20 December 2021
Do you want to become a licensed contractor, handyman, or home renovator in Tennessee, but you’re not exactly sure how to get started?
There’s a lot of information out there on how to apply for your contractor’s license in Tennessee. Where do you start? How much is the application fee? What information do you need to submit to complete your application?
I cover all that and more in this step-by-step guide on everything you need to know about getting your contractor’s license in Tennessee. Follow this guide, and you’ll be a licensed contractor in no time.
Most likely, yes. The state of Tennessee requires a contractors license, if you plan to bid on a project with an estimated cost of $25,000 or more — including material, equipment, and labor. The law specifies that this applies not only to submitting a bid, but also offering to engage or negotiating a price.
The Tennessee contractors license requirement affects you if you’re acting as any of these:
Prime (General) Contractor - Bidding or contracting directly with the “owner” of the project;
Subcontractor – Contracting directly with any contractor (not to the owner) to perform projects when the total cost of that portion on the project is $25,000 or more, for the following (includes all materials, equipment, and labor):
Construction Management – When the value of the total project is $25,000 or more.
You can read all the details related to Tennessee contractor license requirements here.
While the definition of a contractor can include a wide range of occupations,
as long as the total cost of the work does not equal or exceed $25,000.
If you’re doing masonry work, the amount is increased to $100,000.
There are some exemptions to the Tennessee contractors license law. One of them does allow you to be your own general contractor, but there are certain requirements and conditions.
If you’re a homeowner doing the work on your property, you can do the work yourself without a contractor's license. The restriction here is that the residential structure is not open to the public, or that it is not for sale, lease or rent.
You’re also allowed one homeowner permit once every two (2) years.
Anyone you may hire needs to have a Tennessee contractors license if they perform $25,000 or more of the work. Based on the contractor law, they would be considered prime contractors in those instances.
Church members may build a single residence for a preacher without a contractor's license. A storage building can also be constructed without a license as long as it’s not open to the public, or it’s for sale, lease or rent. Keep in mind, the total project cost of $25,000 applies here since the building is open to the public.
A non-profit organization with a 501(c) federal exemption, may build single residences without a contractor's license. They must follow local requirements for permits and inspections.
A state license is not required for projects that are 100% federally funded and are on federal land, unless required by the federal authority in charge of the project.
No, you do not legally need a contractor’s license to flip houses. This applies at both the state and local municipality levels.
However, just because a Tennessee contractors license isn’t required doesn’t mean you shouldn’t consider getting one. Like a hammer or compound mitre saw, a Tennessee contractors license can be a great tool to have if you’re flipping properties.
With a license, you can do some or all of the work yourself without needing to hire a general contractor (remember, since the property is being offered for sale, the homeowner exemption we mentioned above doesn’t apply).
Home improvement contractor, prime contractor, construction management—what’s the difference between each contractor’s license? Before we jump into the nitty-gritty details of the application process, let’s define what each license covers. That way, when you go to apply, you know exactly what license to pursue.
There are two categories of Tennessee contractor’s licenses:
Projects that are under $25,000
Projects that are over $25,000
Depending on the nature of the projects you plan to take on, you may need to apply for an additional license. For more information about the license classifications, check out this resource from the Tennessee Board for Licensing Contractors.
Home Improvement Contractor: If you want to take on projects like repairs, improvements, or additions for remodeling projects, this license is for you. Keep in mind this license doesn’t allow you to take on plumbing, electrical, or HVAC projects.
Limited Licensed Electrical (LLE): This license is for electrical projects that do not require an inspection.
Limited Licensed Plumber (LLP): Similar to the LLE, this license is for plumbing projects that do not require an inspection.
Prime/General Contractor: If you plan on working with the direct point of contact for the project that falls within the definition of contracting in Tennessee, this is the license you’ll want to look into.
Subcontractor: If you plan on working directly with the prime or general contractor, who is not the owner of the project, doing jobs like plumbing, electrical, HVAC, and roofing, this license is for you.
Construction Management: No matter what, this license is needed for any project valued at $25,000 or more.
Also, it’s important to note that no matter the type of contractor you are, you must indicate the type of work you want to do. You must apply for a license if your work falls under one of the categories:
Now that you know what the different licenses are, let’s take a look at what the requirements are and how to apply.
Regardless of the type of license you want to apply for, you must take and pass the Tennessee Business and Law exam. And depending on your trade, you likely will have to apply for an additional license.
The tests are issued through PSI Testing along with other administrative things like scheduling, registration, testing locations, and more. Each exam has a $55 fee.
Tennessee law requires that all contractor’s license applicants prepare an Audited or Reviewed financial statement through a licensed independent accounting firm.
Reviewed Financial Statements are required for monetary limits of $1,500,000, and Audited Financial Statements are required for monetary limits that exceed $1,500,000. For more information on financial statements, visit the Tennessee Department of Commerce & Insurance website.
The next step in the application process is to submit a letter of reference. The letter must be from a past client or employer who has direct experience working with you. Or, you could also submit a letter from a code official who has inspected your work.
You also need to provide proof of insurance, specifically general liability insurance based on your monetary limit. You must also provide proof of worker’s compensation insurance as well.
We get it. Finding the right type of business insurance can feel like a project that needs its own general contractor. Not to worry. We work with a lot of contractors and tradespeople like you.
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You may need to show proof of business insurance to get your license.
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Nothing says “official” like registering your business with the Secretary of State!
All LLCs, partnerships, and corporations must register their business through the Tennessee Secretary of State. What’s more, all businesses that operate in the state of Tennessee must register for their tax identification numbers as well.
Now it’s time to fill out the application and submit the fee. Make sure you fill out the application completely, and if there are sections you don’t feel apply, provide a detailed explanation.
You’ll be asked to provide information such as:
Once you’ve completed the entire application, submit the nonrefundable $250 fee to:
Tennessee Board for Licensing Contractors 500 James Robertson Parkway Nashville, TN 37243-1150
Once you submit your application, it typically takes roughly three weeks to process. You’ll be notified by email, mail, or fax if an interview is required or if they need extra information.
All licenses are issued for two years. Notices of renewals are mailed 90 days before your license expiration date and are required to be renewed 30 days before the license actually expires. Also, there’s a $200 renewal fee, so don’t forget to submit that as well!
There are two ways you can renew your license:
Online: You must create an account and will need to provide your Indv/Org number, license identification number, email address, and zip code, so make sure you have that on hand.
Mail: You can also fill out a paper application and send it to: Board for Licensing Contractors, 500 James Robertson Parkway, Nashville, TN 37243
You can contact the Tennessee Secretary of State at (615) 741-2286 or check out their website for more information or if you have any questions.
Tennessee does have reciprocal agreements with several states. If you have a contractors license from one of these states, you may apply for a trade exam waiver by having your state complete a License Verification form and including it with your Tennessee contractors license application.
Here are the states that have reciprocal agreements with Tennessee:
Do you have questions about contractor’s insurance in Tennessee? Our team can help you figure out precisely what you need to ensure you’re up to code. You can also check out our helpful guide on How to Start a Handyman Business.
* 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’m a writer who specializes in creating value-packed blog content for eCommerce and SaaS companies and small businesses. When I'm not writing, I’m probably out running, checking out a thriller novel—or two—from the library, or trying to pet the nearest dog.
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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