10 January 2022
Do you want to own a construction or handyman business? A lot of people do.
After all, licensed contractors can make a lot of money. And the profession allows you to enjoy flexible hours, choose your customers, see tangible results, and avoid a desk job.
Sounds like the dream, huh?
And this may be a great time to do so. According to the University of Colorado Boulder, jobs in the residential and nonresidential construction industries are expected to grow by 2.3%, which is among the highest growth rates of all occupations they looked at in the state.
But before you take the leap, you need to get a contractor’s license. As you start the process, you’ll notice there’s a ton of confusing information out there. To help, we’ve done the research. All you need to do is follow these steps.
Do you work as an electrician or plumber? If so, it’s the law for you to get a license before doing any work in Colorado. If you don’t, you could risk time in jail or a hefty fine. Yikes.
To avoid criminal penalties, head over to the Colorado Department of Regulatory Agencies (DORA). You’ll need to pass an exam, provide proof of experience, and fill out the required paperwork.
It’s worth the effort. Pretty soon, you’ll carry an official title and get the high-paying work to boot. Plus, getting a license in Colorado has a ton of other benefits:
Not an electrician or plumber? Other trades, including general contractors, can get their licenses through local municipal departments. The process is a little different in every city and county in Colorado.
But don’t worry. We’ll walk you through the details, so you can jump into it right away.
First off, it’s not as overwhelming as it appears. We’ll talk about getting a state license for electrical and plumbing professions. Then, we’ll cover getting a general contractor’s license in Colorado’s largest city, Denver.
** 1. **What you'll need to get licensed as an electrician:**
There are different kinds of electrical experience that will dictate how you apply for your Colorado contractor's license.
The requirements are different depending on if you’re a:
Start the application process by applying online here. You’ll also need:
** 2. **If you're a plumber applying for a license, you'll need to consider this:**
The type of work you do will be specified on your application. The types of plumbing work experience and list of items needed to apply for your contractor's license are below:
Keep in mind: 1 month of full-time experience is 163 hours.
It’s fairly simple to apply online here. In your application, you’ll also need:
** 3. **You may need to register for a business license**
If you’re planning on working for yourself (and let’s face it, for many that’s the dream), then there's a chance you may need to get a Colorado business license, too. You would apply for a business license with Colorado’s Secretary of State.
Typically, to get a business license in Colorado, you’ll need to submit general information about you and your business, as well as supporting materials based on your occupation. To make the application process faster, it’s a good idea to have the following information handy:
You may have noticed during the application process for your Colorado contractor's license, that certain types of business insurance, such as workers compensation, are required--and for good reason. Workers comp and other business insurance coverage, like general liability, can help protect your company in case there’s an accident or loss.
Wanting to protect your business is easy to understand. But when it comes to understanding insurance, that can often be harder.
One reason is that many insurance companies speak their own language and use jargon that most small business owners don’t understand. That can be frustrating when all you want to do is protect the contracting business you’re working so hard to build.
That’s why we put so much effort behind doing two things really well. One is understanding what it’s like to be a small business owner. The other is using that knowledge to find the right insurance for each customer and help them understand their coverage. We believe that puts you in the best position to make the right insurance choice for your business.
And we can work with you the way you like to work. Our online quote tool can get you coverage from leading insurers at any time of the day or night. And you can do it on a laptop, tablet, or phone.
We also have licensed insurance agents who can answer questions and take care of your coverage on the phone, Monday through Friday from 8 am to 8 pm. Just call 844-6654-7272.
Either way, we can get you covered in just about 10 minutes. It’s fast, easy, and friendly. Probably not what you’d expect from a typical insurance company.
Plus, because we work with many of the nation’s top insurers, we can find coverage and prices to fit your budget. That includes general liability policies as low as $19.58/mo.*
To help get you started, here’s a quick rundown of some of the coverages you may need or want to include as part of your business insurance.
General liability insurance — As a contractor, there are skills and tools you rely on to get things done. You can think of general liability (GL) coverage in much the same way. It can go a long way toward taking care of your business.
A GL policy can financially protect your contractor business by covering the costs related to claims of:
Accidents happen, even to the best of us. And when they do, they can have a significant financial impact. Consider this: the average claim for property damage or customer injury is a stunning $30,000.
Without general liability coverage, the cost of that claim could come out of your pocket.
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 $19.58/month.*Start Here >
Workers compensation insurance - Colorado requires that you carry workers compensation insurance if you have one or more employees. This includes full-time, part-time, and seasonal employees.
While compliance will keep you on the right side of the law, having workers comp also can make good business sense.
For one thing, it can help take care of your people. If an employee gets sick or injured while working for you, workers compensation could financially cover those resulting claims, up to the limits of your policy.
Secondly, workers comp can protect your business's finances in the event a claim is filed. It could pay your employees’ medical bills (including rehabilitation expenses), lost wages, and even death benefits.
Plus, a workers compensation policy also could pay for legal fees if you need to defend yourself against a lawsuit.
Inland marine insurance - As a contractor, what would happen if your tools and equipment were lost or stolen? That could really bring your business to a standstill.
Inland marine insurance can help financially protect the tools and equipment you use while in transport or on a job site.
Inland marine insurance can cover:
Inland marine insurance also can cover someone else's property that gets damaged or stolen. So if you’re renting or leasing tools, your insurance may cover repairs and replacements, up to the policy’s limit.
There are typically three types of licenses to consider when you’re applying for a Colorado contractor license.
Each one allows you to work on particular types of projects. Here’s a quick breakdown:
Class A - This allows you to work on residential, commercial, and public projects of any size. While the range of projects is fairly broad, it’s important to know that to do any electrical, plumbing, or mechanical work you’ll need an appropriate license.
