Want to become a general contractor in Maryland, but have no idea where to get started?
We understand! Setting up a new business often has a lot of little steps. You want to do it all right, too, especially the steps that deal with being lawful. The downside, though, is that all of those necessary forms and filings can get confusing. If you feel lost in a sea of wordy state government jargon, we’re here to help.
First things first, do you even need a Maryland contractor license? Each state handles licensing, registration, and insurance requirements for general contractors or handymen a little differently. In Maryland, the industry is regulated by the Maryland Home Improvement Commission.
Some examples of work that require licensure include:
Just like you need to pass an exam to get your driver’s license, you’ll need to pass an exam to acquire your general contractor license in MD.
Licensure laws require contractors to meet experience, education, or examination requirements before they can set up shop.
What’s the point of licensure, though? Just like driver’s licenses make sure that only capable and knowledgeable drivers are on the road, contractor licenses make sure that all contractors in the state meet standards. An unlicensed contractor is committing a crime each time they work on a home improvement project, and they also may have a criminal past.
The Maryland Home Improvement Commission also protects consumers with a Guaranty Fund. Each new licensed contractor contributes to the fund, which compensates homeowners that received poor workmanship from a licensed contractor. Having these protections in place creates a favorable opinion of licensed contractors, which in turn benefits local contractors.
We’ve covered the “what" and “why" of general contractor licenses in MD, now let’s get into “how."
I know, I know. I just talked about how contractors need a license, and now I’m bringing up exceptions? There are a few specialties that don’t require licensure and another that requires a different kind of license altogether.
Examples of project types that do NOT require a license include carpet installation and cleaning, chimney sweeps, and installing blinds. However, any related services do require a license. For example, carpet installers don’t need a license, but if you also install a wood or tile floor, you WOULD need a license. Unless you plan on only selling a single specialty service without offering any additional help, you need a license.
Up until this point, all of the general contracting jobs fall under Maryland’s “home improvement" category. If, however, you plan to work on home building projects, you’ll need to register with the Attorney General.
Now that we had a quick detour on license exceptions, let’s get back to how to get a contractor’s license in MD. Before you’re able to submit an application, these are the requirements you need to meet:
Two years of experience. Before taking your exam, you’ll need two years of trade experience or comparable educational training. If you’re a veteran, you can apply relevant experience to the two-year requirement. There are no continuing education requirements to keep up after you have your license, though.
Financial solvency. Financial what? Basically, the state wants to see that you’re able to handle your business liabilities. Solvency takes into account your personal assets, liabilities, credit report, and net worth. If your business doesn’t meet the guidelines, you’ll need a surety bond or an indemnitor. You can find the personal financial statement form here.
Conviction records for related crimes. If you’ve been convicted of a misdemeanor or felony related to a home improvement transaction in the past, you’re required to supply copies of conviction records.
Articles of incorporation. Corporations applying for licensure must submit articles of incorporation and a Certificate of Good Standing from the Department of Assessments and Taxation.
Registered trade name. Have a great idea for a business name? You’ll need to check with the Commission that it’s available, and then register your name with the Department of Assessments and Taxation. Your name registration certificate will be sent with your application.
Liability insurance. Accidents happen, and if they do, you’ll want to be protected. General liability insurance can help protect in case of property damage, third party accidents, or injury.
Having coverage can save you from having to pay costs out of your own pocket, which could be detrimental to your business.The state of Maryland requires you to have $50,000 in liability insurance at the time you apply for licensure.
You may need to show proof of business insurance to get your license.
That’s where we come in. Compare free insurance quotes for policies as low as $25.95/month.*Start My Quote
After you have your requirements squared away, you’re ready to take the exam. The contractor’s exam has 55 questions, and you’ll need to earn at least 70% to pass. After passing the exam, you have two years to use the scores to apply for licensure. If you don’t pass, you can try again in a month.
The exam will set you back $63 and two hours of your time, but it’s worth it for the opportunity to set up your business. PSI Examination Services hosts the exam, and you can apply to take the test by:
After you’ve met application requirements, secured business insurance, and passed your exam, you’re in the home stretch of getting your Maryland contractor license. You can download the application here, along with all the supporting forms.
You’ll also need to send application fees. There’s an extra $250 fee for additional company locations, but the cost to license a new, single-location would be $370.
Don't forget, you may need to also get a Maryland business license as well.
Luckily, each license is good for two years before you need to renew and pay the fee again. The state will send you a notification 60 days before expiration.
Have more questions about getting your Maryland contractor license? Find answers at the official Maryland Home Improvement Commission website .The Home Improvement Commission also offers a workshop to help you through the process.
If you still need to get general liability insurance before you can apply, get a contractor's insurance quote to ensure you’re covered. If you’re already covered, get a quote to learn if you could be paying less for your insurance.
There are so many things you can do as a business owner to set yourself up for success. And we know, sometimes those things make up a long list. By reading this article and taking the steps to get a Maryland contractors license, you're preparing to provide your customers with your best work. Take one step at a time - you got this!
* Monthly payment calculations (i) do not include initial premium down payment and (ii) may vary by state, insurance provider, and nature of your business. Averages based on January - December 2020 data of 10% of our total policies sold.
I'm a freelance writer who has always had an interest in entrepreneurship, starting way back with lemonade stands. These days I write to help business owners with their everyday challenges and choices. When I'm not typing away, you'll find me eating pizza, volunteering at the animal shelter, or taking too many pictures of my cats.
This content is for general, informational purposes only and is not intended to provide legal, tax, accounting, or financial advice. Please obtain expert advice from industry specific professionals who may better understand your business’s needs. Read our full disclaimer
*Harborway Insurance policies are underwritten by Spinnaker Insurance Company and reinsured by Munich Re, an A+ (Superior) rated reinsurance carrier by A.M. Best. Harborway Insurance is a trade name of Simply Business, Inc., which is a licensed insurance producer in all 50 states and the District of Columbia.