SuretyBonds.com contributor posts provide external expertise to help small businesses and other professionals succeed. This post features insights from Jordan Cabell, leading state license specialist at Contractor Training Center.
Acquiring a contractor’s license is an essential first step in legitimizing your contracting business. Holding the proper license lends credibility to your brand and makes it possible for you to set payment structures that align with your expertise and experience.
You’ll also appear more trustworthy to potential clients. However, contractors face some of the most complicated and lengthiest licensing requirements of all regulated industries.
With so many documents to assemble and so much variety in the requirements from one state to the next, it’s very easy to make an error during the application process, resulting in your contractor license application being rejected.
This process of revising and resubmitting your application can take up valuable time. That’s why we’ve compiled the most common license application mistakes contractors make and what you can do to avoid them.
1. Failing to Prove Their Experience
One of the biggest causes of rejections is a lack of specifics in the contractor’s experience documentation. You must apply for the license type you have experience in or can prove your experience in.
If you have only built residential homes in South Carolina and have never touched commercial buildings, for example, you’ll want to avoid applying for a commercial license. You must apply for a South Carolina residential license instead.
Also, if you are self-employed and have never worked with a contractor, you must still provide proof of experience from someone who can verify your job experience. This can be an architect or engineer with whom you have worked on a project.
2. Collecting Incomplete Financial Documentation
Most states require contractor applicants to show proof of financial stability, and you may have to submit a compilation, review, or audit of your finances.
A licensed CPA must complete these financial statements, and it’s best if the CPA is an independent agent. You can’t submit bank statements in place of the financial statements.
If your business is new, check whether your state allows bonding rather than the submission of financial statements.
3. Obtaining the Wrong Insurance
Insurance helps to protect you against claims related to property damage and injuries caused by your business. It also helps pay for court and legal fees you may incur to defend your business against a claim.
When applying for a contractor’s license, the business should be insured, not the individual taking the license exams.
Having liability and workers’ compensation insurance is required for getting licensed in many states. Additionally, proof of a bond is often needed, whether you’re in Texas or Washington. Check with your state’s licensing body to determine what you’ll need to carry.
4. Going for a General Contractor License
Opting for a general contractor’s license is a common misconception when it comes to licensing. In many states, there isn’t a “general contractor’s license.” Most states have now separated licensing into classifications based on the type of work you perform, such as residential roofing, commercial roofing, or highway contractor projects.
If your business includes work like electrical, roofing, or HVAC, you will likely need to acquire a specific license for that work. If you can perform more than one job classification, you may need to take more than one exam, depending on the state.
You should also remember that it won’t allow for tradesman work (electrical, mechanical, and plumbing) if you get a contractor’s license in all 50 states. These are separate trades that each require a separate license.
Contractor Training Center Can Help You Get Your License
Although getting a license can be time-consuming, it’s well worth the effort. A contractor license can net you bigger, higher-paying jobs and grow your customer base. Contractor Training Center’s agents can make the license application process as easy as possible. CTC offers an affordable application processing service, and we can help you fill out the proper forms and submit them to the state licensing agency. Most importantly, we will make sure that you complete everything required in the licensing application. If you’re looking to boost your income, sign up for our application services today!