Admit it: You’ve got a real talent for carpentry. Whether it’s helping a friend put up new kitchen cabinets or repairing a few leaks on your roof, there’s nothing you can’t build or fix.
That’s why you’re interested in setting up your own contracting business, so you can turn your talents into serious money.
Or maybe you already consider yourself a contractor, but so far you’ve been limiting yourself to smaller projects. You’re ready to take it to the next level, so you can start working on bigger projects and earn more money.
There’s just one thing standing in your way: an Arkansas contractor’s license.
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If you’re already doing contracting work without a license, it might seem like you don’t really need one right away.
But think about it - if you don’t have a contractor’s license, you’re missing out on a ton of work. We’re talking about high-end residential projects, commercial properties, and anything else where a client might prefer to work with someone who has a contractor’s license.
Think about it from your client’s perspective - they’re asking you to work on their home or their business property. Either way, they have a really strong interest in making sure they’re hiring the best person possible. A contractor’s license:
It’s pretty similar to how you hire subcontractors or anyone else who works with your business or in your home. You don’t want to hire just anyone who walks in off the street. You want someone you can trust with the things that are most important to you.
Same can be said for your customers. They want to make sure you’re not just going to get the job done - you’re going to get it done right.
Hopefully that convinces you why you need a general contractor’s license. But that still leaves us with one question:
How do you get a contractor’s license in Arkansas?
You may need to show proof of business insurance to get your license.
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The general contractor’s license in Arkansas can be broken down into two categories: commercial contractor license and residential contractor license. The requirements for each category are pretty different, so let’s break down what it takes to get each type of contractor’s license:
Commercial Contractor’s License: First, let’s define what we mean by commercial. A “commercial” construction project in Arkansas covers any type of building or property that’s not considered a single family residence. So whether you’re building a small office or a large building complex, you fall into this category.
You need a commercial contractor’s license if you’re working on any project that’s worth $50,000 or more. This includes any costs associated with the project, like hiring for labor, materials, and other expenses.
Before we continue, let’s take a moment to go over what Arkansas defines as a “project.” A project is any work that takes place within a single contract. Avoid the temptation of dividing up a project so that it falls below the $50,000 mark so you can get around the commercial license - it’s definitely illegal.
You’ll need a commercial contractor’s license before you can even think about bidding on a project, so make sure you get this squared away before meeting with clients. That way, you can start work immediately without going through the hassle and time-consuming effort of getting your commercial license.
If you’re looking to get a commercial contractor’s license, follow these steps:
Make sure you read over the Arkansas Commercial New Application Form to see if there are any other requirements you need to check off to get your license.
Note: You can also apply for a Restricted Commercial License. This license means you can only perform work on commercial projects that are less than $750,000. Most of the requirements for this type of contractor’s license are similar to those for the general Commercial license.
One interesting exemption to these rules is if you’re building your own commercial property. So for example, if you’re building your own retail store and aren’t hiring any contractors to help, you won’t need a commercial contractor’s license. If you’re pretty handy at building and are up for the challenge, you may want to consider taking this route.
Residential Contractor’s License: Residential work in Arkansas is defined as any work that’s done on a single family residence. So whether you’re building a home or adding an extension, this work falls under the residential contractor’s license.
Let’s quickly define what Arkansas means by “a single family residence,” as plenty of contractors may question which license they might need to work on a multi-family complex. According to Arkansas law, a single family residence is a property that contains up to four separate single units.
For example, if you’re building a duplex or a triplex, that’s still considered a single family residence, even if multiple families will live there. Any residential building that’s designed to house more than four separate units is considered a commercial project, which will require a commercial contractor’s license.
You’ll be required to get a residential license (referred to in Arkansas as the “residential builders license”) if your project is more than \$2,000. This includes the price of subcontractors, materials, and any other costs.
If you’re looking to get a residential contractor’s license, follow these steps:
Note: If you’re looking to build your own home, you don’t need to get a residential contractor’s license. In fact, you’re allowed to build one house per year, so long as you’re not aiming to sell it or rent it out. If you are, you’ll need to get a residential contractor’s license.
By the way, it’s worth mentioning that if you already have a commercial license, you don’t need to get a residential one. Your commercial license covers any legal obligations you might have when working on a single family residence.
Other Licenses: There are two more specific commercial and residential contractor licenses that you might be interested in. These include:
Light Building Commercial Classification: Under this specific commercial license, a contractor is allowed to work on a commercial project that’s less than $500,000; additionally, the commercial building shouldn’t be more than two stories in height. You can also work on residential properties with this license. As we previously noted, the requirements for getting this type of license is the same as getting a general commercial license.
Home Improvement License: A home improvement license is a specific type of residential license that’s required of contractors who are remodeling or repairing a home. This type of license is only required if the residential project totals more than $2,000. Whether you’re remodeling a home or painting a home exterior, you may need to get this license to continue with the project.
Keep in mind that you don’t need to get a home improvement license if you own the home you’re working on. You also don’t need to get this license if you already have another type of contractor license, or a license to do electrical or HVAC work (provided you’re working on those types of projects).
By now, you probably have a good idea of the type of contractor license you need to apply for - but you’ve also noticed that you need to pass the Arkansas Business and Law exam in order to get it. What exactly is it, and how can you prepare for it?
The Arkansas Business and Law exam is actually a national exam that’s used to determine if you’re ready to have a residential or commercial contractor’s license. The test is open book, but you’ll need to answer 50 questions within the span of two hours. You’ll take the exam at your nearest testing center, which will be pointed out to you when you register for the exam.
The testing schedule is pretty generous; in most locations, you can take the test Monday through Friday between 8am and 8pm, and Saturdays between 8am and 4pm.
To register for your contractor’s license exam, use the following steps:
It’s recommended that you arrive at the testing center about 30 minutes before the exam (we suggest doing a practice run on an earlier date so you can be confident about directions). You’ll need to bring a form of government ID with you, like your driver’s license or passport.
Once you’re done with the exam, visit https://www.prometric.com/en-us/Pages/home.aspx to have the exam results sent to you first. Once you receive the exam results, you can forward them to the Arkansas Contractors Licensing Board at:
Arkansas Contractors Licensing Board 4100 Richards Road North Little Rock, Arkansas 72117
You can also forward your exam results by faxing them to the Arkansas Contractors Licensing Board at 501-372-2247.
Unless you miss the days of test-taking, the thought of taking an exam probably isn’t the most exciting one. But don’t worry - the Business and Law exam may sounds pretty intense, but it’s actually not that bad. The entire purpose of the exam is just to make sure you know your legal obligations when you’re on the job. If you’ve ever done a contracting job before or have previous experience as a subcontractor, it’s likely you’ll do just fine.
Got more questions about getting your Arkansas contractors license? Find answers at the official Arkansas Contractors Licensing Board website.
Once licensed, don't forget to run a contractors 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 love writing about the small business experience because I happen to be a small business owner - I've had a freelance copywriting business for over 10 years. In addition to that, I also head up the content strategy here at Simply Business. Reach out if you have a great idea for an article or just want to say hi!
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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