What is a General Contractor’s License?

A contractor’s license is important for contractors to demonstrate their credibility and have an edge in the market place. Getting a license can take several months and varies from state to state. While a contractor’s license is generally good for 2 to 4 years, it should be consistently renewed. A license addresses construction business issues such as legal, insurance, knowledge and experience. However items such as a business plan are also important for successfully operating as a building contractor.

What all does it take to achieve a general contractor’s license? For starters, there are expectations of skills and experience in running a construction business. There are expectations of supervision, such as the background in overseeing the construction field during a build operation. Getting a general contractor’s license also requires items such as a criminal background check, and review of any potential lawsuits against the contractor or his/her business. Other general contractor’s license expectations include liability insurance, worker’s compensation and the ability to get building permits. Some of the requirements which vary by state include amount of experience, a background of financial health and non-bankruptcy, and exams of both trade and business focus. Every state of the U.S. has a different set of requirements for getting a contractor’s license. Some states have more complicated requirements than others. Requirements can vary based on expectations in one state more on business knowledge versus more construction experience in another. Overall, achieving a general contractor’s license typically requires a few months’ time.

Why is a general contractor’s license important? It gives an advantage to contractors in a variety of fields such as renovation and general commercial construction. As a point of clarification, aspects of building such as electrical, mechanical or plumbing, are not covered in a general contractor’s license - they have their own licensing structures.

The process of getting a contractor’s license typically begins with an application, at which point the state should approve the paperwork and set up the assessment for the applicant. The testing is based on state codes and covers issues such as business, legal, construction and the Uniform Building Code. Applicants must pass the test and then cover fees for license, liability insurance and workman’s comp, and bond. Licenses are good for 2 to 4 years depending on the state and should be renewed on an ongoing basis.   

Licensed general contractors can charge more than unlicensed contractors, and can promote their licensing to attract clients. In this way, a general contractor’s license should be a founding factor in the contractor’s business plan. Following building trends is another important factor in a contractor’s business; not every project will be the same. However even a licensed contractor needs to hire a certified supervisor to supervise construction trade work.

All in all, a contractor’s license proves a good establishment of knowledge and expertise in the construction industry, and provides a business edge to thrive and grow in the industry.