The construction industry constantly develops in the USA and is gaining more and more opportunities and growth. People who want to own a business and expand the construction sector can become general contractors and get a contractor license. Any homeowner is interested in a reliable licensed contractor who will take responsibility for the home projects and do everything possible to meet the customer's needs.
However, not all general contractors have a state license, and no this document significantly worsens their reputation and complicates relationships with customers. For instance, people who order remodeling services from unlicensed contractors can lose money. If you want your home remodeling project to be successful and bring you positive emotions, hire a licensed contractor with professional skills and specific knowledge.
A successful construction contractor is a company that knows how to anticipate changing trends in the construction industry in time. Moreover, a general contractor is a contracting business that takes responsibility for the home remodeling process and supports its customers in all possible ways. As a rule, the successful construction contractor should have an experienced team of builders and designers focused on solving customer problems.
General contractors should think strategically and offer different solutions to customers. Otherwise, licensed general contractors who do not develop construction projects and solve customer issues are doomed to failure. If you want to remodel your home or several rooms, always choose a reliable licensed contractor! Your priority is cooperation with a successful contracting business because a licensed business will do the best for you! Study more articles about the construction industry and home improvement to choose a proven construction company.
We have developed this detailed overview to help you learn more detailed information about construction services and the construction business. We want to outline the risks of this construction business in advance and show its advantages. If you still want to take a chance and find a proven company with a specific license, study this guide and our tips. Our recommendations will help you remodel your house using the reconstruction services and not make irreparable mistakes!
More Details About General Contractors: Licensing Requirements And Building Permits
1) Why Customer Should Pay Attention To Contractor Licenses
A licensed contractor is a company that has many years of experience in this construction field and a special license for the development of a successful business. Such licensed general contractors are responsible for each stage of home improvement and other construction projects (offices, retail premises, redesign of rooms and houses).
In addition to the licensing exam, which every company must pass, this company must also have a building permit. A business license and a construction permit are vital components of the construction business, and all general contractors are required to obtain them. Otherwise, a potential contractor will not be able to carry out its activities and offer construction services to people.
Why should you pay attention to a contractor license? As a rule, a contractor license is a vital step in becoming a legitimate construction business. A proper document helps customers protect their rights and secure the transaction with the contractor. If you don't want to have problems with the contractor and risk money, find a contractor with a license!
The benefits of a licensed business:
- Since a licensed contractor follows the laws and has a business license, customers do not have to worry about the legality of the general contracting services.
- A licensed contractor receives liability insurance, and therefore your deal with the contractor is protected.
- The general contractor license allows a contractor to protect the customers from high risks.
- The general contractor license provides customers with consumer protection in controversial situations.
- A contractor's license is a perfect tool for protecting the rights of a general contractor's collateral.
Each reason is justified since the contractor's license significantly simplifies the activities of a contracting company and a customer's life. For instance, from the point of view of safety, any construction contractor should know how to connect an electrical panel and ensure the correct operation of a gas water heater. Besides, the contracting company must solve other potentially dangerous situations. If the contracting company refuses to receive the contractor's license and other documents, the authorities will track down unlicensed general contractors and fine them.
It is also worth noting that the best reason to choose a licensed contractor is the protection of customer rights. A contractor license is a kind of consumer protection tool, and you should rely not on the contractor's words but on the license documents and the contractor's experience. Even if the general contractor makes home improvement in the best possible way, there is no guarantee that you will not be deceived. In such a case, you can lose funds.
Customers get more benefits during a home remodeling if they hire a licensed contractor. A general contractor license plays a significant role in the construction industry and allows people to interact with contractors on equal terms. Therefore, if you want to remodel your home or office, choose a licensed company among other contractors!
2) Licensing Requirements From State To State
To choose a licensed contractor that offers home construction services, you would do well to review the specific licensing requirements. As a rule, you should make sure that the company has filled out a license application and received it. Licensing requirements differ from state to state, and that's why contractors need to know the current local laws. So, you need to trust a company that knows local laws and has building permits or a general contractor license.
General contractors in Alabama must have a state general contractor license. This license refers to the maintenance, home improvement, demolition, construction, or alterations of commercial projects that cost more than $50000. Residential contractors must also have contractor licenses if the cost of large projects is more than $10000.
