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Licensed contractors fall into several categories. Builders may be certified as general contractors. They may also choose a specialty such as electricity, plumbing or roofing. Requirements for licensed contractors are set by each state; very few states do not require licensing. Prerequisites for obtaining a contractor’s license may include proof of financial responsibility and prior experience. Some states also have educational and/or testing requirements. Any project valued above $500 generally requires a licensed contractor.
A licensed general contractor oversees all phases of a construction project. She will be in charge of the job site and oversee the crew; therefore, a general contractor should be familiar with all types and stages of construction. A specialty licensed contractor works with the general contractor to perform his duties.
Each state sets its owns educational requirements for becoming a licensed contractor. Licensed general contractors will need education in business and contract law. Some licensed contractors have degrees in architecture, engineering and/or construction. Many state requirements can be fulfilled by attending schools for licensed contractors and/or through community colleges. Most states also require a licensed contractor to participate in continuing education.
Most states require significant work experience to become a licensed contractor. The actual process of applying for and receiving a contractor's license takes from several weeks to several months.
Application fees and licensing fees average in the mid to high three figures. Additional fees for fingerprints and background checks may also be incurred. Education required to become a licensed contractor can cost several hundred dollars.
Licensed contractors must maintain several forms of insurance including accident insurance and workman's compensation insurance. Several states also require licensed contractors to pay bonding fees.
Unlicensed contractors are subject to fines. They are also financially responsible for accidents and employee taxes. Unlicensed contractors who represents themselves as licensed contractors may be charged with fraud.