{"id":1292,"date":"2021-10-18T20:14:04","date_gmt":"2021-10-18T20:14:04","guid":{"rendered":"https:\/\/www.performancesuretybonds.com\/blog\/?p=1292"},"modified":"2022-01-24T16:03:31","modified_gmt":"2022-01-24T16:03:31","slug":"contractor-bonds-vs-contractors-license","status":"publish","type":"post","link":"https:\/\/www.performancesuretybonds.com\/blog\/contractor-bonds-vs-contractors-license\/","title":{"rendered":"Contractor Bonds vs. Contractor\u2019s License"},"content":{"rendered":"\n

Before you can start a career as a contractor you will need tools, a vehicle, and a way to connect with new customers. But you may also need to get authorization from the state where you live.<\/p>\n\n\n\n

To become a licensed and bonded contractor<\/a>, contractors must jump through a surprising number of hoops to get their business fully compliant with all the rules. Understanding exactly what you need to do can be confusing, but it\u2019s essential to get things right because your business depends on it. If you don\u2019t check all the boxes that the state requires, it\u2019s illegal for you to work as a contractor, and there are strict penalties when you get caught.\u00a0<\/p>\n\n\n\n

Aptly named, the two most common requirements in this process are to get a contractor bond<\/a> and a contractor license. These are two different things, but they are also related, and they serve an overlapping purpose \u2013 it\u2019s no wonder people are confused. Just don\u2019t let that confusion keep you from pursuing your career as a licensed and bonded contractor. We will explain everything in the following article.<\/p>\n\n\n\n

What is a <\/strong>Licensed and Bonded Contractor<\/strong>? <\/strong><\/h2>\n\n\n\n

There are two ways to answer that question. In the eyes of the state, a licensed and bonded contractor is someone who meets all the core requirements to work legally. They have both a contractor bond and a contractor license, granting them the right to offer professional services to whoever will hire them. <\/p>\n\n\n\n

In the eyes of potential clients, a licensed and bonded contractor is the only kind of contractor worth hiring. These individuals have been approved by the state or local city\/county government because they have a license. They also agree to take responsibility for their mistakes because they have a bond (we will get into these distinctions more later).

Moreover, a licensed and bonded contractor appears more trustworthy, credible, and accountable compared to anyone who is not licensed and bonded. That\u2019s why contractors who operate according to all the relevant rules have more successful and sustainable businesses. <\/p>\n\n\n\n

What is a Contractor\u2019s License?<\/strong><\/h2>\n\n\n\n

In simple terms, a contractor\u2019s license authorizes someone to work as a legal contractor within a specific state. Every state (and some counties\/cities) creates its own rules and regulations governing the behavior of contractors.
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License requirements are useful in several ways. First, they define standards that all contractors must meet before going into business, which keeps anyone who can\u2019t meet those standards out of the industry. By being able to earn a license, all licensed contractors meet minimum standards for solvency, transparency, and accountability. <\/p>\n\n\n\n

Secondly, license requirements give the state a mechanism to remove problematic contractors from the industry. If a contractor cheats customers, cuts corners, or puts public trust and human lives at risk, the state can revoke their license, then issue harsher penalties if they continue working. <\/p>\n\n\n\n

Are There Different Types of Contractor\u2019s Licenses?<\/strong><\/h2>\n\n\n\n

Licensing requirements vary widely between states. In some cases, the type of license you need depends on the trade you practice, such as plumbing, electrical work, or general contracting. In other cases, the scale of the business determines licensing requirements. For instance, contractors that work on major building projects often need a different license than contractors who complete home improvement projects. <\/p>\n\n\n\n

Since it\u2019s imperative to meet all necessary licensing requirements, you need to know exactly what they are. Contacting the state agency that regulates your contractor type will always be the most accurate source of current information, but you can also talk to other contractors, recruiters, or professional organizations. <\/p>\n\n\n\n

All states have individual requirements to obtain a license, some more difficult than others. Here are some common examples:<\/p>\n\n\n\n