The general contractor must pass exams in trade and law and confirm experience and ownership of equity. Don't forget that if contractors want to develop a construction business in Alabama, they need to prove general liability insurance. They need to comply with these requirements when applying for a contractor license.
Potential contractors must have a contractor's license and registration if they plan to scale their business in Arizona. It is a requirement of the laws of Arizona, which general contractors must follow.
Contractors can get several types of licenses depending on the direction of their activity. Indeed, if companies develop commercial projects, they can get the status of a commercial contractor. On the other hand, residential contractors can obtain a state license for the residential premises. Another type is a dual license (residential and commercial projects). If contractors want to get a contractor's license in Arizona, they must take the appropriate exams and prove the four years of professional experience. Besides, the general contractor must be covered with a Surety Bond. Check that the contractor fulfills all these requirements!
According to California laws, general contractors must get a license by providing the relevant documents and proofs of General liability insurance and Surety Bond. This law applies to residential and commercial projects that cost more than $500. Also, the general contractor needs to confirm four years of experience in the construction field and pass exams.
Florida law obliges every general contractor to have a license, even if the construction contractor develops small projects. Secondly, general contractors in Florida must have registration. It is also a significant factor in the business development in this state.
Classification of licenses in Florida:
- A construction contractor is limited to the reconstruction, remodeling, or improvement of residential or commercial buildings that do not exceed three stories in height.
- A general licensed contractor is limited to the construction management and construction work of buildings with a height of at least four floors. Work experience should be at least a year.
- A residential contractor is limited to work on residences that do not exceed two stories in height.
In Florida, the law also requires general contractors to take exams and proof of experience. Moreover, companies need to provide financial statements, General Liability, and worker's compensation insurance. That's why before entering into a contract with a contractor, you need to check the license.
As for Idaho, there are no requirements for obtaining a license by a general contractor in this state. It is not a prerequisite if contractors want to develop a remodeling business. But if they plan to realize specific projects worth $2000 or more, companies should have a registration. In addition to Idaho, a license is also not required in Illinois, Colorado, and Connecticut.
In any case, if you order general contractor services, check the relevant documents and certificates of the contracting firm. The company must guarantee the security of the transaction and quality work!
General contractors in Louisiana must get a contractor license and register a business. There are two types of this document in Louisiana: residential and commercial. The residential license is intended for general contractors with projects for home construction that cost more than $75000. Residential contractors must provide financial statements, General Liability, and worker's compensation. Also, such companies must pass exams.
A general contractor can also have a commercial contractor license for construction work and construction management. Getting a commercial license is simple: companies take exams and provide financial documents.
As already noted, any construction company aimed at growth and gradual development must have construction experience and have a license. If you are interested in a reliable contractor, choose a licensed company. Contractors need to obtain a construction license for the residential buildings or maintenance and remodeling. It is a primary requirement of Michigan law.
Also, the general contractor must undergo training and pass specific exams. We are glad to help turn your ideas and dreams into reality by providing the best general contracting services. Contact our managers and consult on any questions!
Nebraska is one of the few American states where general contractors do not need a construction license. The primary condition for scaling the remodeling business is registration. Therefore, before making a business plan, contractors must submit documents for registration.
Any company and individual in Nevada must get a contractor license and registration. Contractors will not build offices and houses or reconstruct premises if they do not have the relevant state documents.
You must make sure that the contracting firm has completed the following steps and obtained a license:
- This company provided business insurance and surety bond
- This contractor provided financial documents and proved four years of experience in this field
- This company took exams in trade, business, and law
As for Virginia, the laws prescribe the mandatory having of a license by a general contractor. In this state, companies can get three types of these documents depending on their business (individual projects from $10000 and above).
Do you want to find a construction company in Wisconsin with a licensed contractor? You should review the laws and requirements regarding the license application and other nuances to understand that your contractor has a license. In Wisconsin, licensed contractors have more benefits than unlicensed ones. If contractors specialize in residential construction and their entire project costs more than $1000, they need to get a license.
Firstly, they must take a 12-hour lesson and pass the appropriate exams. The authorities should check that companies have professional knowledge and skills to reconstruct houses. Secondly, they need to present special business insurance.
