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Why A Contractor License Is Essential

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If you want to operate any type of business, you will need to obtain a permit, license or both. If you engage in any building or remodeling related business, a contractor's license is essential in every state. Individual state laws and regulations vary, but all have some things in common.

Contractor License: General Information

Regardless of where you live, there are some general requirements for obtaining a contractor's license. You must:

Be 18 years of age or older Have a high school diploma Be a U.S. citizen or legal resident Show documentation of other occupational licenses you hold, if any Provide reasonable explanations for previous citations, liens or violations Provide two passport sized photographs

You will also have to provide proof of competency, which will involve taking a written exam and providing proof of previous employment or on-the-job training. Letters of reference will be required, too, and you will need to provide proof that you have the finances necessary to operate your business. In many states, you will also have to post a ""state license bond."" This is not a type of insurance policy. You will still need to obtain liability and workers' compensation insurance in order to conduct business.

State, County and City Regulations

Every state has three basic types of contractor classifications: General Engineering, General Building and Specialty. Some examples of Specialty contractor's licenses include:

Carpentry (with sub-categories) Electrical Flooring Plumbing Roofing

Other regulations might apply at the county or city level. For example, in Hermosa Beach, California, building and remodeling related businesses must have Building and Construction Permits and a Business Tax Certificate. You will probably find that these or similar regulations will be in place wherever you apply for a contractor's license. For more specific information, visit the Small Business Administration (SBA) State Licenses & Permits page and scroll down to the list of State Business License Offices.

Yes, there is quite a bit of red tape involved in obtaining a contractor's license, but once it's out of the way, renewing your license and permits is easier. To avoid setbacks, don't apply for a license until you are confident you have the necessary experience and finances. Provide everything that's required in your area and you should be able to get your contractor's license without any unnecessary delays.

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