You’re good at carpentry. Anything you can build or fix, whether it’s putting up new kitchen cabinets for a friend or repairing a few leaks on your roof, you can.
That’s why you’re looking to start your own contracting business to use your talents as a to-by-product of your freelance gigs.
Perhaps you have already established yourself as a contractor, but have only been taking on smaller projects to date. Now that you are more experienced, you want to start working on bigger projects and making more money.
Only one thing stands between you and obtaining an Arkansas contractor’s license.
Why Do You Need a General Contractor’s License in Arkansas?
It may seem like you don’t really need one to do contracting work if you’re already doing it without a license.
However, you may have missed out on a whole lot of work if you don’t have a contractor’s license. The project at hand is a luxury residential project, a commercial property, or any project where a client would prefer to work with someone who possesses a contractor’s license.
Try to imagine yourself in your client’s shoes – they are asking you to transform their home or commercial space. The fact is, both of them really do want to hire the best possible person. A contractor’s license:
- It allows you to prove that you’re approved by the state.
- It demonstrates that you know what you are doing.
- Having a contractor’s license gives you more status than someone without one.
- A certificate of insurance and licensing prove your legitimacy in the event something goes wrong with a project.
The process is pretty much the same as hiring subcontractors to do work on your business or at your home. Hiring someone you don’t know isn’t an option. You have to find someone who you feel comfortable leaving your most precious possessions with.
The same thing applies to your customers. They want to know that you aren’t just going to get the job done – you are going to get it done right.
General Requirements to Get an Arkansas Contractor’s Licence
Arkansas has two types of general contractor licenses: commercial contractor licenses and residential contractor licenses. There are some pretty different requirements for each type of license, so let’s go over what each one requires:
Commercial Contractor’s License:
First, we need to define what we mean by commercial. In Arkansas, a construction project that meets the requirements for “commercial” construction includes any property or building that’s not a one-family residence. Therefore, whether you’re building a space for a small business or a large office complex, you belong in this category.
Commercial contractors are required to have a license if their project exceeds $50,000. The project costs include labor, materials, and any other expenditures that are associated with the project.
Before we go further, let’s review what Arkansas means by the term “project.” A project includes projects that fall under a single contract. Make sure your project does not go under the $50,000 threshold so you can get around the commercial license – do not do it.
If you want to bid on a project, you’ll need a commercial contractor’s license, so make sure you have one before meeting with clients. Therefore, you do not have to go through the time-consuming and frustrating process of getting a commercial license.
Here are some steps you should follow if you want to become a contractor:
- You may request a new application from Arkansas Commercial New Developers.
- Pay the $100 fee
- Make sure your references are current (less than 90 days old) with your application.
- Please submit a copy of your Arkansas Business and Law exam score.
- Please provide a contractor’s bond of $10,000 fully executed
- You need to provide financial statements.
If there are any additional requirements that you need to fulfill for your license, please review the Arkansas Commercial New Application Form.
Note: It is possible to apply for a Restricted Commercial License. This license only allows you to work on commercial projects with a value less than $750,000. For those seeking a contractor’s license of this kind, the requirements largely match those required for a general Commercial license.
If you are building your own commercial property, you are exempt from these rules. A retail business or business that does not hire contractors will not require a commercial contractor’s license as long as it is being built on its own. If you have a knack for constructing and are up for the challenge, taking this route may be appropriate for you.
Residential Contractors License:
In Arkansas, residential work may only be done on a single family residence. Therefore, if you add an addition to a house or a residential house, these activities are covered under a residential contractor’s license.
As many contractors wonder what license to apply for to work on a multi-family complex, we must first define what Arkansas means by “single family residence”. A single family residence in Arkansas is defined as a property that contains no more than four separate sleeping units.
The single family residence is still considered even if there are multiple families living there if it is being built as a duplex, triplex or quadplex. A residential building with more than four different units is considered a commercial project, which is why it needs a commercial contractor’s license.
You’ll need a residential license, called a “residential builders license” in Arkansas, if your project is more than $2,000. In addition to this, it includes the cost of subcontractors, materials, and anything else involved.