Thus, licensing requirements vary from state to state. It all depends on the legislation of the American states and the field of activity (commercial, individual or residential projects). If you don't want to get into a dangerous situation and have problems with the contracting company, choose the most trusted licensed firm. The contractor must provide you with guarantees that the team will do the work efficiently and on time. Besides, if the firm has a contractor license, you don't have to worry about the home remodeling project since the company controls all processes!
Step-By-Step Guide: How To Choose A Contracting Company With A State License
This step-by-step guide will help you choose a contractor with a state license without problems. If you don't know how to choose a proven company and where to look for information about contractors, be sure to read these instructions. It is the base that every homeowner should know!
1 – Define The Scope Of Activity
The first step is to decide which contractor you want to hire. For instance, if a company specializes in the construction and alteration of residential premises, the company is a residential contractor. In this case, the contractor needs to have the relevant documents (official permits and certificates) for residential construction but not for commercial projects.
Therefore, the sooner you decide which contractor to hire, the sooner you start home construction with professional builders and designers. As a rule, each type has its disadvantages and advantages and reveals a specific business area.
Below are the most common types of general contracting:
- General contractor
General contracting services are the most common among homeowners. A general contractor is a person (or a company) that helps build customers' houses or offices and realize commercial projects quickly and efficiently. Besides, the general contractor can hire subcontractors and monitor their work since the general contractor is responsible for the success of the remodeling project.
General contractors can act as a link between the customers and subcontractors and offer a business plan. By the way, a vital component of the general contractor's services is a free estimate, which reveals the main stages of the reconstruction process and other details of the entire project.
- Specialty contractor
A specialty contractor is a person (or a company) who offers a wide range of services (construction of rooms, electrical work, replacement of flooring, mechanical work). As a rule, this person (or company) specializes in several business areas and maneuvers between different types of work.
- Mechanical contractor
Another common type is a mechanical contractor. This person works as a mechanical contractor in the construction field. In most cases, these mechanical contractors do plumbing and electrical work. The contractor's license applies only to mechanical work and not to installation. This limit is due to the laws of a particular state.
Thus, you need to choose a specific type of contracting company. Do not ignore this step! If you decide in advance which general contracting services you need, you will be able to hire a professional team and remodel your home quickly. Designers and builders who will work with you will make all your wishes come true and make your home or office more comfortable!
2 – Read The Exam Requirements
We understand that the exam requirements do not apply to customers, and you can skip this point. However, if you want to know how the remodeling business works and check the contractor, we recommend reading this section.
Every contractor needs to meet specific education requirements before applying for a license. The contracting firm must have a high school diploma. This document confirms the level of knowledge and guarantees that the contractor is a professional in the reconstruction field.
Undoubtedly, classes in high school such as algebra, drawing, or geometry are most helpful for continuing education in the construction field. In addition to a high school diploma, contractors also need to take advanced training courses and pass exams.
- Contractors' Degree Level
Instead of a high school diploma, many contractors can graduate from university and get a bachelor's degree. It is the equivalent of a high school diploma that serves as a solid foundation for the reconstruction business.
In most cases, the minimum degree in some states is a bachelor's degree program. It can be coursework (architecture, engineering, planning, or construction management). Other contractors receive an advanced master's degree in construction management or project planning to increase their competitiveness. Remember that professional development and retraining show that the contractor is interested in fruitful work and business prosperity. It means that such a contractor will do everything possible for customers!
- Professional skills
Many homeowners and company owners pay attention to competencies and process skills when hiring a contractor. Unfortunately, it is difficult for a general contractor who does not have specific skills and knowledge to break into the market and become in demand. Therefore, contractors and subcontractors need professional skills to do the work adequately.
Experienced construction contractors understand various construction norms and how to operate construction equipment. Contractors also need soft skills (the ability to sell and communicate with customers). Today, soft skills play a primary role in any business. If the contractor can't convey the benefits of the services to customers and solve their needs, this company is doomed to failure. Companies need to analyze their interaction with customers to improve soft skills step by step. Therefore, hire only a contractor who knows how to communicate competently with customers and shows the value of the company's services!
- Many years of experience
You need to rely on the contractor's experience and check that your contractor has successful projects and a license. Usually, the minimum work experience in each state varies and averages from three years and above.
The contractor's experience in the construction industry means working with customers on residential or commercial projects. If your contractor has many years of experience in the construction industry, it will play into your hands.
