Are you looking for a career as a trade service professional? If you’re looking to become a plumber, electrician, or contractor, licensing is a crucial step. But is it really necessary? Or can you take on big projects before getting a contractor license?
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Answering this question isn’t as straightforward as you might think. That’s largely because general contractor regulations vary state by state. Still, as you wonder how much work you can do without a contractor license, we can make a few general statements.
Read on for more details on what is and isn’t permissible without a contractor license.
What is a Contractor License?
Let’s begin by defining our terms. Before we talk about what you can do without a license, let’s discuss what a license actually is.
A contractor license is issued by the government. It permits you to take on various kinds of construction jobs. Specific types of contractor license can vary by state. In some states, there may be a special certification just for plumbers, or just for electricians. You may also apply for a roofer contractor, or a subcontractor license. Again, there is much variation between states.
In some states, the type of licensing you have will determine exactly what kinds of projects you can take. For example, without a license, you may be allowed to take jobs up to a certain dollar amount. To handle a project that’s worth more than that dollar amount, a contractor license is required.
Why Get a Contractor's License?
There are several benefits to getting a contractor license.
The biggest reason is that, without one, there are many types of jobs you won’t be legally permitted to take on. If you accept jobs you’re not licensed for, you could get fined. Sometimes, the fine totals thousands of dollars.
Say you comply with the law, and don’t take on any projects you’re prohibited from. You won’t get fined, but you also won’t get any big jobs. You’ll only be allowed to take on projects that have a low dollar amount. Bottom line: You’ll lose a lot of opportunities. Without a contractors license, it’s hard to grow your business in any meaningful way.
There are still other reasons to pursue a contractor license. One is that it gives you credibility. When you’re licensed, it tells potential customers that you’re approved by state or city regulators. You’ve passed the necessary exams. And you have the right coverage from your insurance company. To get a license, you have to be a credible and skilled tradesman. That helps you engender the goodwill of customers, and ultimately earn work. Being able to show your license to potential customers proves your professionalism and your reliability.
Are There Reasons Not to Get a Contractors License?
Clearly, there are some good reasons to pursue a contractor license. But are there any downsides? Are there reasons why you might be better off working without a license?
In some states, getting a license requires an investment of time and money. You may need to pay exam or registration fees. You’ll also need to pay for the right insurance coverage if you wish to become a licensed contractor. And you’ll need to gain some hours of professional experience, sometimes totaling a few years of work, before you sit for the exam.
In many cases, it makes sense to make licensure your long-term goal. As you pursue that goal, you may wish to take on some smaller jobs… projects you can legally do, without a license.
Also, in some states, becoming a licensed contractor can actually limit what you’re able to do. For example, without a contractor license, you may be allowed to take on jobs that involve painting or assembling furniture. Once you get that license, you will only be allowed to take jobs that require that expertise.
Check with the guidelines in your state to see how a license would impact your ability to work. Look at how much work can you do without a contractor license. But also, be sure to look at what work you’ll be cut off from if you do pursue licensing.
Deciding Whether You Need a Contractor License
As you think about whether you require a license to grow your business, here are a few tips.
- Check your local regulations. Again, different states and cities structure their licenses in different ways. License requirements in North Carolina differ from those in New York. Make sure you know what your state allows you to do, both with a license and absent one. You may decide you need to have a contractor license to grow your business. Or, you may decide the limitations and the costs outweigh the benefits.
- Consider your own experience level. Usually, to get a contractor license, you must accumulate on-the-job hours. If you have a lot of hours already, getting a contractor license might make sense. If you don’t have enough hours, think about how to get them before getting your business license. For instance, you might consider getting an apprenticeship. Or, you can work under a tradesman who does have a contractor license. This can be a way for you to get much work and much on-the-job experience.
- Finally, spend some time thinking about the kinds of services you want to provide. Are you looking to remodel a kitchen? To do complicated, multi-day plumbing projects? To take on advanced electrical work? For jobs like these, you will likely need to get a license. But what if you want the flexibility to help a lot of people, doing smaller jobs as needed? For instance, what if you’d rather do small repairs or appliance installation? For much smaller projects, you may not need a contractor license. In fact, having one can actually be a drawback.
Final Thoughts: Should You Do Unlicensed Work?
As you think about how much work can you do without a contractor license, there are final considerations.
First, realize that if you do projects you’re not supposed to, you can get reported. This can run you afoul of much legal trouble. If you plan to take on projects absent licensing, it’s critical that you have a clear sense of what you’re allowed to do.
Second, consider that if you do pursue licensing, your name can appear in directories. This helps you connect with customers who are eager to hire a reputable professional. Check out some examples of trade service directories.
The bottom line: There are pros and cons to pursuing licensing. In some cases, you may prefer to take on projects that don’t require licensing. But more often than not, having that licensure will help you develop your business and career.