Contractor Licenses

Home improvement, renovations, and other major work involving construction elements mean property owners are entrusting the welfare of their building to professionals. As a result, these professionals require licensing and regulations they must abide by.

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About this license

What to Know Before You Apply

The agencies that regulate this kind of work set the licensing rules, and they differ from place to place. We confirm which licenses apply to your business, file the applications and track renewals.

Requirements depend on your state and, in some cases, your city or county
Many businesses need more than one license or permit
Each license is renewed on the schedule set by the issuing agency

Contractor licensing guide

How to Get a Contractors License

To get a contractors license, you confirm which agency licenses your type of work, document your experience, pass any required exams, secure a surety bond and insurance, and submit an application for the business. A general contractor license, a specialty contractor license and a local contractor registration are different credentials, and many contractors need more than one of them.

This guide is for business owners, tradespeople going out on their own, and companies expanding into new states. Licensing matters because unlicensed contracting can bring fines, stop work orders and contracts that are hard to enforce, and most building departments will not issue permits to a contractor without proof of an active license.

For a small business, the licensing process usually involves multiple licenses: a state license for the trade, business registration with the secretary of state, and local permits for each job site. Keeping a clear record of your licensing requirements helps you stay in compliance as the company grows and takes on new clients.

Identify the license you need

Contractor licensing is handled by states and local governments, not the federal government. Check the state contractor board, then your city or county. Some states license general contractors statewide, while others license only certain trades and leave general work to local registration.

Meet the experience requirements

Most boards ask for proof of relevant work experience. California, for example, requires four years of journey level experience in the classification within the last 10 years and the experience must be verifiable, per the Contractors State License Board.

Pass the exams

Many states require a trade exam and a business and law exam. The NASCLA accredited exam can satisfy the commercial general building trade exam in participating states, but you still apply to each state separately.

Bond, insure and apply

Buy the required surety bond and general liability insurance, add workers compensation if you have employees, register the business entity, and file the license application with fees and background checks.

Contractor license requirements

Contractor License Requirements by Type

Requirements change with the license class, the size of the jobs you take and the state where the job site is located. These are the areas almost every licensing board reviews.

General contractor license

A general contractor license lets a business take prime contracts and coordinate multiple trades. In Florida, a person must be certified or registered to engage in the business of contracting, and certification requires passing the board approved examination.

Some states set a dollar threshold. California requires a license for construction work valued at $500 or more in labor and materials, and it is illegal to split a job into smaller contracts to stay under that limit.

Specialty contractor license

Electrical, plumbing, HVAC and roofing work usually requires its own license even if the business already holds a general contractor license. Texas, for example, licenses electrical contractors and air conditioning contractors through the Texas Department of Licensing and Regulation while general building is handled through city registration and permits.

In Washington, specialty contractors can only perform work in the specialty they are registered in and cannot hire subcontractors outside it, according to Washington L&I.

Surety bond and insurance

A surety bond protects customers if the contractor fails to meet its obligations. California requires a $25,000 contractor license bond. Washington requires a $30,000 bond for general contractors and a $15,000 bond for specialty contractors, plus general liability insurance of $200,000 public liability and $50,000 property damage or a $250,000 combined single limit.

Tennessee ties general liability insurance to your monetary limit and requires workers compensation unless you prove an exemption, according to the Tennessee Board for Licensing Contractors.

Financial and business requirements

Many boards review financial stability. North Carolina requires applicants to meet a minimum financial requirement based on the license limitation and to pass an exam, but it has no general insurance or bonding requirement for the license itself, per the NC Licensing Board for General Contractors.

Virginia requires a surety bond form only from Class A and Class B applicants, according to the Virginia Board for Contractors. If you operate as an LLC or corporation, the entity must be formed and in good standing before the license is issued.

Before You Submit Your Application

Business entity registered with the state and an EIN obtained
Qualifying individual identified, with experience records and references
Exam results, including any NASCLA transcript sent to the state
Surety bond, general liability certificate and workers compensation proof
Fingerprints or background check completed where required
Local business license and contractor registration for each city where you pull permits

FAQ

Contractor License Questions

How long does it take to get a contractors license?

Plan for several weeks to several months. The timeline depends on exam scheduling, how quickly your experience can be verified, background checks and how complete the application is when you file it.

Do I need a contractor license to do small jobs?

It depends on the state. California sets the line at $500 in labor and materials. In Pennsylvania, home improvement contractors who perform $5,000 or more of work per year must register with the Office of Attorney General, and contracts over $500 must be in writing.

Can one license cover several states?

Usually not. Each state issues its own license. The NASCLA commercial exam is accepted by a list of participating state agencies, which can save you from retaking the trade exam, but bonding, insurance and business requirements still apply in every state.

What happens if I let my contractor license expire?

Most licenses renew every one or two years with a renewal fee, updated insurance and, in some states, continuing education. Working on an expired license is treated the same as working without one, so track your expiration date for every license you hold.

How do I keep my contractor license in compliance?

License renewal schedules are set by each board, and many require continuing education, a current surety bond and proof of workers compensation insurance coverage at renewal. Maintaining an active license also means notifying the board when your address, qualifier or business entity changes. A renewal calendar for every license you hold helps you stay informed of deadlines.

Is a residential contractor license different from a commercial one?

Often, yes. Many states separate residential and commercial work, and some regulate residential remodeling through home improvement registration instead of a contractor license. Pennsylvania, for example, requires most home improvement contractors to register with the Office of Attorney General before working for homeowners.