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We are a central hub for everything you need to know to get your general contractors license. The licensing requirements are different for every state, so we have separate articles for every state in America. Each article details everything you need to know about getting a contractors license in that state.
You’ll find links to an article for every state just a little bit further down this page. Some states have complex requirements and processes to become licensed, but the articles below should answer all your questions and help guide you through the process. You can also see our “tool box” page for useful resources that every general contractor should know about.
As well as teaching you specifically how to become a contractor, we also feature helpful information on marketing your services, training to pass licensing exams, obtaining necessary insurance, useful software and other resources to help you run a successful general contractor business.
General Contractors License Information For Every State
Here is a list of links to licensing information for our most popular states. Check this list first, and if your state is not there you will need to check our page which lists every state in America. If your state is not listed below, click here to see the full list.
- Arkansas contractors license
- California contractors license
- General contractors license Florida
- Idaho contractors license
- Louisiana contractors license
- General contractors license NY
Contractor licensing requirements are different in every state, so be sure to go to the article specifically for your state and read through it. Some states require you to pass exams to prove business competence, some require proof of experience in construction. Some states have more requirements than others, but each article should have all the information you need.
What is a Licensed Contractor?
A contractor has the know-how, applied background and training necessary to get a general contractors license. They are primarily responsible for the supervision of an entire construction project. This could be anything from constructing a new office building or property, a room add-on, addition of a second story, landscaping services, home improvement, or getting a job finished that requires a building permit.
This includes full supervision of the work, scheduling of the subcontractors and compliance with the building codes. To qualify to become a licensed contractor you have to have the experience and skill set needed to run everyday activities of a construction business, most notably field supervision. Or, you should be represented by another individual with the necessary know-how and experience (e.g. in conducting certified energy audits or green building design or framing), who would be your qualifying person.
Contractors are unable to get licensed without having also passed an examination that covers business management competency. Other requirements include criminal background check, plus not possessing any outstanding open contracting grievances. A licensed contractor has worker’s compensation and liability insurance for his or her employees and can get and also sign building permits.
What are the advantages of this type of business?
With a license, you’ll have a significant competitive advantage in the marketplace for home improvement and other construction and renovation contracts. More and more homeowners are getting to be savvy and opt to hire licensed general contractors. Licensed contractors are subject to statutes put in place to safeguard consumers.
Being a licensed contractor means that you have met the mandatory minimum specifications for your line of work as legislated by all the states. As a licensed general contractor, you would not fix plumbing work, electrical as well as mechanical work; as these types of trades all have their own unique license requirements. Regardless, as an individual overseeing a building or rehabilitation project, you are going to want to be familiar with the specifications of multiple specialties.
The road to becoming licensed
State along with local ordinances throughout the United States mandate any individual hired under contract to carry out construction at a given property must be a licensed contractor with a state. To become a licensed contractor, there are certain minimum established requirements. By means of undergoing stringent evaluation and screening, you could become a licensed contractor.
Various other criteria determine whether a construction contractor can become licensed in each state, such as having a clean background, proven financial competency, maintaining a bond against bankruptcy, having a minimum amount of experience, and typically pass both business and trade exams. The procedure often requires several months in order to complete.
Even though the exact procedure varies by state, it usually begins with completing an application. When the state approves the required forms, a notice will be sent announcing the appointment to take the state assessment. The exam will cover areas, such as Law as well as Business, based on state codes, and construction based on the Uniform Building Code. Once you successfully pass the exam, the applicant must spend the money for compulsory license fees, post a bond, secure workman’s compensation and liability insurance if needed, as well as prove minimal working capital. Each license is issued for a set timeframe (for example, two to four years depending on your state of residence) and additionally must be continuously renewed to be able to continue to operate as a Licensed Contractor.
New licensed general contractors have worked under another licensed contractor and have identified things they need to do (or what not to do!) Your experience of working for an individual who did all the wrong things and knowing you could do it better may cause you to get your contractor’s license. You could potentially create a whole new fully licensed company by mixing your own license and credentials with other licensed general contractors. You may want to recruit students in training paired along with unlicensed construction industry professionals. Commonly, all published marketing material such as business cards, newspaper advertisements and also telephone book ads have to show your contractor’s state license number.
Some important things you should know
You’ll have a marketing advantage with consumers who are trying to find a trustworthy business to manage critical building and renovation plans. It is not necessarily surprising, however, to learn that an unlicensed construction contractor is less pricey when compared to a licensed contractor. Unlicensed contractors possess advantages that enable them to provide the lowest prices, like not paying for licensing charges, nor obtaining a bond to protect their work, nor do they purchase liability or workers compensation insurance policies. Without these added costs, an unlicensed contractor may offer their services for a price lower than the lawfully licensed contractor.
Unlicensed contractors will try to create work-arounds to cut back costs under project costs that trigger the mandatory use of an authorized contractor in a given state. They will do so in order to get construction work, although it might mean violating the law. This is simply not good business practice. An increasing number of consumers (with the help of government agencies seeking to protect the general public from fraudulent enterprises) have begun to stay away from anyone who offers to perform construction or specialty work that doesn’t hold a contractor’s license.
Most individuals and businesses want to know they are really hiring a respected contractor licensed by the state. Thus, an additional incentive to be licensed is the opportunity to get more work. A large number of homeowner policies require that a job must be done by a licensed building contractor and supply no insurance coverage for a job done using unlicensed individuals. The client may desire to not spend as much; however when homeowners or enterprises weigh any imagined financial advantages up against the potential consequences, it stands to reason to use a licensed construction contractor.
