25 September 2020
Want to become a general contractor in Delaware - but have no idea where to get started?
We don’t blame you. It seems like wherever you turn, there are different contractor license requirements you have to fulfill before you can start working. And that’s not just at the state level; certain counties in Delaware have their own legal requirements for contractors, which can get pretty frustrating if you’re working at multiple sites.
That’s why we decided to jump in and help take the confusion out of getting your general contractor’s license in Delaware. So whether you want to work exclusively on single-family homes or want to dive into commercial building, here’s what you need to know about how to get a contractor’s license in Delaware.
The short answer is, getting a contractor’s license shows that Delaware has vetted and approved your business to work with customers within the state. Without this approval, you could end up getting some serious fines, since it’s illegal for unlicensed contractors to work on construction projects.
But let’s go a little bit deeper, because that’s not the only reason why you should get licensed.
Let’s say you’re looking to hire someone to help you out with your contracting business. You have one of two methods for hiring this subcontractor:
It doesn’t take long to figure out that the second option is the best way to hire a good subcontractor. By examining a person’s credentials, you can get a pretty accurate idea as to the kind of work they’ll bring to your business.
Think of your Delaware contractor’s license as the credentials your customer needs to feel good about working with you. Your license shows that you’re committed to doing things the right way; it also demonstrates that you understand your legal obligations as a contractor. Without it, your customer might be legally liable should any accidents or damages happen while you’re on the job.
Okay, so you know you need a contractor’s license. But what’s the process for getting one in Delaware?
Getting your Delaware contractor license is surprisingly simple, especially when compared to other states. If you’re
Before we dive into the specific steps for getting your Delaware contractor’s license, let’s take a second to understand how the state defines a contractor. Let’s grab a direct definition from Delaware’s Division of Revenue:
“‘Contractor’ includes every person engaged in the business of [f]urnishing labor or both labor and materials in connection with all or any part of construction, alteration, repairing, dismantling or demolition of buildings, roads, bridges, [etc]; a person is a contractor regardless of whether the person is a general contractor or subcontractor, or whether the person is a resident or a nonresident…”
In other words, if you have anything to do with any kind of residential or commercial construction, you should probably consider yourself a contractor!
If you need this kind of license, then the first step is to identify how your residence affects the kind of license you need to apply for. On one hand, if you live within the state of Delaware, it’s pretty simple - you apply for a resident contractor license.
If, on the other hand, you’re located outside of Delaware but you’re still getting a lot of projects here, you’ll want to apply for a non-resident contractor license.
Here’s how to do just that:
Resident Contractor: If you already live in the state of Delaware, prepare yourself for a pretty straightforward process. Resident contractors only need to fill out this resident contractor application and the $75 business license fee.
Keep in mind that this license fee is prorated based on the month you apply. For example, if you’re applying for your business license in January, you’ll need to pay the full $75. If you’re applying in any other month, you’ll pay less, depending on the month itself.
Here’s a quick chart that can help you determine how much it’ll cost to get your Delaware business license:
All resident contractor licenses expire on December 31st each year, at which point you’ll need to renew.
Pretty simple, right?
Delaware has also provided a handy guide with all the tax forms you’ll need once your contractor business is up and running. These forms come with the Delaware resident contractor license application, so once you download it, you’ll have everything you need come tax season.
Non-Resident Contractor: If you want to conduct contractor work in the state of Delaware but don’t actually live in Delaware, you’ll need to apply for a Non-Resident Contractor license. This specific type of business license gives you permission to work in Delaware, regardless of where you live.
The first step of this process is pretty straightforward: You’ll need to fill out an application for a Delaware business license and submit it with a check for your license fee. The business license costs $75 and expires annually on December 31st.
However, if you apply for your business license after January, you can prorate the cost of your license. Here’s a handy breakdown for figuring out how much you’ll need to pay:
As a non-resident contractor, you’ll need your business bank to fill out a letter of credit to demonstrate that you’ll be able to make good on any of your obligations to the state of Delaware.
So you’ve got your business license from Delaware - awesome! Now you’re ready to get started on that project, right?
Not so fast. Whether you’re licensed as a resident contractor or a non-resident contractor, there are certain things you’ll need in order to work in specific Delaware counties. It can get pretty confusing trying to figure out what you need for each county, so just plan on having the following so you can get right to work:
This is a must-have for non-resident contractors, as Delaware requires you to have surety bonds in the amount of 6% of the total cost of the project. In some Delaware counties, you’re required to have even more; for example, general contractors working in Wilmington need to post $3,000 in surety bonds.
The price for posting these bonds can vary, since they’re based on two factors:
It’s worth doing a little research to see what you can expect to pay for surety bonds. No matter what you end up paying, make sure your project contract reflects the price of these bonds.
If you’re a non-resident contractor working in Delaware, you’ll have to provide proof of your bond. The bond company that you choose to work with should be able to help you with this process.
The only exception to the above rules is if you’re a non-resident contractor working on a project that’s less than $20,000. In this case, all you have to do is submit this form to the Delaware license department, which demonstrates that you don’t have to go through these bonding requirements.
No matter what size project you’re working on, it’s a good idea to have a business insurance policy in place. Not only is liability insurance legally required by some counties before you start working on a project, but the state of Delaware also requires you to have a workers compensation policy if you have employees.
Bottom line: If you want to work as a general contractor in Delaware, you must have business insurance. To make sure your bases are covered, we recommend getting a general liability policy as well as workers’ compensation coverage.
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 $22.50/month.*Start Here >
Here’s why: General liability insurance provides coverage for accidents and damage that either happen in your place of business or when you’re on a client’s property. As a contractor, you’ll definitely be spending plenty of time visiting your customers, so you need this kind of protection in place.
Otherwise, if you or an employee gets hurt on the job, your customer could be held legally liable for that injury.
It’s not just protection for your customer - general liability insurance covers you as well. Let’s say you’re replacing a roof on a client’s home. The upcoming weather forecast calls for storms, so you cover up the roof with canvas tarp so the rain doesn’t seep through.
Unfortunately, you didn’t secure the tarp well enough and rain ends up getting into the client’s attic.
Without general liability coverage, you’d be personally responsible for any costs associated with cleaning up that damage (including mold removal and replacing ruined items). General liability insurance covers those costs for you, so you don’t end up having to potentially bankrupt your business (or yourself!) after an accident.
With regards to worker's compensation, Delaware requires that you have this type of coverage, even if you only work with part-time contractors. You’ll need to provide proof of this insurance coverage before you can even work on a client’s project. Otherwise, you risk getting fined $10,000 or more.
Now you know what you need in place to get your contractor’s license in Delaware. But there might be a burning question you still need answered: Do you have to take a test to get certified as a contractor?
Does the thought of taking a contractor’s license exam give you flashbacks of tests back in high school?
Don’t worry, you won’t have to go through that test-taking experience again. Generally speaking, Delaware doesn’t require contractors to take any sort of exam in order to be licensed as a general contractor. All you have to do to get your license is follow the steps outlined in this article.
There are a couple exceptions to this rule; for example, if you’re looking to do work as an electrician, plumber, or HVAC technician, you’ll have to take an exam in order to get your license. You can learn about these exams here for electricians, or here for plumbers and HVAC technicians.
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 January - December 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
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