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How do I Become a Licensed Contractor?

By Carol Francois
Updated Feb 24, 2024
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Every state has their own rules and requirements if you want to become a licensed contractor; someone who has passed the state exam for all contractors. If you move to another state, expect to have to take the state exam to become a licensed contractor, regardless of your status in your prior state.

An unlicensed contractor who has accepted more than nominal work can be assessed a fine. He may also find that they are unable to sue for non-payment of a construction contract. Most customers will not hire an unlicensed contractors, as they are not protected under state law and lose the right to sue for poor workmanship.

There are three steps to become a licensed contractor: meet the minimum qualifications, register your business, and pass the written exam. There are certain minimum requirements before you are eligible to become a licensed contractor. Although the requirements vary by state, there are several items that are consistently required by all states.

All applicants must be at least 18 years of age with a high school diploma or its equivalent. They must be United States citizens or have legal residence status. Applicants must have legally registered their businesses and may be required to provide proof of financial resources to operate a business. Letters of reference and proof of experience or related education are also required.

To register your business, you must submit a business license form to the state business office. They will require the business name, primary business address, types of services provided and owner's information. There is a fee associated with registering a business. Many states require all contractor business to pay a state license bond. In addition, a licensed contract must have proof of liability and workers compensation coverage.

The licensed contractor exam is usually a multiple choice test. The test varies in length by state, but range between one and two hours long. The purpose of the exam is to ensure that all contractors have a minimum level of knowledge about business and the trades.

The exam itself has a wide range of specialties, designed to cover all the skilled trades. Select the area that you are going to focus your business on and write that exam. People who are going to become general contractors may be required to write more than one exam. A common example is a licensed plumber who is going to open a general contractor firm. They will need both a plumber license and a general contractors license. However, this is only required if they are planning to compete the work themselves.

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Discussion Comments
By ceilingcat — On Jun 07, 2012

If you are going to hire a contract, definitely don't hire someone who is just interested in becoming a licensed contractor. Hire someone who already is a licensed contractor, and make sure to actually check to see if they are licensed, don't just take their word for it.

A friend of mine hired and unlicensed contractor to do some work on her home. He did a terrible job, and when she went to sue to try to get some of her money back, she discovered she couldn't, because the contractor wasn't licensed. She ended up having to spend even more money to hire an actual licensed contractor to fix the damage.

By starrynight — On Jun 06, 2012

@indemnifyme - State licensing seems to be fairly similar for most things. I have a friend who does real estate, and she had to go through a similar process. She took a class, then took the state licensing test, then applied for her license.

Anyway, I can't imagine why anyone would want to work as a contractor without getting the proper license. I know for most professions that you need licensing for, there are penalties for practicing without a license. It seems like it would be more economical to just get the license and then start your business!

By indemnifyme — On Jun 05, 2012

I have a state license in insurance, so I had to go through kind of the same process someone has to go through to become a contractor. I also had to pass a written exam.

However, in order to even take the exam, I had to fulfill certain qualifications by taking a class that was approved by the state I imagine some states may require contractors to take a class, or perhaps work experience is sufficient.

I also didn't have to pay to get a business license, but I did have to pay a fee in order to take the exam. And in most places, if you fail, you still have to pay to take it again!

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