Construction licensing
What is a contractor license and when is it required?
A contractor license is a state or local credential required to perform construction work above a defined project value or within a licensed trade, issued by a state contractor board or local building authority after the applicant proves experience, passes an exam, and in most states posts a contractor license bond.
What is a contractor license and when is it required?
A contractor license is a state or local credential required to perform construction work above a defined project value or within a licensed trade, issued by a state contractor board or local building authority after the applicant proves experience, passes an exam, and in most states posts a contractor license bond.
State boards, thresholds, and trades
States take three broad approaches. Some license every general contractor through a state board, with classifications by trade and by project size. Others license only above a project-value threshold, leaving small handyman work unlicensed. A third group has no state general contractor license and leaves it to cities and counties, while still licensing electrical, plumbing, and HVAC statewide. The same company working across state lines can be licensed at the state level in one market and the county level in the next.
What applicants must prove
Typical requirements include documented experience in the trade, often several years under a licensed contractor, a trade exam and a business and law exam, financial statements or a minimum net worth, liability insurance, and workers compensation coverage where the applicant has employees. Qualifying-party rules let a company license through an individual who holds the credential, and that person's departure can put the license at risk.
The contractor bond is part of the license
Most licensing states require a contractor license bond as a condition of licensure: a surety bond that pays consumers or the state if the contractor violates licensing law. Bond amounts vary by state and classification. The bond is not insurance for the contractor; it is a guarantee the contractor repays. Cornerstone's surety practice places contractor license bonds alongside the license application, which is the most common pairing in our cross-brand compliance stacks.
The cost of working unlicensed
Unlicensed contracting is one of the most enforced violations in business licensing. Consequences include stop-work orders, fines, misdemeanor exposure in several states, and in some, most famously California, a rule that an unlicensed contractor cannot sue to collect payment for the work and can be ordered to refund everything paid. The license threshold is worth checking before the first bid, not after.
Where Cornerstone fits
We manage state contractor license applications and renewals for companies operating in multiple states, coordinate the exams and documentation each board wants, and place the license bonds through our in-house surety practice. Purely municipal contractor registrations are filed with the local building department, and we tell you when a market works that way.
Frequently asked questions
Do handymen need a contractor license?
Below each state's threshold, usually no license is required for minor repair work, but the thresholds are lower than most people expect and often count labor and materials together. Trade work such as electrical and plumbing is licensed separately in almost every state regardless of project size.
Can a contractor licensed in one state work in another?
Only if the second state licenses them. Some states offer reciprocity for exams between specific partners, but the license itself does not travel: each state issues its own, and local registration may apply on top.
What is a contractor license bond?
A surety bond most licensing states require with the application. It protects consumers and the state against violations of contracting law, and the contractor must repay the surety for any claim paid. Bond amounts and premiums vary by state, classification, and the contractor's credit.
The license types library
- All business license types
- Seller's permits and sales tax permits
- Liquor licenses and ABC permits
- Food service licenses and permits
- Home occupation permits
- Professional and occupational licenses
- Building, zoning, and sign permits
- DBA and fictitious business names
Related resources
Business licensing
File the licenses your business actually needs
Cornerstone maps the license stack for your business model, files the state-level registrations and applications, and keeps every renewal current.