Want to set up your general contracting business in D.C. but don’t know where to start? We’ve got you covered.
You’ve decided to take the leap and start your own contracting or construction business, now what? Setting up a business is an exciting time, but it can also be overwhelming. Throw in government processes and legal hurdles and you’ve got a recipe for confusion. Luckily, we’ve reviewed official websites so you don’t have to. Here’s a simple step-by-step guide to getting your Washington, D.C. contractor license.
By the end of this article, you'll know if you should apply for a DC contractor license, what steps go into the application process, and how business insurance is related to the contractor licensing process.
It’s normal to wonder whether or not you really need a general contractor license. After all, time is money. In the case of business licenses, though, it’s a matter of “must-have” not “nice-to-have.”
Business licensure laws are created to protect contractors and consumers alike. By attaching requirements and applications to contracting businesses, customers feel more comfortable hiring trustworthy handymen.
On the flip side, contractors benefit from an even playing field rid of shady contractors that can dramatically underprice you due to lack of knowledge. Business licenses can also grant contractors rights, such as lien right for unpaid work.
Along with license requirements, contractors in Washington, D.C. also need to have business insurance. Just like car insurance helps you pay for car accidents, general liability insurance protects you in a variety of ways.
Similar to a DC contractor license, having business insurance can help build trust with potential customers, setting you up for success from the get-go. Should anything happen down the line, general liability coverage can protect your pocketbook in case of third-party accidents, bodily injury, or property damage on the job. The average property damage claim is $30,000 (no small sum!), and insurance helps keep that money in your business.
In addition to helping you look favorable to potential customers, having a DC contractor license, coupled with a business insurance policy and Certificate of Insurance (COI) can be a benefit in other areas as well. Perhaps you need business insurance coverage before partnering with certain vendors, or maybe a landlord will require proof of coverage before allowing you to rent additional space or tools.
Finally, should you ever decide to apply for financial assistance, such as a loan or grant, or a bond of sorts (which we'll cover further down the article), a business insurance policy could help to boost potential candidacy for funding.
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
We took a quick break to explore why you need a Washington, D.C. contractor license, now let’s get down to the how.
Contracting projects can cover a wide range of specialties, and Washington, D.C. has decided to license them a bit differently. The rest of this post covers how to get a general contractor or construction manager license, but there are also specialty licenses issued in Washington D.C. The steps to licensure are similar between general and specialty contractors, but you’ll need to review any specific requirements for your skillset.
Washington, D.C. requires individual licenses for:
These specialties and the requirements for licensure are overseen by the District of Columbia Board of Industrial Trades. Specialty licenses require passing an exam as well as meeting experience or education requirements.
Washington, D.C. contractor licenses cover a wide range of project types, including construction and home improvement projects. While there are separate licenses for specialty projects, the only choice that general contractors need to make before applying is their license class.
There are five general contractor licenses types:
What differentiates the classes.
The difference between classes is the limit of a single contract value your business can accept. For example, on the low end is Class H, with a project value cap of $500,000. Alternatively, Class A construction manager licenses have no contract value limitations but limits at least two and a half million dollars ($2,500,000) per occurrence of bodily injury or property damage resulting from work done.
If you have questions about which class best fits your specialty, you can call the Department of Consumer and Regulatory affairs at 202-442-4400 or fill out this form to get in touch with your inquiry.
Most states require passing an exam before earning your contractor license, but the District of Columbia skips that step. While you won’t need to pass an exam for a general contracting license, there are a few other steps to complete before applying for licensure.
A “basic business license” is the term that Washington, D.C. uses for the process of getting your business set up legally. The licensing process includes registering your business name, getting set up with the IRS for sales and unemployment tax, and registering your business location. If you have employees, you may also want to consider worker’s compensation insurance. It isn’t required, but it may be a benefit that potential employees look for. Plus, worker’s compensation premiums are tax-deductible.
A pricey accident or customer injury can bankrupt a contracting business, and the District of Columbia doesn’t want that to happen. That’s why a certificate of general liability insurance is required. The coverage you need depends on your license class, ranging from $500,000 for a Class H license to $2.5 million for Class A.
Providing examples of contracts that you’ll use in your business is a bit of a unique request for contractor licenses, but a helpful one. By submitting sample contracts to the state, you get your business documents approved and feel confident sending them out. If you have a current or former contract you only need to submit one copy. However, blank agreements that haven’t been used before need to be submitted with three copies. You’ll also need to provide receipt examples.
Before submitting your application, you need to obtain a police criminal history report from the jurisdiction where you live, so that D.C. can check for related crimes.
If you or an employee will act as a salesperson, you’ll need to fill out a form and provide identification.
D.C. wants to protect consumers from contractors that run off with a client’s money or don’t perform agreed-upon work, so a bond is required. A $25,000 surety bond or cash shows that your business can cover claims.
Applying for a DC business license isn’t something you want to do for fun in your free time, but at least Washington, D.C. has made it as easy as possible to apply. The DC Business Center portal has a “Business Wizard” to help you check requirements for your exact scenario.
You’ll be able to submit your application online, as well as pay the $654.50 fee.
If you still have some Washington, D.C. contractor’s license questions unanswered, check out the district’s business registration and licensing website.
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.
* 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 Q1 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
28 November 2018 • 6-minute read
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*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.