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How to Get a Contractor License in Illinois

Contractor Tips , Posted by Charlotte Smith on

How to Get a Contractor License in Illinois

In the state of Illinois, general contractors can make a base salary of approximately $100,000. Note, though, that as you grow your reputation, you can increase this figure substantially. In other words, becoming a licensed contractor in the Prairie State has the potential to make you a great living. 

Now, you might be wondering: how do you get a contractor license in Illinois? We're going to let you know right now, covering everything from prerequisites to training to exams and more. Let's go! 

Requirements To Become a Licensed Contractor in Illinois

First, let's discuss the general requirements for becoming a general contractor in the state of Illinois. You'll need to submit the following documents and meet the following criteria:

Choose a Business Entity Designation 

First and foremost, you need to choose a business entity designation. This describes what type of business you're running. 

In Illinois, contracting companies can choose to be corporations, partnerships, limited partnerships, LLPs, and LLCs. Learn more about these designations by clicking here

Note that the designation you choose will affect everything from your taxes to how you handle your employees and more. In short, it's important. Therefore, if you're having trouble choosing one, you should strongly consider speaking with a business lawyer. 

Register With the Department of Revenue

In addition to choosing an entity for your business, you also need to register your business with the Illinois Department of Revenue. They will ensure that your business complies with the state's tax laws. Note that you'll need to submit financial information to the department. 

Decide Which Type of License You Need

In the state of Illinois, you don't need a special license to operate as a general contractor. However, if you're a plumber or electrician or roofer or otherwise, you do need to obtain a specific type of license, such as a plumbing license or roofing license. 

At the municipal level, you will likely need to obtain additional licensure of some kind. This will depend on the municipality in which you work as well as on the types of work that you're performing. For more information on this, give a call to your municipality's town hall. 

Take the Appropriate Exam

If you are, indeed, trying to obtain a plumbing license, roofing license, electrician license, or otherwise, you will need to take the state exam in order to obtain it. This will cost a small fee and will require extensive knowledge of the specialty in question. 

Obtain the Necessary Insurance

If you're providing plumbing work, roofing work, electrical work, or some similar service, you will need to obtain insurance and bonding in order to work legally in the state. We'll discuss the specifics of this below. 

Liability Insurance

Liability insurance covers damages that you cause to other people's property. As a contractor, you're almost sure to cause damage at some point. Therefore, liability insurance is highly recommended, not to mention probably legally required in your municipality. 

The exact amount of liability insurance you'll need depends on your circumstances. However, if you're a plumber or roofer, there are state minimums that you have to meet. 

Plumbers need to have a minimum of $100,000 general liability insurance coverage as well as a minimum of $300,000 of bodily injury insurance coverage and a minimum of $50,000 of property damage insurance coverage. 

Roofers require minimums of $500,000, $250,000, and $250,000, respectively. 

The key is to weigh the risks of injury and damage as well as the monetary values that you can attach to those risks. Then, obtain enough insurance to cover those risks. 

Surety Bond

In addition to liability insurance, you should also obtain a surety bond. This is essentially a guarantee that you'll be liable for a debt in the event of non-payment. While Illinois contractors in general aren't legally required to obtain surety bonds, plumbers, roofers, and the like are legally required to do so. 

Plumbers in Illinois are required to purchase a surety bond of $20,000 minimum. Roofers in Illinois are required to purchase a bond of $10,000 minimum (limited license) or $25,000 minimum (unlimited license). 

Workers' Compensation Insurance

If you're going to be hiring employees, you should have workers' compensation insurance as well. This will cover any costs that are incurred due to an employee being injured on the job. If you don't have workers' compensation insurance, you will likely have to cover these costs straight out of your pocket. 

You can learn more about workers' compensation in Illinois by clicking here. 

Obtaining a Contractor's License in Chicago

As we've noted, there is no state-wide contractor license in Illinois. Instead, these licenses are distributed by municipalities. We can't cover every municipality in this article but we can cover the biggest one, which, of course, is Chicago. 

So, without further ado, here's how to obtain a contractor's license in Chicago, Illinois. 

Fill Out an Application

First and foremost, you need to fill out an application. This can be found at this link. The application will require a bevy of information from you, including tax info, Social Security numbers, and the like. 

Once you've filled out your application, you'll need to submit it for processing. Generally speaking, you'll hear back in a few weeks with an approval or denial note. You'll also be given instructions on what you need to do over the coming weeks and months. 

Note that your application will require you to pay a fee. Depending on the classification of your license, you'll need to pay somewhere between $300 and $2,000. 

