How to Get a General Contractor License in Alabama

If you are considering joining Alabama’s construction industry, becoming a general contractor (also known as a prime contractor) may be for you. Licensed general contractors in AL are not only in demand, but their licensure also allows them to easily work in many neighboring states through reciprocity licensing—leading to an abundance of work opportunities.

Who Needs a General Contracting License in Alabama? Any contractor working on residential projects with a value of $10,000 or more, or commercial projects worth more than $50,000 needs a license. Unlicensed contractors may take on projects that do not meet those value thresholds, but the state is very strict about the rules and regulations surrounding unlicensed work. 

Our guide below breaks down how to get a general contracting license in Alabama. We cover license types, license requirements, the application process, surety bonds, contractor exams, and more.

Step 1: Register Your Business

Before starting your licensing application, you need to:

• Choose a business structure. The main structures to choose from include sole proprietorship, partnership, corporation, or limited liability company (LLC). Once you have picked a structure, register with the Alabama Secretary of State. 
• Register with the Internal Revenue Service (IRS). They will provide you with an Employment Identification Number (EIN), also known as a Federal Tax Identification Number (FEIN). 

Step 2: See if You Qualify for a Reciprocity License

If you have been licensed as a general contractor for at least one calendar year through one of the following Boards, you may be eligible to receive reciprocity.

• Arkansas
• Louisiana
• Mississippi
• Tennessee General Contractors Board
• North Carolina State Board of Electrical Contractors

Reciprocity expedites your application as it may exempt you from some of the exams. 

Step 3: Understand Contractor License Classifications

In the state of Alabama, contractor licenses have six classifications. The classification of a license is denoted by a letter and directly corresponds to the maximum bid that a contractor can make on a single project. 

How Do I Choose a License Classification? 

The license classification you choose depends on the size of projects that you plan to take on. However, note that the tier you apply for must be less than 10 times your working capital or net worth (whichever is less). In cases where you do not have the finances to meet that requirement, you may provide a surety bond to make up for any deficit. 

Step 4: Get a Surety Bond

A license applicant may post an Alabama contractor license bond equal to their negative working capital or net worth plus the amount of such net worth and working capital to satisfy the requested bid limit.

Get a Free Bond Quote 

Due to the variation of the required amount for this licensing bond, we frequently get applicants who are confused about the bond amount they need. 

One of our surety experts recently had an applicant who thought they needed a surety bond for the full amount of the classification they were applying for ($1,000,000 for License Class D). Our surety expert knew this amount didn’t sound right, so advised them to contact the Alabama Licensing Board for General Contractors before issuing the bond. After speaking with the Board, the client learned that they in fact did not need that much. While they still needed a surety bond, it was less than half of what they thought they originally needed to pay. 

Depending on the city or county you are operating in, you may need an additional contractor license bond. This bond is required to protect the general public from financial loss caused by a contractor’s misdemeanor or misconduct.

So when in doubt, please contact the Board at 334-272-5030. Getting bonded is quick and easy once you know the bond amount you need. 

Step 5: Gather Required Documentation

• Insurance – Proof of current liability insurance and workers’ compensation insurance (if you have employees). The insured's name must match the applicant's name listed on this application. The certificate holder must be listed as: 
   

  Alabama Licensing Board for General Contractors 
  445 Dexter Ave, Suite 3060, 
  Montgomery, AL 36104

• Entity Details – A screenprint from your registration with the Alabama SOS must be provided to prove that you are a registered Alabama business (see Step 1). 
• Financial Statement – Must be less than a year old and prepared by a board-approved Certified Public Accountant (CPA) or a Licensed Public Accountant (LPA).
• Copies of Any Certificates/Cards – HVAC, Plumber, Electrician, Wastewater, etc. 
• Three Letters of Reference – All works/job reference forms must be from any combination of the following:
  • Licensed General Contractor 
  • Registered Architect 
  • Registered Professional Engineer 
  • Qualified person as declared by the Board

Step 6: Fill Out the Contractor License Application

You can get the latest general contractor application forms from the website for Alabama Licensing Board for General Contractors. They offer two applications: Prime Contractor (for general contractors) and Subcontractors (for those who want to work under a general contractor).

Ensure that you fill out all parts of the application, specifically the work experience and sitework portion, as well as designation. The designation that you apply for will determine what type of work you can do. You can apply for one or more.

• Building Construction (BC)
• Building Construction Under Four Stories (BCU4)
• Highways & Streets (HS)
• Municipal and Utility (MU)
• Heavy & Railroad (H/RR)
• Swimming Pools (SP)
• Mechanical (M)
• Electrical (E)
• Environmental (EV)
• Demolition (D)
• Specialty Classifications (SC)

Step 7: Send Your Application and Fees

Once your application is signed and notarized, send it with your fee to the Board for review. The current fee is $300.

Note that both your application and payment must be received at least 30 days before their quarterly board meeting. Meeting schedule dates are available on the Board's website.

Step 8: Take the Contractor Exams

General contract licensing exams are administered by PSI Exams. Exams vary depending on the license classification being sought but frequently include an Alabama Business and Project Management Exam, Business and Law Exam, and Trade Exam.

Looking to do contract work in multiple states? You may want to consider the NASCLA exam.

Alabama has two main contractor licenses: one for commercial work and one for residential work.

Residential contractor licenses are issued through the Alabama Home Builders Licensure Board. This home builders license is required for any building contractor taking on residential projects exceeding $10,000 or roofing projects exceeding $2,500.

Commercial contractor licenses are issued through the Alabama Licensing Board for General Contractors (LBGC). This prime contractor license is required for any contractor working on commercial projects with a value of $50,000. Note that the information below deals mainly with this license. 

Before you apply to become a licensed general contractor, ensure that you meet the following criteria.

• Age – A minimum of 18 years of age. 
• Citizenship – A citizen of the United States or legally present in the United States with appropriate documentation.
• Licensing Fee – $300 application fee. 
• Insurance – Proof of general liability insurance. 
• Exam – Willingness to take a licensing exam.

The best way to prepare for the Alabama general contracting exam is to check the study resources provided by the Alabama Licensing Board for General Contractors. 

Their resource list will tell you exactly what books you need and where to find them.