Are you great at working with your hands? Do you want to be your own boss and lead a team? Then the life of a general contractor may be just the job for you.
Being a general contractor can be quite lucrative, but it’s also one of the riskiest industries in the country. It’s rated in the top ten industries for both workplace injuries and fatalities.1 Because of this, California has license requirements that you must meet in order to safely and legally operate a business in the construction industry.
Want to know what the contractor licensing requirements are in the Golden State? Let’s get to work.
California general contractor license requirements
Under California law, a general contractor’s license is required for any construction or alteration project exceeding $500 in labor and materials, and relating to any of the following categories:
- Building Construction/Renovation/Repair
- Highway or Highway Construction/Repair
- Parking Facility Construction/Renovation/Repair
- Railroad Construction/Repair
- Excavation Work
The California Contractors State License Board (CSLB) stipulates:
Contractors, including subcontractors, specialty contractors, and persons engaged in the business of home improvement (with the exception of joint ventures and projects involving federal funding) must be licensed before submitting bids. Licenses may be issued to individuals, partnerships, corporations, limited liability companies, or joint ventures.2
Penalties for contracting without a license
Working as an unlicensed contractor comes with serious risk. Businesses that perform contracting jobs above $500 without an active license face significant fines and penalties under California law:3
- First time offenses – Potential misdemeanor charge, which could result in 6 month jail time, a $500 fine, and an administrative fine as high as $15,000.
- Subsequent violations – A second conviction results in a minimum 90 day jail sentence and a fine that is either worth 20% of the value of the job, or $4,500.
Step 1: Requirements before you apply
A California contractor’s license can be issued to an individual, partnership, corporation or LLC, or a qualified individual.
To be eligible to become a licensed contractor in California, you need to be at least 18 years old, have a valid Social Security Number, and have the requisite experience and skills necessary to safely operate a construction business.
The only major requirement before you take the state exam is that you’re expected to show proof of four years of professional experience (within the last decade) as a journeyman contractor, foreman, owner-builder, supervising employee, or contractor.
CSLB may grant credit for training, apprenticeship, or education, but it depends on the school and the program you completed. If you do have qualifying scholastic training and/or experience, you will need to submit your official transcripts. Generally speaking you can expect to receive some credit for related education, technical training, and vocational training:4
- Up to 1.5 years for an Associates of Arts degree from an accredited university.
- Up to 2 years of credit for a 4-year degree in the fields of accounting, architecture (B-General Building classification only), business, economics, mathematics, physics, or areas related to the specific trade or craft.
- Up to 3 years credit for a Certificate of Completion of Apprenticeship from an accredited apprenticeship program.
If you lack the experience to satisfy licensing requirements, you could have a qualified individual apply for the license and then act as your representative. According to the Contractors State Licensing Board, “A ‘qualifier,’ is the person listed on the CSLB records who meets the experience and examination requirements for the license. A qualifying individual is required for every classification on each license issued by the CSLB.5
Step 2: Apply for the exam
Do you meet the qualifications described above?
Then your next step is to apply for the licensing examination. To begin, you’ll need to complete the Application for Original Contractor’s License.
Be sure that your license application is fully completed and proofread. Then send it to the CSLB headquarters with the $330 application processing fee. The address you’ll send it to is:
CSLB Headquarters
Contractors State License Board
P.O. Box 26000
Sacramento, CA 95826-0026
Step 3: Plan for the exam
If your exam application is accepted, you’ll need to sign up for a test at a testing center in one of the various locations throughout the state, including:
- San Diego
- San Bernardino
- Oxnard
- Norwalk
- Oakland
- Sacramento
- San Jose
- Fresno
You’ll receive a Notice to Appear for Examination by mail, explaining the location, date, and time of the exam, as well as other requirements such as identification.
Step 4: Study for the exam
The exam process is typically a two-part test.
Everyone must pass a standard Law and Business exam. Then, depending on if you’re planning to become a specialty contractor in a specific industry, you may need to take a second trade exam.
The following are recommended resources you can use to study for the test:
Step 5: Get your contractor license
After you’ve passed the state exam with flying colors, you’ll receive a contractor bond and fee notification form from the testing site. It will tell you what you need to submit in order to receive your California contractor license.
Requirements differ, but you may need to submit the following:6
- An initial licensing fee of $200
- Contractor license bond or cashier’s check of $15,000
- Bond of Qualifying Individual (if applicable) of $12,500
- Completed asbestos open-book examination
- Certificate of Workers’ Compensation Insurance
- Proof of exemption from workers’ compensation insurance, if no employees
- Fingerprints submitted via Live Scan (CLBS will send instructions)
- LLC Employee/Worker Bond (if applicable)
- LLC liability insurance (if applicable)
Once this has been completed, your official general contractor’s license will be sent and you’ll be almost set to go.
Step 6: Register with the proper authorities
All new general contracting corporations and LLCs in California are required to register their business with the Secretary of State’s office. The business name on your license must exactly match the name registered with the Secretary of State.
In addition, local areas throughout the state have a variety of local zoning, planning, and construction permits that may be required. Be sure to check with your local government to confirm that your I’s are dotted and T’s crossed.
Step 7: Get liability insurance
Although you may not be legally required to carry any insurance coverage outside of commercial liability auto and workers’ compensation, it would be incredibly risky to operate as a general contractor without general liability insurance.
This type of insurance can help protect you from financial damages incurred by third parties. It typically helps cover the investigation, defense, and settlement from claims relating to:
- Bodily injury
- Property damage
- Personal and advertising injury
So, where do you go to get general liability insurance?
Enter Thimble. We provide affordable, on-demand contractor insurance policies that go by the hour, day or month. It’s customizable insurance that works when you do, and helps you save when you’re not on the job.
It only takes 60 seconds to get protected by Thimble. Just download the Thimble mobile app or click “Get a Quote,” enter a few details about your business, and we’ll generate an instant quote. From there, you can purchase with a final “click” and your policy and any Certificates of Insurance (COI) you need will be instantly sent to your email inbox.
Become a general contractor in California
To become a general contractor in California, you need a license.
For that, you must have the requisite experience, pay all the related fees, and pass the specific specialty contractor tests. Once you’ve completed the steps be sure to get the insurance coverage your business needs.
Just as a quick review, you’ll need to:
- Be 18
- Apply for the exam
- Confirm that you have the proper experience
- Schedule the test
- Study for the test
- Pass the exam and pay your fees
- Register (if necessary)
- Get insurance
Accomplish these tasks and you’ll be ready to start building.
Sources:
- Bureau of Labor Statistics. National Census of Fatal Occupational Injuries in 2018.
- CSLB. Contractor Licensing.
- CSLB. Contractor Licensing.
- Contractors State License Board. Credit for Education, Technical Training, and Vocational Training.
- Contractor State License Board. Before Applying for the Examination.
- CSLB. Contractor Licensing.
