercial work, another distinction to be aware of is that some states have different levels for different trades. It’s only natural that an apprentice does not have the same possibilities as a master electrical contractor who has 20 years of experience.

Can Licenses be Transferred?

We understand that if you are living in a state such as Texas but considering moving to Arkansas, Connecticut or another state that you would be interested in finding out whether you can actually have the license transferred between states. The answer to that question is not very simple. The different licensing boards will make reciprocity agreements with one another, but they’re all individually set up and trade specific. Even if it was the case that Oklahoma and Georgia have a license reciprocity agreement for plumbers, it’s not necessarily the case that they would have it for a trade like siding.

Some states will handle all licensing under one licensing board while other states may have different licensing boards and associations for the different trades. If you could see yourself moving to a different state at a later time, it might make sense to already read up on the license reciprocity agreements between the different states you’re considering moving to to see what your possibilities might be in the future.

For licensing boards to establish such agreements, they will usually require that partnering states have the same or very similar requirements for the different types of licenses. The most common licenses that reciprocity agreements have been established for include electrical and plumbing, which also happens to be the trades that states have state-wide requirements for.