Looking to start a general contracting business in Oregon but aren’t sure what you need? This post is for you.
So you’ve decided you want to start offering your contracting skills professionally or finally start the handyman business you’ve dreamt of. Hooray! Before you start finding clients and sending contracts, there are a few legal loose ends to take care of. How do you get a contractor’s license in Oregon, and do you even need one? Those questions will be answered in this post. Ready?
Let’s start at the beginning - do you need a license? If you’re going to be doing construction or home improvement projects on someone else’s property, the answer is most likely yes.
Here are some jobs that fall under Oregon’s definition of “construction or improvement" and therefore require licensure:
In fact, there are only a couple of specialties that do not require a license in Oregon. These are:
Alright, so you’re going to have to get a license. What is a license, and why do you need it? Much like your driver’s license, a general contractor's license in Oregon ensures that everyone contracting in the state knows what they’re doing.
Licensure laws require workers and businesses to pass an exam to earn the right to operate in the state. Some states also have standards for years of experience or education.
When licensure laws are in place, customers feel more confident hiring out projects. Plus, it helps raise the standard of contractors in the state.
Oregon’s license laws come with insurance conditions, too.
Business insurance covers expenses in case there’s property damage or bodily injury. The state of Oregon requires contractors to have general liability insurance, which will save your personal finances in case of an accident.
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When you first review all the steps and requirement to get a general contractor license in Oregon, it can be a little overwhelming. In this section, we’ll break it down into manageable chunks that you can add to your to-do list. Slow and steady wins the race, remember?
A majority of general contracting jobs fall under the same category in Oregon and therefore use the same process. However, there are a couple specialties with slightly different requirements.
You’ll need to take a different exam if you’ll be doing any of the following:
If any of these apply to you, learn more about specialty certifications here. In some cases, these skills require a separate certification along with the contractor license that we cover in this post.
Before you start the Oregon contractor’s license process, you need to determine the extent of your work. Oregon classifies contractor licenses as residential, commercial, or dual.
Residential contractors work on smaller-scale buildings. This includes single-family homes, 4-unit apartment buildings, or single units within a high-rise. This classification also covers small commercial buildings, such as gas stations or fast-food restaurants.
Commercial contractors construct or improve large commercial buildings. Think hospitals, shopping malls, or parking garages.
Contractors who opt for a dual license can work on both residential and commercial scales.
In addition to affecting what types of structures you can work on, the scope of your projects also changes your bond and insurance requirements. A contractor with residential and commercial endorsements needs two separate bonds along with a larger general liability insurance plan.
Want to learn more about residential vs. commercial endorsements for Oregon contractors? Check out the comparison chart here.
Before you’re able to take your exam and submit your contractor’s license application, you need to meet a few requirements. These include being at least 18 years old and completing at least 16 hours of training on law and business practices. This training has to come from an approved provider who will alert the testing company when you complete the course.
After you’ve completed your pre-license education, you’ll be able to schedule your test time with PSI. Leading up to the exam, you’ll prepare with the Oregon version of the NASCLA Contractors Guide to Business, Law and Project Management (1st edition).
You’ll need to purchase the guide and then pay $60 for the exam, but I’ve got good news: the test is open book. That means you’ll be able to bring your guide with you to take the test. You’ll still need to study, but you’ll be able to reference answers at test time. Plus, you’ll get your test results right away.
After passing your exam, you just have a few more requirements and forms to take care of. Here’s what you’ll need to submit alongside your application:
Registered business name. No matter what type of business you plan to set up, be it a corporation or sole proprietorship, you need to register. Choose a name and head to the Secretary of State’s website to formally set up your business.
Surety bond. If a client files a report against your contracting company for breach of contract or improper work, you may be ordered to pay money. Oregon requires contractors to have a surety bond so that even if the company isn’t able to pay damages, the bond company can. The required bond amount varies based on the type of contractor, from $10,000 up to $75,000.
General liability insurance. The state wants to make sure you’re covered in case something goes wrong, so general liability insurance is required. Just like with surety bonds, the amount of general liability insurance you need varies by contractor type.
Worker’s compensation insurance. If you have or will have employees, you need worker’s compensation insurance. Not only is worker’s compensation insurance helpful, but you’ll also receive a penalty if you need it and don’t have it.
SSN or tax numbers. You’ll need to supply your SSN or Federal Employer Identification Number for taxes, along with employer account numbers.
With your exam scores, insurance and bond proof, and company info in tow, you’re ready to submit your application! There are separate forms for residential residential, commercial, or dual endorsements. The final step is submitting your:
You’ll mail your application and documents to:
PO Box 14140
Salem, OR 97309-5052
After you receive your license, you’re ready to start accepting customers. Just make sure you display your license number on your advertisements and contracts. You’ll also need to take continuing education classes to renew your license every two years.
If you still need to get general liability and worker’s comp insurance before you can apply, get a contractor's insurance quote to ensure you’re covered.
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.
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