Construction work can be both satisfying and profitable, and it draws many persons who see themselves as successful builders and entrepreneurs. Entering the construction business seems simple: buy tools and a truck, identify materials suppliers, buy business cards and post some ads on the internet and you're off. But not so fast. California requires all persons and entities that wish to do business as a contractor to obtain a contractor's license, post a bond and satisfy the state's working capital requirements.
Obtaining a contractor's license is not an especially burdensome process, but anyone who wants to become a contractor in the state should take time to learn the basics and apply for and receive a license. California requires anyone who undertakes a project priced at $500 or more for labor and materials must have a proper license. The first step is choosing the class of license. The California Contractors State License Board has established three general classifications: general engineering contractor, general building contractor and specialty contractor. The specialty contractor classification has more than 60 sub-categories.
An applicant for a license must pass two examinations: the law and business exam and the trade exam. In addition, an applicant must have at least four years of experience in the construction industry in the field for which a license is sought. Prior education or work experience can often be used to offset or reduce the experience requirement. Once a person passes the examinations, he or she must post a contractor's bond of $15,000, pay an initial license fee of $180 and meet the other requirements for obtaining a license. Anyone who engages in the business of a contractor without a license can be charged with a misdemeanor and subjected to a fine up to $5,000; subsequent violations carry heavier financial penalties.
Anyone who is considering entering the contracting business may wish to consult a lawyer who specializes in construction law. A knowledgeable construction law attorney can provide advice on which license type is best suited to the kind of work one is seeking to specialize in, assist in organizing a business entity that complies with the licensing statute and answer questions regarding the licensing process.
Source: California Contractors State License Board, "Application for original contractors license," accessed on March 7, 2016