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.
Why Do I Need a General Contractor License in Washington, D.C.?
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 your pocketbook in case of bodily injury or property damage on the job. The average property damage claim is $30,000, and insurance helps keep that money in your business.
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Steps to Get a Washington, D.C. Contractor License
We took a quick break to explore why you need a Washington, D.C. contractor license, now let’s get down to the how.
Steps for specialty contractors
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. 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:
- Asbestos workers
- HVAC mechanics
- Steam and operating engineers
- Elevator tradespeople
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.
Choose your license class
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:
- Class A
- Class B
- Class C
- Class G
- Class H
What differentiates the classes? The limit of a single contract value your business can accept. 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.
What you need before applying
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.
Basic business license. 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.
General liability insurance. 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.
Contract samples. 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.
Criminal history report. 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.
Salesperson application. If you or an employee will act as a salesperson, you’ll need to fill out a form and provide identification.
Bond. 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.
Submit your application and fee
Applying for a 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.
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