Do you need a contractor license to be a handyman? This is a commonly asked question, and the answer depends on a variety of factors.
If you intend to become a professional handyman or contractor, and later start a business, it is important to understand the licensing laws of your state and city. Violating these laws can have major consequences, so you must familiarize yourself with them before going into business.
State and local regulations determine whether or not you need a contractor license to be a handyman. They generally depend on two main factors: the type of work and/or the value of a project (materials and labor). Small cosmetic repairs don’t require a license whereas big structural projects do.
If you intend to work as a handyman, here are some things you should know about starting your business and obtaining a contractor license.
Disclaimer: This article is not legal advice. You should consult your local building regulations and a qualified attorney for legal advice.
What Is the Difference Between a Handyman vs Contractor?
Before you begin researching permits and licensing laws in your area, you should know whether your state or city classifies you as a handyman or contractor.
For individuals with a diverse skill set, starting a handyman business can be an attractive prospect. Usually handyman work involves quick repairs, small jobs, and other tasks valued under a certain dollar amount, but laws will vary by state.
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Contractors, on the other hand, are typically involved in major work such as residential or commercial contracting, which often involves a bidding process. In most cases, the state that contractors reside in requires them to obtain all the necessary licenses before they can submit a bid.
Contractors may also specialize, so they work in specific areas such as construction, electrical, plumbing, gas, HVAC, or hazardous waste disposal. Contractors are often subcontractors of other, larger companies, and must have the ability to self-manage a project.
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Do You Need a Contractor License To Be a Handyman?
There are licensing rules and requirements associated with handyman work. The majority of states have what is referred to as a “handyman exemption” or “minor work exemption.” This exemption lays out the maximum amount in dollars that a handyman is allowed to charge for a job before a license is needed. The exemption also specifies what type of work you can do if you do not hold a license.
For example, a drywall repair worth less than $500 is unlikely to require a license in almost any state. Whereas a $10,000 project to build out an unfinished basement will almost certainly require a general contractor license as well as a building permit.
Other trade specific work may require more specialized contractor licenses. For example:
- Rewiring an old circuit or adding a new one requires an electrician’s license.
- Upgrading old plumbing in a bathroom to new requires a plumber’s license.
- Installing a new furnace requires an HVAC license.
A professional handyman should not attempt such projects without the proper license. But if you are outside of that type of work, the job is relatively small, and you have confirmed with local regulations, a contractor license may not be required to do handyman work.
It is important to note, however, that licensing criteria and laws vary from state to state. In some states, a handyman license may be required regardless of the work done.
License Requirement Checklist
Always consider the following items when determining whether or not you are ok to proceed with a project as a handyman.
- Liability Insurance Coverage – The state may require handymen to have adequate liability insurance to protect against lawsuits and other financial consequences as a result of an accident or damage to a consumer’s property.
- Maximum Labor and Material Dollar Amount – If you work on a job that goes over a certain dollar amount, such as over $1,000 including materials and labor, you may need a license.
- Type of Work Limitations – Your state may permit you to work as a handyman without needing a license if the project you are working on meets specific criteria.
To learn more about the licensing requirements of your particular state, visit the contractor’s board website for the state.
Once you find out what you need, you will need to pay close attention to how you market your company. Some states require unlicensed handymen to advertise the fact that they are unlicensed in their marketing materials. Other states prohibit marketing altogether.
Also, if a client asks you to perform a task outside of your scope as a handyman, you must decline the request.
How Can You Obtain a General Contractor License?
You may need a general contractor license if your state categorizes you as a contractor. To obtain this license, you must prove your competency in your trade as well as pass a general contractor examination (this exam is usually on your trade and business law).
The state licensing board may also ask about how much experience you possess, your financial status, and whether you have a criminal background. Your competency in managing a skilled trade company is assessed as well.
You should be prepared to share any paperwork showing the registered name of your business and legal entity.
If you wish to obtain licensing for a skilled trade, such as mechanical, plumbing, or electrical, you must learn more about your state’s specific licensing and exam requirements since these have more specific requirements than those for general contractors.
Once you receive your license, you will need to purchase a contractor’s license bond, liability insurance, and workers’ compensation insurance.
If you intend to form a limited liability company or corporation for your business, your business must possess all the necessary licenses the state boards require. If you are not interested in filing for a distinct company but plan on using an assumed business name (ABN, DBA, or “doing business as”), be sure to register that name if the law requires it.
Why Do You Need To Understand State Laws and Regulations?
There are numerous consequences associated with violating state and local laws. States take violations seriously and often conduct routine stings or sweeps of various job sites seeking out violations. They may also explore online ads to find illegal advertisements by unlicensed contractors.
If your LLC or corporation performs contracting work without the proper license, you could find yourself personally liable for any damages that occur during a contracting job. For this reason, it is important to fully understand the laws associated with contracting and handyman work in your area.
Why Is General Liability Insurance Important?
As a handyman or contractor, you must have the right insurance coverage. By purchasing general liability coverage, you can protect your business and reputation. General liability coverage protects your business from claims from third parties related to property damage, personal injury, and advertising injury.
The vast majority of states will require you to have some form of insurance to protect yourself from the inherent risks in your profession.
Having the proper insurance coverage is good for business, too. If your clients feel protected, they will feel more comfortable hiring you because they know they will be reimbursed if any mistakes occur. Before starting your business, research state insurance requirements first.
Keep State and Local Laws in Mind
Working as a handyman can be immensely rewarding as long as you are aware of state and local licensing requirements, such as understanding if you need a contractor license to be a handyman. By keeping these laws in mind, you can ensure your business operates lawfully and successfully.