What is a Contractor License?
A contractor license is a license that all general contractors in Indiana must obtain if they want to operate under a business entity. A contractor license helps general contractors operate within state and local laws and gives them power and credibility within their field of work.
When hiring a licensed contractor, homeowners can feel confident that their home projects are financially protected and no corners have been cut in the building process. Unlicensed contractors may not be able to obtain proper building permits and may risk a void on a homeowner’s insurance policy if a mistake occurs.
Comply with State Requirements
Becoming a licensed contractor in the state of Indiana is a process managed on the local level. Licensing requirements and fees vary based on city and county regulations as well as on job industry (i.e. residential or commercial contracting).
Contractors have to meet the statewide business requirement if acting as a general contractor under a business entity. Any Indiana county or city requiring licensing for contractors begins by complying with the state’s business regulation before conquering several steps at the local level.
Any general contractor working in Indiana as a business entity, such as an LLC, a limited partnership, or a corporation, must register the name of their business with the state. This crucial step is handled through the Indiana Secretary of State, but it only takes a few minutes to complete online.
The Business Entity Report requires general contractors operating under a business entity to provide details on the following:
- Registered agent of the business
- Officer or principal information
- Business address and contact email address
- Service of process email address
The Business Entity Report must be filed every other year and is due by the end of the month in which the business was initially formed.
Check with Local Jurisdiction for Licensing Requirements
After filing with the state as a formal business entity, contractors in Indiana must understand local licensing requirements and rules. These regulations vary from county to county, and in some cases, from city to city.
Checking with your local jurisdiction for licensing specifics is the most accurate way to learn what is needed to become a licensed contractor in your area. In most counties or cities that require licensing, there are many steps for contractors to complete. These steps include:
- Determining the type of contractor license necessary
- Completing a licensing application
- Undergoing a background check
- Completing an exam
- Obtaining a surety bond
- Submitting fees for licensing and completed application
Each city or country will have different requirements for becoming a licensed contractor, so it is essential to check with your local contracting division of government to determine what is required of you.
Determine the Type of Contractor License Needed
Local jurisdictions typically require contractors to select the type of contracting for which they would like to hold a license. Although contractor types may be more specific in certain cities or counties, the general contractor categories include:
- General contractor for either residential or commercial projects
- Journeyman, tradesman, or master tradesman for electrical, HVAC, or refrigeration contractors
- Specialty or subcontractor in concrete, masonry, insulation, drywall, tile, or roofing contractors
The application for each type of contractor is often the same, but the type of license you select may dictate the projects you can work on in a county or city. Different types of contractor licenses may also require different surety bond amounts.
Complete the Application
Once you know the type of contract work you plan to do in a specific county or city in Indiana, a formal application will need to be completed and submitted to the licensing authority in that jurisdiction.
Both personal and business information is often required as part of the application process. A certification of criminal history may also be necessary as well as a background check. Licensed contractors in Indiana may need to complete an exam to verify their skill level in the industry.
Personal and Business Details
Personal details included on a contractor application include your full name, home address, phone number, and email address. In addition to these basics, business information must also be provided.
Contractors may be asked to include the name and address of their business and list out any additional owners or shareholders of their business. The business type, including a sole proprietor, partnership, or corporation must also be included in the business details.
Contractors wishing to get licensed in a city or county in Indiana are also subject to a background check. Questions included on an application are likely to include any history of disciplinary action imposed by a licensing authority, denial of a contractor license, and history of arrests or felony charges.
Additional details about these incidents may be required as part of the licensing application. Nearly all jurisdictions in Indiana submit a formal background check on contractors wishing to become licensed.
Verify Training and Experience
Most Indiana cities and counties will request details on training and experience in the industry.
This may mean a contractor must have proof of participating in a state-approved training program or letters of reference or employment history to show a minimum number of years of experience in performing contracting work.
The application for licensing should provide the specifics on training and experience requirements to become a licensed contractor.
Obtain an Indiana Contractor License Bond
The majority of cities and counties requiring licensing to work as a contractor in Indiana have a surety bond requirement. A surety bond for a licensed contractor is an agreement between three parties: the local licensing authority or department requiring the bond (known as the obligee), the contractor (known as the principal), and the surety company providing the bond.
A contractor license bond for Indiana contractors is a form of protection for the local licensing authority. Should a contractor fail to abide by the rules when working on a project, paying subcontractors, or interacting with customers, a claim can be made against the surety bond.
The surety company initially pays for a legitimate bond claim, up to the limits of the bond, but the contractor is required to repay the claim amount. This is why minimizing bond claims by performing high-quality work in line with current laws and regulations is necessary for all licensed contractors.
Fortunately, you do not pay for the full bond amount. As the contractor, you pay a percentage of the total bond needed, which is typically between 1 and 10%. To get the most accurate pricing for your licensed contractor bond, submit a bond quote form today.
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Submit Contractor License Application
Once you have completed the contractor application, registered your business entity with the state, and received your bond certificate, you are ready to submit your application to your local licensing authority; however, you should carefully review other requirements that may be necessary as part of the process.
The City of Indianapolis requires contractors submitting a new license application to pay a fee of $247 for processing. Additionally, general liability insurance of either $500,000 or $1,000,000 must be in place as well as workers’ compensation insurance.
Certification of these additional insurance coverages must be provided and the fee paid at the time you submit your licensing application. To submit your licensing application, mail it to the appropriate licensing authority or department in your local city or county.
It may take several weeks to review your information, but once that is complete, you are free to work as a licensed contractor in the state of Indiana.