Meeting Basic Requirements
Meeting Basic Requirements
Decide on your license class. In many areas, you must apply for a contractor’s license of a certain class. Usually, the class is determined by the monetary value of projects contractors will undertake. For example, Class C contractors might be limited to working on projects of $10,000 or less, Class B contractors on projects up to $200,000, and Class A contractors may be able to work on projects of any value.
- Fees and insurance requirements may vary by contracting class.
- Working on projects outside of the limits of a contracting class is a violation of regulations. Disciplinary or legal action can result.
- Seek the contracting class that suits the types of project you want to do, as well as your company’s financial and physical abilities.
Choose a specialty, if desired. In many locations, you may be classified either as a “general contractor” or a “specialty contractor.” ] General contractors, as the name implies, oversee many aspects of a project, while specialty contractors focus on a specific area. Common specialties include:
- Appliances
- Awnings, coverings, and screens
- Boiler, steam, and process piping
- Cabinetry and finish carpentry
- Closets
- Concrete
- Demolition
- Drywall
- Electrical
- Excavation
- Fire protection
- Flooring
- Glass and glazing
- Heating, ventilation, air conditioning and refrigeration (HVAC/R)
- Landscaping
- Masonry
- Plumbing
- Roofing
Name and register your company. If you want to practice as a contractor, you will need to officially register a company with your state and/or local authorities. Your contractor’s license will then certify that this company can operate. You must first determine that your intended company name is not already taken. Many states will have a name availability form you can fill out, or an online database you can check to see if a company name is not yet taken.
- You also need to decide on your contracting business’ structure (sole proprietorship, limited liability corporation, etc.).
- If you plan on hiring employees other than yourself, you should also request an Employer Identification Number (EIN) from the IRS.
- Make sure to pay any fees that are required to register your business and/or its name.
- In some states, you must also designate people to serve as your contracting business’ management and qualified individuals (those with the appropriate training/experience in the contracting field). These may or may not be the same people, depending on how your business is structured.
Pass the contractor’s examination. Each state will have a required examination or set of examinations that contractors must pass in order to legally practice. These exams might be composed of multiple topics, some dealing with business aspects and others with technical and trade practices.
- Contact the International Code Council (ICC) for information about contracting examinations that are applicable in your area.
Purchase insurance and a bond, if required. In many locales, you must purchase special insurance in order to practice as a contractor. Since contracting work is often dangerous and involves large amounts of money, this insurance protects you against liabilities and covers any losses. In addition to or instead of insurance, you may be required to purchase a surety bond. This is essentially protection against loss in case you are unable to finish a project or complete it satisfactorily.
- The amount of insurance or bond that you must purchase will vary depending on your location and the type of projects you will do. However, expect it to be substantial.
- You will need to show proof that you have purchased the insurance or bond in order to receive your contractor’s license.
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