3 – Exams and Courses
It's no secret that all licensed contractors have some certificates confirming their professional skills. If you want to hire a professional contractor with an excellent business structure, you must check that this company passes the appropriate exams.
Each state has a licensing and construction council of contractors. This council is the government agency that manages the licensing of construction contractors in the state, including exam requirements for each type of contractor license. For instance, such a licensing council may provide information about the licensing process. You should ask the contractor where the company passed the exams and if the company has business insurance.
The more time the contractor spends preparing for exams, the better this company will pass exams. The professional knowledge of the contractor determines how this team will cope with your remodeling project. Therefore, ask the contractor about professional training.
4 – Study The Business Plan (Or Business Structure)
- Business strategy development
The success of a business largely depends on a properly developed business strategy. Any general contractor should create a business plan based on the realities of our time. Always pay attention to the competence of the contractor you have chosen, as the contracting company must follow the trends of the construction market and offer you the most profitable remodeling projects.
Also, to achieve success quickly, the general contractor needs to understand its differentiation. What does it mean? Indeed, contractors with many years of experience in electrical and plumbing work should focus on these skills. This competitive advantage will allow the company to stand out from other contractors and attract more customers. You should choose only the best contractor with an excellent business strategy. If the company knows how to make a business plan, this team will cope with your remodeling project!
- Review a financial plan
Any business project always starts with a financial plan. If the contractor doesn't know how to reconstruct your house, the company will not help you and provide general contracting services properly.
Undoubtedly, drawing up a financial plan is the most complex aspect of a business. The contractor will need to calculate all finances to understand how much money will be required from a particular customer and offer an estimate. Also, the general contractor must pay licensing fees.
Remember that a professional contractor who works for results always has successful projects. If you don't want to take risks and lose money, hire only a hardworking team that proves professionalism with successful cases.
- Marketing strategy
Although general contractors should have experience in the construction industry, it does not negate that competition in this market is high. Therefore, contractors should develop a marketing plan to attract as many customers as possible. The more customers contractors have, the more residential and reconstruction projects they will realize.
You can see the contractor's ads on social networks and the Internet. It means that the company is interested in a successful future and is serious about implementing home remodeling projects.
- Sample business templates
A general contractor must have a business template for each project. This business template usually includes a standard agreement between the contractor (subcontractors) and the client, pricing and payment terms, and any information regarding the future project. On average, it takes about three days to develop such a business template.
5 – Check The Contractor's Documents
After drawing up a business plan and financial strategy and obtaining work experience in the construction sector, contractors need to look at the licensing requirements.
As already noted, licensing conditions vary from state to state and depend on the specific reconstruction business. Choosing a reliable licensed contractor can be difficult, but you should make a lot of effort to find a company with an excellent reputation. Overall, a successful licensed contractor needs to submit an application and wait for the approval. As soon as this company passes this stage, it will receive a state license.
- License terms
The general contractor must follow the licensing requirements and have proof of guardianship and insurance. In some cases, contractors will have to provide worker's compensation. If the contractor follows local laws, the company will not deceive you and do home remodeling for you in the best possible way.
- The cost of the general contractor's license
The state license is not free. The cost will vary depending on the type of contractor's license and the state. As a rule, the price ranges from $50 to $300. Most states have similar requirements, including verification of personal data, minimum experience, education, and financial documentation.
If you decide to hire a successful licensed general contractor, check the company's documentation. Unfortunately, if the contractor ignores the laws and is unlicensed, you as a customer may face problems.
- Contractor's license collateral
The license collateral is the most expensive document compared to the license fees and application fees. Almost all states require construction contractors to have a minimum guarantee of a surety bond and registration. Contractors should remember that a surety bond is not insurance! The surety document guarantees that the remodeling companies will follow the state rules in the construction field, implementing each project wisely.
By the way, the contractor's license deposit protects customers from financial losses if a general contractor doesn't work following safety standards or building regulations. It is a significant aspect of customer-contractor interaction that everyone should know.
- Reliable documents
All remodeling companies must know the local laws and apply for a license. Undoubtedly, clients may not ask the contractor about this license, and they can trust this company completely. But what if the contractor deceives you and turns out to be a dishonest company? Such a company will not benefit you, and on the contrary, it can aggravate your situation.