Here are the steps you need to follow in order to get your residential contractor’s license:
- Fill out the Arkansas Residential Builder New Application Form and submit it.
- You need to pay $100 for this service.
- Your application should include three (3) written references that are less than 90 days old.
- Please submit a copy of your Arkansas Business and Law exam result.
- Please provide a balance sheet for a single year in business (do not submit an income statement).
Note: It is not necessary to obtain a residential contractor’s license if you will be building the home yourself. Building one house each year is permitted, but not if you intend to sell or lease it. If you are planning to do that, you will have to have a residential contractor’s license.
Regardless of whether you have a commercial or residential license, it is smart to note that commercial license holders do not need to apply for residential licenses. Having a commercial license covers you from any legal obligations when working on single family residences.
Additional Contractor Licenses:
There are two more specialized licenses for residential and commercial contractors you might be interested in. They are as follows:
Commercial Light Building Classification:
Contractors under this license can work on commercial projects not exceeding $500,000. In addition, the commercial building should not exceed two stories in height. It is also possible to work on residential properties with this license. We have previously mentioned that the requirements for obtaining the general commercial license are the same as getting the aforementioned license.
Licence for Home Improvement:
Contractors who are remodeling or repairing a home are required to hold a home improvement license, which is a type of residential license. If the residential project exceeds $2,000, you will need this type of license. It doesn’t matter if you’re remodeling a house or painting an exterior, you may need to get this license in order to proceed with your project.
Don’t forget that if you own the home you’re working on you don’t have to get a home improvement license. This license is not necessary for individuals with another license, or a license to do electrical or HVAC works (provided they are undertaking such work).
If you haven’t already noticed that you have to pass the Arkansas Business and Law exam in order to get a contractor license in Arkansas, then read on to find out exactly what it is. How do you prepare for this examination?
Take the General Contractor’s License Exam in Arkansas
In actuality, the Arkansas Business and Law Exam is a national exam that is used to determine if you are prepared to hold an Arkansas contractor’s license. There will be 50 questions to be answered in two hours. The test is an open book exam. The exam will be administered at a testing center near you, which you’ll be advised of the next time you register for it.
Generally speaking, you can take the test from 8am to 8pm Monday through Fridays at most locations, and between 8am and 4pm Saturdays.
The following steps will guide you to registering for your contractor’s license examination:
- The test can be registered for at Prometric (you can also register by calling a number 1-888-763-0131).
- The Business Law & Management exam (AR04 Program name) can be accessed here.
- Exam Code 100 should be used.
- Please take note of the testing center name provided by the operator.
- It is possible to pay the exam fee by credit card or debit card. It is also possible to pay by check as long as the routing number is available. The exam fee is $80.00.
We recommend that you arrive at the testing center about 30 minutes early (do practice runs earlier so you’re confident with the directions). Your driver’s license or passport will be required as forms of government ID.
Get the exam results from Prometric once you’re finished taking the exam. Your written exam results are sent to the Arkansas Contractors Licensing Board which can be reached at the following address:
Arkansas Contractors Licensing Board
4100 Richards Road
North Little Rock, Arkansas 72117
The Arkansas Contractors Licensing Board also accepts faxes with exam results at 501-372-2247.
Exams may not seem like the most exciting thing in the world unless you remember taking them when you were a kid. However, you don’t have to worry about it – the Business and Law exam may seem difficult, but it is really not that difficult. You’re taking this test just to ensure you’re aware of your legal obligations when you’re employed. If you have experience in contracting or have lived through working as a subcontractor, you probably won’t have any trouble.
You can find answers at the Arkansas Contractors Licensing Board’s website if you have questions regarding getting your Arkansas contractors license.
What should we do next?
Having completed all the paperwork for obtaining licenses for contractors, now is the time to begin building an online presence for your business and promoting your website. In the current economy, it is essentially impossible to succeed in the market without it. Due to increased competition, you need to take proactive steps to reach your clients instead of cold-calling them.
Whenever you choose Infodrafts as your local contractor marketing services provider, you will be fully covered for all your online marketing needs — from content creation and Google Maps management, to ad tracking and beyond. Get in touch with us for assistance!