Handbook / Licenses and permits

Contractor license: how to find out whether your trade work needs one

If you plan to do construction, remodelling, repair or trade work for pay, licensing is one of the first things to check. Rules are set mainly by states and local governments, so the answer depends on where you work and what you do. This guide shows how to find your answer and what usually comes with a license.

Who sets the rules

The SBA explains that the licenses and permits you need from the state, county or city depend on your business activities and location, and that local governments set many registration and permit requirements. For contractors that usually means three layers:

1. State licensing. Many states have a contractor licensing board that licenses general contractors, specialty trades or both.
2. Local registration and permits. Cities and counties may require contractor registration and issue building permits for specific jobs.
3. Federal requirements for particular kinds of work.

Kinds of work that are often licensed

While every state differs, licensing commonly covers:

• general building and remodelling
• electrical work
• plumbing and gas fitting
• heating, ventilation and air conditioning
• roofing
• some landscaping, pest control or pool work

Electrical, plumbing and gas work are often licensed even where general handyman work is not, because of the safety risks.

Job value thresholds

Some states require a license only above a certain job value or for certain types of project. Others license by trade regardless of size. Definitions of what counts toward the value, such as labour and materials together, vary. Read the actual rule on your state board's website rather than relying on a figure you saw elsewhere.

Federal lead-safe certification

One federal rule catches many small contractors and painters. The EPA's Renovation, Repair and Painting Rule requires anyone paid to perform work that disturbs painted surfaces in homes, childcare facilities and preschools built before 1978 to be certified, with their workers trained in lead-safe work practices. This applies on top of any state license.

What licensing usually involves

Requirements differ, but applying often involves some of the following:

• proof of experience in the trade
• passing a trade or business and law exam
• proof of insurance, such as general liability, and workers' compensation if you have employees
• a license bond in some states
• a business entity registration
• fees and periodic renewal, sometimes with continuing education

Start early. Exams and experience verification can take weeks or months.

Using the license

Once licensed, many states expect you to:

• show your license number on contracts, quotes and advertising
• use written contracts for jobs above certain values
• pull permits where required
• keep insurance and any bond current

Clients increasingly check licenses online. California's licensing board, for example, offers a public license check tool, and many other states have similar lookups.

Insurance alongside the license

Even where no license is required, insurance matters. General liability insurance covers claims of property damage or injury to others; the guide on general liability insurance explains it. Clients and property managers often ask for proof before you start.

Related trades without contractor licenses

Some service businesses, like pressure washing or cleaning, may not need a contractor license but still need a general business license, environmental compliance or specific certifications. The guide on business licenses covers the general license question.

A checklist before your first paid job

• Confirm the state license rule for your trade and job sizes.
• Confirm local registration and permit rules.
• Check federal certifications such as lead-safe work.
• Arrange insurance.
• Prepare a written contract template.

Working in more than one area

If you work across city, county or state lines, licensing multiplies. A state license usually covers work anywhere in that state, but cities may still require local registration. Working in a neighbouring state generally requires checking that state's rules, which may include a separate license; some states have reciprocity arrangements for certain trades, but you need to confirm them with the licensing board. Before you quote work outside your usual area, check the license, registration and permit rules there, and confirm your insurance covers work in that location.

Licensing is local. Check your state board, your local building department and any federal rule for your exact work before you take paid jobs, and keep license, insurance and renewals current.