How to Become a General Contractor in Tennessee: A Basic Guide
Contractor Tips , Posted by Nicole Zemaitis on
How to Become a General Contractor in Tennessee: A Basic Guide
In Tennessee’s booming real estate market, contractors are always in high demand. Whether you are interested in pursuing a track in new construction or repair work, residential builds, or commercial ones, you can construct a stable and successful career in this field in no time.
Before committing to any contracting jobs, though, there are a few steps you need to take to get yourself fully certified and legally able to take on this kind of work.
Becoming a general contractor in Tennessee can be an extensive process, between the exams, the licenses, and other state/county requirements. Read on for a breakdown of the ins and outs of contractor licensing in the state of Tennessee.
Why Do You Need a General Contractor License in Tennessee?
One of the things to know about contracting in Tennessee is that, unlike in some other places, there is no catch-all license. Instead, the monetary amount of a project determines the extent of licensing necessary.
In fact, for any project above $3,000, a general contractor’s license is required. What this means, essentially, is that a legally licensed contractor needs to conduct all construction for almost everything that ranges from minor home repairs to large industrial builds.
While it’s important to note that requirements may vary and intensify based on the city or county jurisdiction, obtaining a contractor’s license is necessary to perform any of the tasks listed below.
For Home Improvement Projects
In Tennessee, everything within the range of $3,000-$24,999 falls under the category of official home improvement. So, even if you want to remodel or build an addition onto your private home, and you want to do the work yourself, then a contractor’s license must still be in hand.
It might seem like an inconvenience that will slow down your business growth. However, it means less competition for you in the long run since only licensed contractors can do this work.
If you are looking to be hired for others’ home repair projects, having a license as a “residential contractor” ready to go will significantly open up your ability to do legal and profit-driven business in this arena.
For Bidding on Larger Projects
The anticipated budget also dictates the licensing requirements for larger-scale projects. Having a license as a “prime contractor” in Tennessee will allow you to bid on projects above $25,000.
This level of contracting is likely to include full-blow residential, commercial, and industrial builds. That said, you’ll still need to apply for the license with a specific category of building listed, so you should have a well-defined idea ahead of time of the type of work you aim to complete.
For Construction Management
The Tennessee real estate market is hot, with places like Nashville having a lower market supply. It means there is a feverish demand for new home builds. However, you need a license to get a piece of that pie.
Once again, the monetary amount plays a role in dictating who gets to take on the job. For any job over $25,000, a construction manager is required alongside a prime contractor or subcontractor.
In Tennessee, a construction manager needs to have a contractor’s license in the area of work they will be overseeing, as well as an additional construction management license.
Investing in a license as a “prime contractor” or specialty projects will only get you so far but will still be a boon to your record when you go to pursue management work or set up your own contracting business.
Tennessee General Contractor Licensing and Registration Fees
As you may have anticipated, obtaining a Tennessee contractor’s license involves putting some money upfront. Overall, though, it’s a small price to pay to pursue one of the most stable and lucrative careers around.
For the initial two-year contractor’s license, a $250 non-refundable fee is required. You’ll need to pay another $200 every time you have to renew.
When applying, you can pay in the form of a personal check or money order, but not cash or credit cards. You should also attach your fee to your application and submit them together to avoid complications or mishaps involving lost paperwork.
You must address both the fee and the application to the Tennessee Board for Licensing Contractors. They are the administrative body that will issue your license.
The licensing fee does not include the added cost of taking the mandated exams. The Tennessee Business and Law exam and the Trade exam cost $55 apiece, bringing the total exam fees to $110.
Tennessee General Contractor License Application
As stated above, the type of license you are pursuing and the category of work you are seeking dictates most of the application itself.
Aside from specifying whether you would like to apply to be a prime contractor, a residential contractor, a construction manager, or a specialty subcontractor, you also need to determine the type of building classification(s) on which you will be working. Your options are as follows:
- Building (BC)
- Residential (BC-A)
- Limited Residential (BC-A/r)
- Commercial (BC-B)
- Small Commercial (BC-B/sm)
- Industrial (BC-C)
Make sure you fully understand the work you wish to take on before applying, as each license varies slightly but significantly. Having a comprehensive understanding of the nuances and specifications for each building category will also help you sit your exams.
How to Become a General Contractor in Tennessee
Now that you understand a little more about the different types of licenses folded into a general contractor’s license in Tennessee, the steps to obtain all this necessary legal paperwork will hopefully also appear to be more transparent.
Every individual working on a construction project—whether they are the owner, officer, or employee—is considered a “Qualifying Agent” (QA) who is required to pass specific exams.
All QAs are required to take a Business and Law exam and a Trade exam. PSI administers these exams at its testing centers, located throughout the state. Some trade exams—namely the plumbing and mechanical exams—require pre-approval.
These exams are intensive and may take several months of studying and preparation. It can be a lot to handle, especially if you are a working professional. Fortunately, Contractor Training Center has all the books and exam prep courses you need to prepare for the Tennessee contractor license exam. We have a 90% first-time pass rate and have helped countless contractors prepare for the exam, apply for their licenses, and build their careers.
2. Financial Statement Compilation
As noted, many of Tennessee’s licensing classifications are contingent on price points. As such, a formal financial statement is required before licensing to ensure that all business plans associated with your contractor’s license are legitimate and sustainable.
This statement must be reviewed and audited by an accredited CPA and include information specifying the monetary limits of the building projects in question.
3. Reference Letter and Insurance Verification
Before you can get approved for a future license or project, your employment and business record will need to be verified, too.
Only one letter of reference is required for your application. You’ll need to have a past client or employer who is in a position to comment on your experience with construction write this statement for you. If you have never worked in Tennessee before, that’s okay, as references from non-residents are acceptable.
Plus, because all building projects entail some degree of liability and risk, proof of insurance is also required. This insurance should factor in the monetary limit outlined in your financial statement.
If you employ other construction workers, you should also include proof of worker’s comp insurance.
4. Business Registration
To be approved and licensed as a contractor for a building project, you must be actively registered with the state of Tennessee as a legitimate corporation or LLC.
This registration is a separate application process that must go through the Secretary of State’s office. Out-of-state corporations or LLCs are still invited to apply but must be first registered to operate in Tennessee.
5. Application Submission
Once you’ve completed all of these steps, all that’s left is to fill out the proper form listed on the Board’s website and have it signed and notarized.
Make sure that all information on the form is correct regarding your work classifications and monetary limits. The application takes a while to review, so you won’t want to have to resubmit because of a slight technical error.
Finally! It’s all out of your hands. All you have to do now is sit back and wait for the Board to complete its review and get back to you, which typically takes around 4 to 6 weeks. Once your application has their approval and your license issued, you’ll be all set to build legally in the State of Tennessee.
The whole process of pursuing a career as a general contractor has quite a few steps involved and many classifications to wrap your head around. Make it easier on yourself by getting support and resources from experts in the field at Contractor Training Center. We help with exam prep, applying for a license, and consulting on building your contractor career.
Get in touch today!