For this reason, you should check the documentation of the contractor you have chosen. If you want to protect yourself and your money, try to ask the contractor as many questions as possible. The contractor must have to provide you with a license and all certificates. You need to be patient in this whole process. Not all contractors try to be honest with their clients. Your task is to choose a proven company that will provide you with general contracting services of the highest quality!
6 – View The Portfolio And Basic Information
The final step is to study the contracting company's portfolio and basic information about its business. This step allows you to look at the company's activities from different angles and assess its success in terms of construction work. If you want to choose the best contracting firm in your state, you need to study the portfolio. Remember that business is not words but wise decisions, and the contractor must prove his professionalism with successful cases. By the way, the general contractor also builds a solid reputation and increases customer flow. The reconstruction business requires the contracting company to study the construction market and review finance and marketing.
Below are the main issues that you should pay attention to when choosing a general contractor.
- Attention to construction projects
The wisest step you can take as a homeowner is to review the home remodeling projects. Successful projects are the key to the future for any contractor focused on results and fruitful work. Therefore, you should pay attention, first of all, to the portfolio. You can ask the contractor about completed projects and, for instance, find out where the contractor orders building materials and at what price.
Besides, do not forget to read customer reviews, which you can find on the official website. Reviews are proof of the honest (or dishonest) contractor's work. As a rule, clients will recommend a contracting company to friends if it has satisfied their needs and done home renovation in the best possible way.
To better understand how a contractor builds the work, ask questions about subcontractors and builders. You need to know whether the contracting company has a professional team or not and whether it meets your expectations.
- Contractor's partners
Another vital component of any business is the development of business partnerships. General contractors can achieve faster success in conducting contracts when they accept their colleagues and adapt their knowledge and experience. Communication with other construction contract specialists and business professionals helps contractors do a fantastic job and make up unique renovation projects for customers.
Consult with the managers regarding your future renovation project and find out which partners the contracting company interacts with on your project. The more information you know, the better you can navigate this process. Therefore, do not be afraid to communicate with the contracting company on this aspect.
- The best contractor in the area
What does it mean to be the best contractor in the state? What functions does the general contractor perform? Why is hiring a contractor so important? Perhaps these are the most frequently asked questions. Let's look at each question to understand what a general contractor is.
A general contractor is a person (or company) responsible for reconstruction projects. The contractor controls commercial or residential projects. General contractors manage the entire project from start to finish, including budgeting, hiring subcontractors, and construction services. Moreover, the contracting firm plays a significant role when ordering furniture and building materials and choosing suppliers. Such companies should understand the construction process and modern building norms and regulations.
In almost all American states, public authorities require that a general contractor obtain a license. The license is proof of the experience and professional skills of contractors. In some states, the general contractor is required to pass an exam covering competencies in construction and pass a personal data check.
Thus, this detailed guide about contractors will help you hire the best remodeling company without any problems in your area. If you follow this guide and do not neglect these tips, you will easily find a reliable contractor who will realize all your ideas. The most important thing is to check all the information about the contractor and read the customer reviews.
Additional Information About The Reconstruction Business
1) How To Interact With Contractors
Increasing customer flow is one of the most pressing problems of general contractors. To achieve unprecedented heights in business and constantly expand the customer base, the general contractor needs to develop a marketing strategy and improve its offers.
Homeowners can interact with contractors through the official website and social networks. A well-built marketing strategy allows contracting companies to attract more customers and offer unique reconstruction projects. If you want to reconstruct a house using general contracting services, you should study the contractor's website. Pay attention to the design of the website and its functionality. Is it convenient to use? Can you navigate the platform quickly?
The first step the contracting firm should take is to create a minimalistic and user-friendly website. The website is a business card, looking at which the client decides whether to trust the company or not. Since most people look for contractors online, contractors should not underestimate the importance of a user-friendly website and portfolio. You can find the "Contacts" section on the official website and send an email or call the manager. The sooner you consult with a specialist, the sooner you will reconstruct the house.
You can also come to the contractor's office to ask questions and find out as much relevant information as possible (prices, projects, deadlines). However, we do not recommend doing this right away. It is better to call the manager anyway, so that again not to waste time on a company that does not meet your expectations.
