To become a general contractor in Arizona, multiple licensing and education requirements must be fulfilled, and a completed application (with fees included) must be sent to the Arizona Registrar of Contractors (ROC). These requirements are not optional, and those who engage in contractor work without fulfilling them will be prosecuted to the full extent of Arizona law.
Besides passing the applicable PSI examination by at least 70 percent, and submitting a completed Arizona contractor License Application form to the ROC with a nominal fee, other important requirements must be met. Applicants must name Qualifying Parties and both must submit to a background check. Licenses are only issued to entities legally recognized by the Arizona Corporation Commission, such as sole proprietorships, partnerships, LLCs, etc. Make sure that you check out all of the information below and that you’ve met all of the requirements to become a general contractor in Arizona.
Arizona Contractor License Requirements
It’s important that those wishing to become a general contractor in Arizona understand all of that is required of them. This includes understanding exactly who needs a contractor’s license, minimum exam and experience requirements, and more. See below for these details and more.
Additionally, although surety bonds are required, it is important to note that Arizona law renders many forms of insurance elective; however, there is a strong case for choosing to acquire things like liability insurance. A certificate of insurance can protect you from many forms of risk on a project and may be necessary to secure competitive contracts.
Who Needs a Contractors License?
According to the official Arizona ROC website, “any business which contracts or offers to contract to build, alter, repair, add to, subtract from, improve, move, wreck or demolish any building, highway, road, railroad, excavation or other structure, development or improvement, or to do any part of the work must be a licensed contractor.”
That means that basically, any construction project done in Arizona is going to require a licensed contractor. This includes such activities as erecting scaffolding, connecting utility services lines, or any other mechanical or structural service or improvement.
The ROC makes clear that the term “contractor” also includes subcontractors, floor covering contractors, landscape contractors, and any consultants who claim the ability to supervise or manage a construction project. The state also provides separate licensing for the electrical and plumbing trades.
What Do You Need To Become a Contractor in Arizona?
Getting a contractor’s license in Arizona is a fairly straightforward process. The Arizona ROC has a complete list on their website of the nine things you’ll need to obtain a license:
- Identify a Qualifying Party: A “Qualifying Party” is somebody, regularly employed, with the necessary experience, knowledge, and skills as defined under A.R.S. § 32-1122(E). A Qualifying Party can be a sole proprietorship, one of the partners of a partnership, one of the members of a limited liability company, one of the officers of a corporation or an employee of the contracting business.
- Minimum Exam & Experience: The Arizona ROC License Classification Requirements lists out the minimum experience and types of examinations necessary for specific license classifications. Unless otherwise specified on their website, the Qualifying Party must have four or more years of experience to be eligible for a license, and must pass the Business Management Exam (BME) as well as the Trade Exam (unless eligible for a waiver).
- Acquisition of a Surety Bond: The amount of the bond will depend on your license classification and approximated annual gross volume. It will be your responsibility to seek out an appropriate bonding company.
- Passing the PSI Exams: As stated above, the Qualifying Party must pass the BME as well as the Trade Exam with a score of 70 percent of higher. The Qualifying Party can register at any time to take these exams through PSI’s online portal. More information on the BME and Trade Exam below.
- Background Check: Both the Applicant and the Qualifying Party must complete a criminal background check via the ROC’s online Licensing Background Check page.
- Form a Legal Business Entity: Licenses at the state level are only issued to legal entities recognized by the Arizona Corporation Commission. This includes registered sole proprietorships, partnerships, limited liability companies, and corporations. The AZCC provides resources for those starting a business, which can be found here.
- Proof of License Bond: The applicant must file a Contractor’s Bond in the appropriate amount. This amount varies depending on license type and completed gross volume. This can be a surety bond or a cash bond, and you may also provide a bond in the form of cash or a certificate of deposit from any bank which operates in Arizona. More bond information can be found here.
- Pay Applicable Fees: License fees cover a two year time period. The amount is dependent on the license classification and can cost anywhere between $580.00 and $1,050.00. More information on license fees can be found here.
- Government-Issued ID: Both the Applicant and the Qualifying Party both will need to submit a copy of their government-issued ID. The ROC website states that acceptable forms of ID include a valid driver’s license or passport.
- Completed License Application: The License Application Form can be found here. Send completed applications by mail to:
Registrar of Contractors
P.O. Box 6748
Phoenix, AZ 85005-6748Or deliver completed applications to:
1700 W. Washington Street
Phoenix, AZ 85007-2812
On top of these listed requirements, in the State of Arizona, you are also required by the Arizona Industrial Commission to obtain workers’ compensation insurance for employees, assuming that you have any. Per Arizona law, workers’ compensation must cover at least two-thirds of the employee’s average monthly salary.