State licensing requirements vary considerably. For example, almost all specialty contractors and subcontractors must be licensed.
Licensing adds credibility to a construction business and can open up more contractor opportunities. However, understanding what the CSLB requires can be confusing. This guide breaks down the process, state by state.
Qualifications
Many states require contractors to have a certain amount of experience before getting licensed. This experience is often obtained by working as a journeyman or an artisan contractor who works under the supervision of a licensed general or specialty contractor.
Applicants must also complete business management courses and pass a trade exam. In addition, most firms must submit financial information, a surety bond, and references as part of the application process.
Contractors must understand how licensing requirements differ at the state, county, and city levels and what license type is required for their specific trade. It will help them determine which exams they must take and how much time they must spend on the application process.
Experience
The contractors state license board exam is the SAT or LSAT for contractors, and it’s not a walk in the park. It’s designed to separate the wheat from the chaff and will test even the most dedicated contractor.
Many states have specific experience requirements to meet before you can sit for the examinations. Some will accept education credits like academic courses or apprenticeship training, while others will grant military work experience credit.
Most new contractors will work as an apprentice under a licensed general contractor to learn their trade and the ins and outs of working as a licensed contractor. It is the most common way to meet a state’s licensing experience requirement. Other qualifying experience options include working as a journeyman, building inspector, or union representative.
Examinations
Many states require contractors to pass one or more examinations. These exams often cover both the trade’s technical aspects and business law. For example, an exam might include questions about contractors’ rights and obligations to customers.
Upon passing these exams, applicants must post a contractor’s bond and submit proof of insurance. Additionally, some states have special requirements for contractors who work with hazardous materials, such as asbestos.
Many states also require contractors to complete ongoing education or take refresher courses. It ensures that contractors remain up-to-date on changes in their trade, business law, and industry regulations. Furthermore, it boosts their confidence in meeting project deadlines and budgets. Lastly, it helps them avoid the expensive fines and legal actions that come with violating state construction laws.
Licensing Fees
The CSLB oversees the licensing process for nearly every construction trade. The board determines which trades need licensing, sets eligibility requirements, reviews applications, and investigates complaints.
The primary function of the CSLB is to protect consumers by verifying that contractors are capable and responsible on several levels. It also ensures that contractors conduct business fairly and ethically.
Those who are licensed must carry liability insurance and purchase certain bonds. They must also provide proof of workers’ compensation coverage if applicable. Moreover, they must submit their Articles of Incorporation (corporations) or Certificate of Formation (LLCs) and a Statewide Criminal Background Check.
It is possible to skip the CSLB exam by obtaining a license from another state. However, the applicant must pass a business and law test covering specific business laws.
Exemptions
State and city licensing boards ensure contractors follow compensation and liability insurance. The regulations often require them to secure particular bonds for specific contracting work.
Contractor payments are generally taxable unless they meet an exemption. For example, the contract is exempt if a contractor performs services relevant to improving real property for less than 180 days in a financial year.