Purchase Insurance

In order to work as a contractor in Chicago, you need to have liability insurance. So, once your application is approved, purchase this insurance and show proof of it to the Chicago Department of Buildings. 

For specifics on how much insurance you need, call the Department of Buildings and ask. Your insurance needs will vary based on the scale and type of jobs that you do.

Describe the Type of Work You Do

Next, you'll need to send a letter to the Chicago Department of Buildings indicating what type of work you do. This could be anything from roofing to siding installation to constructing buildings from scratch. Regardless, you need to detail your work thoroughly to ensure that everything is accurate. 

If you don't specify all of the different types of work you do, you could end up receiving the wrong class of license. This could result in negative consequences down the road. 

Indicate Which Class of License You'd Like

In the city of Chicago, there are 5 classes of contractor licenses: A, B, C, D, and E. Each of these indicates different levels of work, with the A being the highest level of work and the E being the lowest. You should also note that they cost different prices, with the E being the cheapest and the A being the most expensive. 

Regardless of which you choose, you'll need to indicate it on a document that you submit with your application. In all likelihood, this is the license you'll receive. Note, however, that, based on other documentation you submit, you could end up with a different class of license instead. 

Make Note of Your Business Structure

We've already discussed business structures to an extent. These include designations such as sole proprietorships and LLCs. Regardless of what your company's structure is, you need to document it and include it with your general contractor application. 

You should also consider including things like the location of your business, whether your business has any employees, and the like. This is all information that the Department of Buildings will use in processing your application. 

Submit an Affidavit of Financial Stability 

You'll also need to show that you're relatively financially stable. As a means of doing so, you'll need to submit an affidavit of financial stability. This will need to include financial statements from the last few years as well as tax information and the like. 

For more information on the specifics of this affidavit, call the Department of Buildings. They'll alert you to everything that needs to be included. 

Provide a Certificate of Insurance

We already noted that you need to obtain insurance coverage. However, you can't just stop there. You also need to provide a Certificate of Insurance to the Department of Buildings. 

You'll obtain this from your insurance company and then submit it to the DoB. Note that liability insurance limits generally need to fall between $1 million and $5 million. 

Renew Your License Yearly

In Chicago, contractor's licenses need to be renewed on a yearly basis. If you don't renew yours, you'll be operating illegally, opening yourself up to serious legal repercussions. 

You should start the renewal process at least 90 days before the license is set to expire. If you start too late, and your license isn't renewed in time, you could find yourself out of work for a few weeks or months. 

When submitting your renewal application, you'll need to send most of the documents reviewed above. These run the gamut from an affidavit of financial stability to a license class designation document to a certificate of insurance and more. 

The Importance of Securing a Contractor License in Illinois

As we've stated, there is no state-regulated license for contractors in Illinois. However, the municipalities within the state generally do require such licensing. Even if they don't, you should still strongly consider obtaining a license, as it will provide the following benefits: 

You'll Have More Credibility

When running a business, your credibility is hugely important. If you come across as shady or untrustworthy, many of your potential clients will go running for the hills. 

What can give you instant credibility? A contractor license.

A contractor license indicates that you've been given a nod of approval by a regulating body. It shows that you have the knowledge and skills needed to perform the job sufficiently. 

So, whether it's a plumbing license from the state or a local contractor license, strongly consider getting it so as to enhance your reputation in the customer's eyes. 

You'll Get More Lucrative Jobs

You're in this to make money. As such, you want to be able to land the most lucrative jobs possible. You can only do this if you're properly licensed. 

Big companies and organizations aren't ever going to hire unlicensed contractors. There's far too much money on the line and far too many legal repercussions in doing so. Therefore, if you want to bid on their jobs, you're going to have to obtain the necessary licensure. 

You'll Protect Yourself from Legal Troubles

Let's say that you do contractor work without the necessary licensure. While doing so, you cause damage to someone's property or cause injury to someone on the property. In these events, you could face major legal repercussions. 

But if you're licensed, the legal repercussions will be much less. In fact, in most cases, there won't be any legal repercussions at all. Odds are, you'll just have to pay out of either your pocket or from your insurance policy. 

Looking to Earn a Contractor License in Illinois?

If you're reading this, it's probably because you're looking to earn a contractor license in Illinois. If so, and if you need help doing so, you're in the right place. Contractor Training Center has you covered. 

We not only offer professional tutoring for contractor exams but we also provide application reviews for licenses of all levels. We'll do everything necessary to ensure that you meet the Illinois contractor license requirements. 

If you have questions about your licensing needs, book a 30-minute call with a state licensing expert at the link below to sort out all the details and apply with ease!