Contractor Licensing Overview
Many States and even Local – County, City and Townships place Licensing and Insurance requirements on contractors. Each location that you work in will have a different set of rules and this can lead to some misunderstandings between the contractor the property owner and the regulators.
For some trades registration can be as simple as applying for a $75 business license and carrying Insurance but as more localities decide they want a cut of the profits from your business it may mean that you need to keep many different applications current and follow rules that may not always be uniform in all locations.
For the most part every contractor will need
State Business License (contractor descriptive in many States)
Workers Compensation Insurance if you have employees or work as a subcontractor.
You may also need
Local Business Licenses
College or Trade School Education
Bonding to cover the job
Criminal Background and Credit Checks
Certification of your Subcontractors
Verification of your Employees
Many other requirements may be added by your employer or the jurisdiction that you work under.
The Process of getting Licensed
To begin to understand where you should go for more information it is best to start with your State Business Department. They should have a Packet that will help you decide if you want to run your business as a Sole Proprietor, LLC or Corporation and they will also tell you if the State requires additional things from you.
Depending on your trade (Electrical, Plumbing, Asbestoses, Pesticides ) you may need to contact other Departments at the State Level to obtain additional Licenses.
Unfortunately the best way to understand who you need to contact is to have gone through the process or to have worked for someone that will teach you the ropes so if you do find a helpful and informed person within the Government thank them and get their telephone extension AND DON’T LOSE IT.
Once you have basic State Level approval to run your business you will want to contact any and all localities that you will be working in and ask if there are any additional licenses you need to perform work in their jurisdiction.
You will then want to think about things like Accountants and Insurance.
Proof of Insurance will probably be necessary at the time you apply for your State License but you should talk with your insurer about any other insurance that could help you with your business.
Accounting is something that you can do on your own but many times especially if you are Incorporating you can benefit from having an accountant submit the forms for you.
We will cover running your business in other HowTos but it is important that you decide up front which form of business you will have before you start Licensing process.