2) New Opportunities For Homeowners
The reconstruction business is developing more rapidly than two decades ago. Today, it is quite possible to find a successful construction contractor. The construction sector provides customers with the opportunity to order general contracting services.
Contractors can offer homeowners the best options for home renovation and order the highest quality furniture thanks to advanced technologies. It, in turn, gives homeowners new opportunities because the reconstruction of the house improves comfort and brings positive emotions. Also, it is worth noting that the newer your home is, the more expensive you will sell it. It is also a kind of an excellent perspective.
Thus, hiring a general contractor in the USA is quite realistic. The main thing is to find a reliable and proven company with many years of experience in this field and a license!
3) Earnings of General Contractors
The earnings of general contractors depend on many factors. Firstly, it is necessary to consider the direction of activity (residential or commercial services, remodeling of a house or commercial premises). The earnings also depend on the area where the general contractor provides services. American states vary in living standards and economic development, so this factor plays a significant role.
The average annual salary of a construction contractor varies from $60000 to $140000. There may also be bonuses and commissions paid to construction contractors when they do the work on time or do not exceed the project budget. Contractors focused on the success and prosperity of the business will realize the best projects for homeowners and will strive to satisfy their desires. Since the contractor's income depends on the quality of work, the company will strive to implement your ideas and make your home more comfortable.
You will need a lot of effort and time to look at the best contracting companies on the Internet, their portfolio, price list, and customer reviews. We recommend choosing only proven licensed contractors to avoid risks and unforeseen situations. Hiring a construction contractor is an ideal investment that will pay off several times! Contractors help to improve the house and other premises, reconstruct rooms and install windows and doors. Therefore, hire a licensed contractor who will remodel your home in the best possible way.
Frequently Asked Questions — FAQ
What should a general contractor know?
The general contractor provides a wide range of services (office and home improvement, plumbing and dismantling works, replacement of windows and floors). The general contractor is responsible for the entire project process, and therefore, the contractor should know everything about the construction industry. Besides, such a company should know the laws in the construction sector and the rules governing the activities of the general contractor. You should also know the security standards and have a license.
Is it hard to pass the general contractor test?
No, it's not difficult to pass the exams! It all depends on your perseverance and concentration and on whether you are ready for exams or not. In most cases, if the contractor prepares for the exams and studies all the information, the contractor passes the exams successfully and receives a license. Therefore, the better you prepare for exams, the better you pass them.
Is a general contractor worth it?
The answer is ambiguous. If you want to have your own reconstruction business and meet customer needs, you can try your hand at this business. However, keep in mind that the reconstruction business is not an easy path, and it takes a lot of effort to become a successful general contractor. In some ways, it's worth it because the general contractor has a well-coordinated team and realizes unique projects. Such a business expands opportunities and brings profit.
How to hire a residential general contractor?
To hire a residential contractor, you need to consult with construction services managers. Secondly, you must fill out an application specifying personal data and answering specific questions. A mandatory stage of hiring a residential contractor is the conclusion and signing of a contract. Don't forget to request an estimate and an approximate cost plan for your construction project.
What is a licensed contractor?
A licensed contractor is an individual or a company responsible for the construction projects and having an official government license. The license allows the contractor to realize larger projects and proves the experience and professional skills of the contractor. A licensed contractor has more benefits than an unlicensed one and does not risk fines from local authorities.
Is it worth hiring a general contractor?
Absolutely yes! Hiring a contractor provides you with a quiet life because you do not have to spend time searching for building materials and furniture, electrical, and plumbing work. The general contractor will do everything in the best way as such a company cooperates with the best manufacturers and has a team of professionals. Hiring a general contractor is the best investment in your future.
Should I sign a contract with my general contractor?
To protect yourself and your money, you'd better sign a contract with a contractor and sign it. The contract is an official confirmation of the contractor's hiring. Without this document, there is no guarantee that the contractor will not break something or refuse to work. Therefore, request a contract from the contractor and sign it.
What can I do if there's an issue after the project is complete?
If you have any issues with the completed construction project, contact the general contractor or come to the office. Ask questions or demand to redo something if something is broken due to the contractor's fault. As a rule, the contractor serves as a quality guarantor. The contractor is obliged to solve all your problems if you are dissatisfied with the quality of work.