We seldom allow guest posts, but the information provided here is valuable for any construction-related business. If you're new in business, we also suggest this article, specifically the information under "How Do I Start a Construction Business."
By Eric Weisbrot
Construction contracting can be a lucrative career for the right individual, particularly when there is a strong understanding of sound business practices. Running a general contractor business, small or large, requires skills in several different areas, including accounting, regulatory compliance, and legal operations of the business. Part of this business ownership acumen involves securing the right licensing and bonding which helps to protect customers from illegal or fraudulent practices on the job. However, general contractor licensing and bonding requirements vary by state, and in some cases, by city, making it a challenge to know exactly what's needed.
Here are the general contractor licensing and surety bond requirements by state to help prepare for running a sound business.
Alabama – any general contractor operating a business in Alabama must have a contractor license if the work performed is above the $5,000 mark. A bond for construction contractors is also required, ranging from $2,500 up to $10,000, depending on where the job site is located within the state.
Alaska – general contractors in construction working in Alaska must have a license if a job is valued at more than $10,000. In most cases, a surety bond of at least $25,000 is also required, but those who perform only residential jobs may only need a $5,00 or $10,000 bond.
Arizona – throughout Arizona, general contractor licensing and bonding requirements vary because they are dependent on the project's dollar amount. Bonding requirements can range from $9,000 up to $100,000, but fortunately, contractors only pay for a percentage of the bond to stay in compliance.
Arkansas – general contractor licensing in Arkansas varies because the type of license needed depends on the type of work being performed. All contractors, though, must secure a bond of at least $10,000.
California – any general contractor working on a job valued at more than $500 must have a contractor license in the state of California. A bond of at least $15,000 is required for most projects, with an additional $12,500 bond needed for certain jobs.
Colorado – bond construction contractor licensing and bonding requirements are set by each municipality or city in Colorado, so there is no minimum threshold to note.
Connecticut – construction contractors in Connecticut must follow the city or municipality guidelines for licensing and bonding requirements to work legally within the state.
Delaware – general contractors working in Delaware must have a state license when the work performed is valued at $50,000 or more. Any non-residential construction contractors must also have a surety bond in place that equals 6% of the project's value.
District of Columbia – in DC, construction contractors must have a license no matter the value of the work, and a surety bond is required based on the dollar amount of the job.
Florida – Florida differs from most other states in that it operates two divisions for general contractors. With Division I requirements, contractors must have a bond of at least $20,000 and a license to perform work. Division II contractors must have a bond of at least $10,000, along with the appropriate license.
Georgia – any construction contractor in Georgia must have a license to work in the state when the project is valued more than $2,500. A bond is also required, no less than $25,000.
Hawaii – general contractors in Hawaii must have a valid state license to perform construction work, and a surety bond of at least $5,000 must be in place.
Idaho – Idaho contractors must have the appropriate license and bond based on the city or municipality guidelines where they intend to work.
Illinois – general contractors in Illinois need both a valid construction license and a bond before work can be performed. These guidelines are set by each city and municipality within the state.
Indiana – construction contractors working in Indiana receive licensing and bonding requirements directly from the municipality where they work for residential or commercial work.
Iowa – Iowa requires a general contractor to have a license if they earn more than $2,000 throughout the year. A bond of at least $5,000 is also required for construction contractors.
Kansas – cities and municipalities in Kansas dictate the license and bonding thresholds for construction contractors working in the state.
Kentucky – general contractor licensing and bonding requirements are set by the city or municipality in which the contractor intends to work.
Louisiana – in Louisiana, construction contractors must have a valid state license when the work they perform exceeds $75,000 for residential projects or $50,000 for commercial job sites. A minimum $10,000 bond is also required.
Maine – like other states, contractors working in Maine go by the municipality or city in which they work to receive guidance on licensing and bonding requirements.
Maryland – construction contractors in Maryland do not have to hold a license in order to perform most jobs, but a bond of at least $20,000 is required for most projects completed in the state.
Massachusetts – in Massachusetts, general contractors must meet the licensing and bonding requirements set by the municipality or city in which they intend to complete projects.
Michigan – general contractors in Michigan have licensing and bonding standards and minimums set by the municipality or city where they work.
Minnesota – bonding and licensing requirements for general contractors in Minnesota vary because they are set by municipalities and cities in the state.
