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How to Become a Licensed General Contractor

Two contractors working on a construction site.

The demand for general contractors has increased over the years, due to the lack of glamour the trade-world exemplifies. While many high school graduates are pressured to obtain a four-year degree to jump into the job market, many trade jobs are left unfilled, leading to shortages of workers while contractors expect strong demand in the future. But for those looking for a job that doesn’t require a four-year degree, trade jobs could be exactly what you’re looking for.

For some, high-paying trade jobs are a financially sound alternative to a university education. According to the 2019 data collected by the Bureau of Labor Statistics, construction manager positions are predicted to grow 10% by 2028 and get paid an average of $95,000 a year. This is due to the increasing supervision needed for an influx of construction activity. Additionally, construction laborers and helper positions are predicted to grow even faster at 11% and get paid an average of $36,000 per year. 

Much to many people’s surprise, general contracting does not revolve around manual labor. Those who pursue a contracting career must show leadership skills, literacy in math and language, problem-solving skills, and project management skills. They work with many people, including tool suppliers, subcontract workers, and property owners. General contractors can wear many hats on a day-to-day basis, which is why the licensing process is lengthy, although important and worthwhile. Since there are many aspects associated with becoming a general contractor, it’s important to understand each step of the process to ensure a successful career. 

Familiarize Yourself with State Requirements

Contractor licensing requirements vary from state to state since some states have special requirements or exceptions. Many states will help establish veteran-owned businesses by transferring skills learned in the field to contracting requirements or will wave apprentice hours for more school hours.

To familiarize yourself with state requirements, you can search online for a contractor's state licensing board which will walk you through the necessary steps. However, there are some general requirements to keep in mind:

  • You must be 18 years of age or older;
  • You must have a high school diploma or a GED;
  • You must be a U.S. citizen or a legal resident;
  • You must provide documentation of any other licenses you hold in the same state;
  • You must submit two passport photos;
  • You must explain any violations, citations, or liens from construction;
  • And you must post a state license bond for your company. 

In addition to the general requirements, you’ll also need to prove on-the-job experience and take a written exam about skills and laws applicable to construction and business.

Get Necessary Training & Education

After reviewing the proper state requirements, you’ll have to obtain an education and training for contracting. Depending on what the contracting state requires, you can choose one of three options to gain the necessary skills: 

  • Bachelor’s degree: Though it is not always necessary, there is an increasing expectation for general contractors to obtain four-year degrees like construction management, civil engineering, or building and construction management. Degrees like these can potentially help give you an edge over the competition.
  • Vocational School: A vocational degree can give you the technical skills you need to become a contractor as well as count for credit towards an apprenticeship. Typically, these degrees take two years to obtain.
  • Apprenticeship: This type of training offers on-the-job experience, often accompanied by the study. It is also the only paid option for people looking to become general contractors.

No matter what route you take, keep in mind that many employers require hands-on-experience. 

Study for the Licensure Exam

After meeting the educational or experience requirement, you must then take and pass the licensure exam. Again, the specifics of the exam vary from state to state, however, there are some general characteristics. 

Every exam is preceded with a fee, ranging from $85-$200. This fee is usually paid to the state licensing board and must be given every time you take the exam. Then, you must schedule your exam in advance. You can either take it in person or online, and some states could require additional paperwork to take with you to the testing center. 

Depending on the type of license, you might have to take a business exam, a law exam, and a trade exam. These exams will quiz you on basic concepts of your trade as well as allow you to demonstrate hands-on skills. The trade portion could consist of:

  • Plan reading and estimation;
  • Site engineering;
  • Sitework and excavation;
  • Footings and foundation;
  • Concrete;
  • Masonry;
  • Carpentry;
  • Metals and safety.

Luckily, there are many practice tests available online which could be beneficial to you. 

Get Bonded as a Contractor

Becoming a bonded contractor means purchasing a surety, fidelity, or contractor bond. This type of bond is an insurance policy that protects the property owner. It provides liability protection as well as compensation to the property owner if the contractor fails to complete the job.

There are three types of bonds a contractor can purchase:

  • Surety bond: this bond guarantees contractors will perform according to the terms of their license. 
  • Fidelity bonds: this type of bond is an insurance policy that protects against theft and forgery. 
  • Contract bonds: this bond is a guarantee that the contractor’s work will be done according to a contract made by both parties.

Many local and state governments require bonds to obtain their license or a job. It’s important to review what might be needed for a successful career in your state.

Launch Your Business

After receiving your license, you can have the benefit of launching your business. It’s important to make sure that you have a business plan, such as a name, a target market, and startup costs. Equally important is having the right tools to get your business started. Important tools that every contractor should have include:

After obtaining the necessary tools, you can start to form your business entity. Some of the most common business structures for general contractors include:

  • Sole proprietorship: This is a type of enterprise that is owned and operated by one person, and there is no legal distinction between the owner and the business.
  • Partnership: This structure includes two people sharing ownership of the business, as well as responsibility for income, management, and losses.
  • LLC: This is a simple business structure that combines the taxation of a partnership or sole proprietorship with the limited liability of a corporation. This is a very flexible business structure that is suitable for businesses with one owner.

After you set up your business entity, it’s important to open a banking account and credit line to keep personal and professional finances separate. Then be sure to obtain the correct permits, insurances, and licenses to avoid hefty fines — as well as hire any help you need to keep customers satisfied.

Maintain Your License

Many, if not all, states require contractors to actively maintain their licenses. Generally, a contractor will have to submit paperwork every one-to-two years to keep their license. This could be as easy as submitting a renewal application or it could require continuing education. While continuing education may seem overwhelming, it provides enormous benefits like:

  • Keeps you up to date on current methods;
  • Increases chances for promotion;
  • Improves image and marketability;
  • And increases personal development. 

However, continuing education for general contractors is not as time-consuming as you might think. Most states require an average of two-to-eight hours of education for a small fee. 

Becoming a general contractor can seem overwhelming at first. However, by following the guidelines above and researching state requirements, you can create a successful general contracting business.

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