Know Everything about Alabama General Contractors Licensing

January 19, 2023

If you are a general contractor in Alabama, you must obtain a license to perform contracting work. The Alabama Licensure Board for General Contractors (ALBGC) regulates and licenses contractors in the state, and all general contractor licenses must be obtained through them. So if you want to run your own contracting business in Alabama, here’s what you need to know about the licensing process.

Who Requires Alabama General Contractor Licensing?

All general contractors in Alabama must obtain a license. This includes any contractor who performs building, repairing, remodeling, or demolishing any residential structure in the state. This includes single-family homes, duplexes, townhouses, and condominiums. Any contractor who performs HVAC, electrical, plumbing, or other specialty trades related to residential structures must also obtain a license.

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How do I Obtain an Alabama General Contractors License?

To become a licensed general contractor in Alabama, you must fulfill several requirements:

1. Register Your Business

A business entity must be registered with the Alabama Secretary of State before applying for a general contractor license. You must obtain an Employer Identification Number (EIN) and register for business and property tax with the Alabama Department of Revenue. You need to specify your business structure, such as sole proprietorship, limited liability company (LLC), or corporation.

2. Get Liability Insurance

You must obtain liability insurance of at least $50,000 to cover any damage or injury caused by you and your employees while performing contracting work. This insurance must be maintained throughout your license.

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3. Gather the required documents

There are several documents you must submit to the ALBGC before applying for your Alabama general contractors license, such as the following:

Financial Statement

General contractors must submit a financial statement showing their business’s net worth. CPA should prepare the document, which should be less than a year old. This includes information about assets and liabilities, such as bank accounts, debts, real estate, vehicles, and other investments. To be eligible to work as a contractor, you need a capital of $10,000 to purchase supplies and pay employees. If you are applying for a partnership, the combined net worth should be at least $25,000.

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Proof of Experience

You need to gather proof that you have enough experience in the field. This can be referenced from previous employers or clients, copies of contracts, and any other proof that shows the projects you took. When applying, you’ll need to provide the contact details of at least three references.

References Forms

You must submit proof of experience in the form of at least three professional references from a subcontractor, contractor, or architect who has previously worked with you. You must also prove that you have completed at least 3,500 hours of paid experience in the last 5 years.

4. Submit the Application

After you have all the documents, you can apply for a general contractor license in Alabama. You must fill out an application form and submit it with the required documents to the ALBGC. The application fee is $300, and you may need additional fees for background checks and credit reports.

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5. Pass the ALBGC Exam

Once you submit all the documents, you’ll need to pass the ALBGC exam. The written test covers all business laws and regulations related to general contractors in the state. It consists of 110 multiple-choice questions and must be completed within two hours. You can take the exam at any of ALBGC’s approved testing centers in the state. You must score at least 75% to pass the exam and receive your contractor license.

6. Getting Your License

After you pass the exam, you can apply for a license. You’ll need to provide proof of your successful test results and submit a license fee of $150. The ALBGC will review your final application, and if accepted, you’ll receive your general contractor license.

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Conclusion

Alabama requires all general contractors to obtain a license before performing any construction work in the state. To get a license, you must register your business, obtain liability insurance, provide financial and experience documents, and pass the ALBGC exam. Once you submit all the documents, you can apply for a license and receive it within two weeks. Remember to keep the Alabama general contractors license updated with the current regulations to comply.

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