Mississippi – in Mississippi, construction contractors follow the bond and license guidelines set by each city or municipality where they intend to work.
Missouri – similar to other states, general contractors in Missouri follow licensing and bonding thresholds set by municipalities or cities.
Montana – each general contractor in Montana must follow the licensing and bonding requirements set by the municipality in which they work, typically based on the value of the job.
Nebraska – construction contractors in Nebraska must have a license when they work in a county with more than 100,000 residents, and the work they intend to perform is valued more than $2,500. A surety bond is also required, ranging from $1,000 to $10,000 depending on the dollar amount of the project.
Nevada – general contractors working in Nevada must hold a license based on the value of each job they complete. A bond must be in place, ranging from $1,000 to $500,000, depending on the job's worth.
New Hampshire – all general contractors working in New Hampshire are subject to the licensing and bonding requirements set at a municipality or city level.
New Jersey – construction contractors working in New Jersey must hold a valid state license and have a bond in place between $1,000 and $3,000, based on the value of the project.
New Mexico – all general contractors operating in New Mexico must have a state license as well as a surety bond of at least $10,000 in most circumstances.
New York – in New York, construction contractors are required to have a license whenever the work they intend to perform is valued at $200 or more. A bond ranging from $25,000 to $200,000 must also be in place to operate legally.
North Carolina – general contractors working in North Carolina may hold either a limited or intermediate license. These categories are based on the value of the work to be performed in the state. Bonds are also required, with the amounts based on the value of each project.
North Dakota – in North Dakota, general contractors may not be required to hold a license, but a bond of no less than $15,000 is often required.
Ohio – a general contractor working in Ohio must have a valid state license, and they must hold a bond ranging between $5,000 and $25,000 in most instances. However, cities and municipalities set the bond thresholds for construction contractors working in the state.
Oklahoma – for contractors working in Oklahoma, a license may be required when the work performed exceeds a specific dollar amount set by the city or municipality. A bond of at least $5,000 is required in most cases.
Oregon – any general contractors who perform work in Oregon that is valued more than $1,000 must have a valid state license. Surety bonds are also required, ranging from $10,000 to $20,000 for residential work and between $20,000 and $75,000 for commercial projects.
Pennsylvania – municipalities and cities in Pennsylvania set the licensing and bonding requirements for general contractors working in the state, so amounts vary widely.
Rhode Island – general contractors working in Rhode Island may not need to hold a state license in order to do business. However, a bond is often required, based on the value of the project.
South Carolina – in South Carolina, any work performed by a general contractor that exceeds a value of $5,000 requires a license. Also, a bond of no less than $10,000 is required for most construction contractors in the state.
South Dakota – general contractors may not be required to hold a state license when performing work in South Dakota. However, a bond is often required, with the amount based on the location of the job.
Tennessee – construction contractors working Tennessee must have a license regardless of the value of the work they complete. While there is no state requirement for bond minimums, most projects require a bond ranging between $500,000 and $1,000,000.
Texas – general contractors in Texas follow the licensing and bonding requirements set by each municipality or city where they intend to complete work.
Utah – all general contractors working in Utah must have a license in order to operate legally. Typically, a bond ranging from $15,000 up to $100,000 is also required, based on the value of the project and the contractor's work history.
Vermont – municipalities and states in Vermont set the licensing and bonding requirements for general contractors, so amounts vary.
Virginia – general contractors working in Virginia may be required to hold a license in order to work in the state. Bonds are also required, but they vary from one municipality or city to the next.
Washington – in Washington state, general contractors must have a license to work as well as a surety bond of no less than $12,000 in most cases.
West Virginia – any general contractor completing work that is valued more than $2,500 must have a valid state license. Bond amounts are determined by the city or municipality in which the contractor completes the work.
Wisconsin – depending on the type of work performed, a general contractor in Wisconsin may be required to have a valid license. Bonds are also required as part of the licensing process, but minimum bond amounts vary based on the value of the work completed.
Wyoming – any general contractor working in Wyoming must follow the licensing and bonding requirements set by the municipality or city in which they intend to work.
Eric Weisbrot is the Chief Marketing Officer of JW Surety Bonds. With years of experience in the surety industry under several different roles within the company, he is also a contributing author to the surety bond blog.