Common Contractor License Mistakes You Should Avoid

Getting a contractor’s license is the first step in becoming a contractor. A contractor’s license makes a contractor appear more credible to potential clients. It indicates a readiness to conform to industry and regulator guidelines. A contractor’s license translates to being trusted with more complex projects and consequently bigger pay. If not obtained properly, it could lead to a lot of problems.

Contractor licensing guidelines vary from state to state, which generates a lot of confusion for contractors. If you’re seeking a contractor’s license or already hold a license, here are some common mistakes you should avoid:

Failing to Prepare for the License Exam

While back in school, you might have gotten away with being unprepared for exams by providing improvisatory answers to questions. The same approach will not work with the license exam. Not preparing properly before taking the tests can prove to be detrimental, especially if it’s the first time in a long while that you’ve found yourself in a test environment.

Preparing for your test doesn’t mean you should undertake many grueling hours going over books alone. You could utilize alternative study materials like videos and webinar courses which make important concepts easier to understand. Ensure you prepare properly to avoid taking the exam a second time.

Not Registering with the State

After passing the licensing exam, ensure you register your business name with the state you reside in. Ensure you opt for the right description of your contractor business, whether it be a partnership or a sole proprietorship. The state registration process usually involves a lot of trick legal work and documentation, so you’ll want to go about the process carefully and maybe seek advice from other contractors and experts.

Not Securing a Contractor’s License Bond

Is it safe to start working on contracts now that you have the proper contractor’s license? Not so fast, my friend. For example, suppose you’re a general contractor or planning to start your firm. In that case, you’ll need a contractor license bond to protect your company and your clients from any catastrophes.

A license bond protects you and your clients in the eventuality of a construction mishap or financial disaster. It also ensures that if a construction project ends up delayed or uncompleted, the contractor is protected from being sued, and the client can get their money back in full.

Working in a New State with the Wrong License

Each state’s licensing laws and requirements differ greatly, so never assume that, for example, holding a Georgia contractor license gives you the right to work in a different state, like Tennessee. So you need to have a clear grasp of the sort of job you intend to conduct and are familiar with unique criteria. Fortunately, having a contractor’s license in one state automatically qualifies you to sit for another state’s licensing exam.

All in all, ensure that you comply with licensing laws and industry regulations to avoid trouble while working as a contractor.