If you offer or are planning to offer services related to construction in Virginia, you need a general contractor license to operate legally. But the specific license you will need must be based on the types and scope of projects you want to perform.
In Virginia, the term contractor means any individual that can bid or accept contracts or orders for managing, performing, or supervising in part or whole, the construction, repair, or removal of any structure or building in exchange for a commission, fixed price, percentage, or fee. This means that practically anyone in the construction trade, including flooring installers, tile setters, and painters, among others, will need a general contractor license to operate.
In addition, no person can engage in or offer contracting work without the proper license. This means that no one can even offer or advertise their construction services without a contractor license.
Only Businesses Can Obtain a General Contractor License
In Virginia, a general contractor license can only be given to businesses. This means that anyone who wants to get licensed needs to have a general contracting business. When starting your business, you can select from several options, with the most common business structures being limited liability companies (LLC), sole proprietorships, partnerships, and corporations.
Once you have registered your business, you can start the process of getting a general contractor license. Once you obtain your license, individuals directly employed by your company won’t need to obtain individual licenses because they’ll be able to work under your business’s general contractor license.
Types of General Contractor Licenses
Licenses in Virginia include two parts, which are specialty and class. The class will be based on the size and dollar amount of the projects you want to work on:
- A Class A license doesn’t have yearly limits or project cost limits
- A Class B license has a $750,000 yearly project limit and a per-project limit of $129,000
- A Class C license has a $150,000 yearly project limit and a per-project limit of $10,000
The specialty part of the license is assigned by letter codes and is based on the specific contractor work you want to do. The specialties come in various types, with the most common being:
- HI – Home Improvement. This allows contractors to do remodels, repairs, and renovations of existing houses.
- RBC – Residential Building. This allows contractors to construct new houses.
- CBC – Commercial Building. This allows contractors to construct new commercial properties.
To secure a specialty on a general contractor license, the individual who’s the designated Qualified Individual (QI) should satisfy all the eligibility requirements for the particular specialization area they’re after. Also, take note that professions including HVAC, plumbing, and electrical are categorized as specialized trades, which means that you should have a tradesman license if you want to work in these specialized areas.
General Contractor License Requirements in Virginia
To get a general license contractor, you should follow these steps:
- Register with the State Corporation Commission (SCC) and the Virginia Department of Taxation.
- Pick your class and/or specialty.
- Identify who are the business’s Responsible Members.
- Identify the Qualified Individuals for the requested specialty license.
- For Classes A and B licenses, identify the designated employees.
- Designated Employees for Class A licenses need to pass the Virginia General and Advanced exam sections.
- Designated Employees for Class B licenses need to pass the Virginia and General exam sections.
- A licensing exam isn’t required for those obtaining a Class C license, but they should have at least two years of specialty experience.
- Applicants of Classes A and B licenses should submit their Surety Bond form, CPA audit/review, and financial statement form. Class B requires a net worth or equity of $15,000, while Class A requires $45,000.
- Complete the Board of Contractors-approved pre-licensing education course.
- Complete the general contractor license application and submit it along with the required fees. The fees will be dependent on which license class you’re applying for:
o $385 for a Class A license
o $370 for a Class B license
o $235 for a Class C license
An extra $50 for the yearly business registration fee is required for all license classes. If you’ve followed all the instructions and submitted all the necessary requirements, you can expect a decision within 30 days of your application. Once approved, you’ll receive your license in the mail.
Insurance Requirements for Licensed General Contractors
Aside from securing the proper licenses for your general contracting business, you’ll need to have insurance coverage to safeguard you and your business. These insurance policies can include:
- Worker’s Compensation Insurance – If more than two people work for you, including subcontractors, you’re required to have worker’s compensation insurance for covering medical expenses and lost earnings in the event that you or your employees get injured while working.
- Commercial Auto Insurance – The state requires auto insurance coverage for all drivers, which includes those driving commercial vehicles. This policy covers you and the vehicles you use for business.
- General Liability Insurance – This insurance policy will cover you if your business has been found liable for causing property damage or injuring another individual other than your employee. While liability insurance isn’t required for general contractors in Virginia, you may need it to get certain business permits. It could also serve as a financial safeguard whenever applicable.
Penalties for Performing Contractor Work Without a General Contractor License
Performing work without a general contractor license or proper license class is illegal and is categorized as a Class 1 misdemeanor in Virginia. You will also have to pay a fine of up to $500 for each day you worked without a valid license. You also may not be able to collect payments if you don’t have a license. Finally, if you engage in a consumer transaction (e.g., work on a residential home) without a license, you could be in violation of the Virginia Consumer Protection Act (VCPA).
Consult with an Experienced Virginia Business Attorney Today
If you have any questions about obtaining a general contractor license or if you just need sound business advice, reach out to us here at McClanahan Powers, PLLC by filling out our online form or calling us at 703-520-1326 to schedule an appointment with an experienced business lawyer in Virginia Today.