Class B - With a Class B license, you can work on the majority of residential and commercial buildings. A key restriction is that you cannot perform contract work on buildings classified as Type IA or IIA by the International Building Code.
The same restrictions on electrical, plumbing, or mechanical work also apply to a Class B license.
Class C - If you hold a Class C license, you can work on residential buildings for single-family or multi-family residential buildings with fewer than 3 floors and fewer than four separate units.
Note that electrical, plumbing, or mechanical work will require additional licenses.
The easiest license to get all depends on your skills and the services you want to provide. Consider what your focus is, and decide.
For contractor work that mostly involves general home repairs and remodelling, you should apply for a general contractor license. If you’re a plumber by trade, then, of course, it makes sense for you to pursue a plumbing license.
Bear in mind that if you do not have a license for a particular trade, you cannot provide that service — even if you have the skills. So without an electrician’s license, you can’t legally rewire a room (even if you know how.)
On the other hand, If you don’t have any experience and want to obtain a license to perform work, there’s another option. One of the easiest ways is to get licensed as an RMO (Responsible Manager Officer) or RME (Responsible Managing Employee).
As an RMO, you’re a licensed contractor who allows your license number to be used by an existing business to take on construction projects over $500. It’s the same for RME, except the contractor qualifying the company is an employee.
With this approach, you are hiring a licensed RMO as a project manager and in essence “borrowing” their license to comply with the law.
Much like a general contractor in Colorado, working as a handyman does not require a state-level license. However, you should check with your local licensing agencies or authorities to find out what may be needed to perform certains types of work in your area.
Yes. You do not need a license to work on your own home, even when that work is plumbing or electrical.
But, and this is an important “but.”
Depending on the project, you may need to pull the required permits to complete the work and will need to adhere to local regulatory codes. If you don’t, you could be looking at civil penalties, or even a requirement that your project be torn down.
Before doing any work, it’s a good idea to check with the local building department or permit office for more information.
Colorado has a reciprocity agreement with several states for certain electrical contractors. This means if you have an electrical contractors license from one of these states, you may not have to take the trade examination in Colorado.
The states with Colorado contractor reciprocity agreements for journeyman electricians are: Alaska, Arkansas, Idaho, Iowa, Minnesota, Montana, Nebraska, New Hampshire, New Mexico, North Dakota, Oklahoma, South Dakota, Utah, and Wyoming.
There are no reciprocity agreements for plumbers.
You should also know that reciprocity applies only to the trade exam. You may still have to supply additional information and meet other application requirements.
After securing your contractor's license, business license, and business insurance, it's likely you'll also need an additional Colorado contractor's license. But it all depends on where you work! Every city and county in Colorado handles the licensing process a little differently. When in doubt, check with your local municipal department before doing any work.
To help, we’ll cover how to get a general contractor’s license in Denver, as an example of how to get a local contractor's license. In this city, you’re required to carry a license before you can pull a permit — a basic requirement before doing any work.
Head to the Denver Community Planning and Development office, which handles all contractor’s licenses. Then:
Now it’s time to send it in! And Denver makes it pretty easy. You can send in the application:
Nice job. Now it’s time to wait for your license. If you sent in your application online or in-person, it takes about 7 to 10 business days to review. If you mailed it in, it takes up to 14 business days to review.
Getting the proper licenses, permits, and insurance coverage are important steps to starting your contractor business. There are other aspects of becoming a contractor that you may want to consider, especially if you don’t have a lot of experience working in the industry.
Creating a business plan, developing and honing your skills, and passing any required exams are just a few areas you may want to explore.
Fortunately, we’ve got an article highlighting several steps you can take to starting and building your contractor business. You can check it out here.
Whether you’re a general contractor or you specialize in a particular trade, such as plumbing or electrical work, being a contractor provides you with opportunities to build something.
Often, the key to success as any type of contractor is building in a number of other areas as well, such as trust and relationships. Being able to work well with people can be just as important as being able to work well with tools and equipment.
In addition, there’s the business side to running a contractor business. While we specialize in providing insurance for small businesses, we also spend a lot of time getting to know our customers and what’s important to them.
We know that insurance is only one part of it all. So we look to help out wherever we can. One way is through our small business resource center, Simply U. It’s a collection of articles, templates, and guides that cover a wide range of topics for small business owners.
Whether you’re looking for the best accounting software, how to get a business loan, or tips for building a website, we’ve got you covered.
And, remember your first step to getting a license — shopping for a solid business insurance plan, such as general liability insurance. It’s typically a requirement, but it’s also one of the smartest things you can do to build trust and strengthen relationships for your 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 - March 2023 data of 10% of our total policies sold.
I earned a B.A. in Journalism from the University of Wisconsin at Madison (go Bucky). After realizing my first job might involve carrying a police scanner at 2 am in pursuit of “newsworthy” crimes, I decided I was better suited for freelance blogging and marketing writing. Since 2010, I’ve owned my freelance writing business, EST Creative. When I’m not penning, doodling ideas, or chatting with clients, you’ll find me hiking with my husband, baby boy, and 2 mischievous mutts.
Emily writes on a number of topics such as entrepreneurship, small business networking, and budgeting.
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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*Harborway Insurance policies are underwritten by Spinnaker Insurance Company and reinsured by Munich Re, an A+ (Superior) rated insurance carrier by AM Best. Harborway Insurance is a brand name of Harborway Insurance Agency, LLC, a licensed insurance producer in all 50 states and the District of Columbia. California license #6004217.