How to operate successfully
Upon getting your license, you should have a strategic business plan. Evolving economic conditions mean that large commercial jobs and extensive home renovations may not always become your main source of income. Experienced contractors follow the actual trends, remain flexible, and will take on small projects such as weatherization, electrical work and plumbing, and large jobs. Prosperous construction contractors do this by giving a comprehensive range of services to prospective clients.
While building contractors offer a suite of services to the general public under a registered company name, a construction contractor license does not by itself allow a contractor to perform or supervise regulated, construction-related trade work. The contractor must hire a certified supervisor in a full-time, proactive capacity. You must carry legitimate insurance coverage and obtain all of the necessary trades prior to starting a job. Contractors should just use their personal staff or that of another appropriately licensed contractor to carry out the project. Every single state calls for a contractor to register their own name and ownership, get a business license as a general contractor, in addition to a business license for any extra specialty trades (such as sign work or demolition).
To reach your goals and fully grasp long term company financial growth and revenue, you might need appropriate software solutions for construction accounting, marketing, expenditure estimates and project management software. Other necessary contractor skills involve in depth knowledge of building codes, blueprint reading, expense estimates and business development tools include sample letters, forms, guides, and processes based on best practices originated in prosperous building contractor enterprises.
Another important factor is the contractors liability insurance – one of the most essential assets you must get when venturing into general contracting. Choosing liability insurance can be tricky, therefore it is important to do your research well. Moreover, liability insurance can cover multiple areas besides injuries and property damage. Take a look at our breakdown to contractors liability insurance and make sure you have full coverage before starting your projects!
When you starting with your general contracting business you might feel discouraged by the competition. The key to a successful business is to use modern technologies that ensure your competitive advantage: green building, software, modern materials etc. Don’t forget to check out our infographic about the common challenges contractors are facing – you can find the infographic here. If you know what mistakes to avoid, you are off to a good start!
How should you find clients?
After having decided your strategy and setting up the technical details for running your business smoothly, the most crucial question every contractor will have is the issue with finding clients. As a newly licensed contractor you might feel intimidated by the competition who has worked on the field for years. However, by making smart moves and taking steps for proper marketing, you will never have to worry about that again.
First of all, you need to set up a nice-looking professional contractor website where you can showcase your skills, previous projects and enable people to contact you easily. Your website is the online “face” of your business. As 90% of your clients use internet search engines every day to find the best service provider for them, the importance of a visually beautiful and responsive website shouldn’t be underrated. If you are not completely sure on how to start with your contractor website, take a look at this article explaining a couple of essential points about contractors marketing.
The most important investment you will ever make for your business is investing in marketing, specifically online marketing. “If you are not visible online for your clients, you don’t exist” – this is the analogue you should keep in mind. Trust your online marketing to the hands of professionals and find a contractor marketing agency who will take care of lead generation, SEO, social media and even website design! This way you can concentrate on what matters the most – your clients – while your reliable marketing partner will take care of ensuring you have plenty of clients to provide your services to. The market is big enough for both you and your competitors so instead of worrying yourself about the success of other companies, put all your concentration on enhancing your business. If your provide your clients true quality and mesmerizing results, there is no reason to feel undermined by other contractors.
How to manage your business
The single most important aspect of your new business is establishing a bulletproof management system. On top of the to-do list is to find and implement a contractor accounting system that can manage your finances and keep you informed. Accounting goes a lot further than just calculating together the invoices and if you have some longer projects it can get very complex with managing the finances of the project. Therefore, you need to either hire an accounting firm or get an accounting program to help you out.
Though you could of course hire a bookkeeper, it is far better and cheaper to hire a firm instead. The firms have trained people who deal with finances on a daily basis and they can help you out with far more than just simple calculations. They can become your trusted financial advisors.
If you want to manage with your finances yourself, you can always use a contractor accounting system and find a suitable accounting program. Accounting programs are usually cheaper to implement and therefore suit very well if you are just starting up. Accounting software have everything set up already so you won’t have to do anything more than just fill in the stats and that’s it. Time and money saved – what could be better!
Another aspect to think about is hiring subcontractors and employees – a contracting business that is looking to expand will need to hire quite massively, hence sooner or later this is a question you are facing. A lot of the times the reason why contracting businesses fail is the fact they had put their trust in the wrong place. So you wouldn’t make the same mistake, don’t forget to read our advice on that!
Don’t forget about security either – that should be on top of your priority list! There are many key things to think about for keeping your construction business safe. From construction site security to even internet security, this is a topic you should not underestimate. Take a deeper look at our guide, explaining what you should keep in mind when creating a secure construction site and furthermore, take proper precautions to ensure your information is safe – internet fraud can lead to nasty stuff and if you want to protect your business and property, it’s absolutely crucial to start thinking about security systems right away. You can never be too safe!
As a general contractor, price is an issue you will come across on a daily basis. How to determine a good, competitive price? What do the terms overhead, net profit, gross margin mean? If you are assessing the value of your work blindly, meaning you don’t know exactly what is a profitable price, you will fail majorly – either by losing money as you realize the costs are far higher or a competitor will get the client with a better price. Therefore, it is essential that besides putting your concentration on subcontractors, safety and overall management, you need to learn how to determine a good price for your services. If you want to get some pointers, we have put together some guidelines that explain a few of the essential terms together with pointers on how to do the pricing correctly. You can check it out here.