That's a good question. You might be wondering what the big deal is when a contractor doesn't hold a license. Some may see it as too much of a hassle to navigate the laws, since they vary by state. But the truth is, not being a licensed contractor can cost you - and your customers - quite a lot!
Most honest contractors avoid getting a license so they can underbid the higher-priced competitors who do have one. This can be appealing to some homeowners, especially those on the hunt for the best price. However, there are numerous horror stories out there of folks hiring unlicensed contractors who either fail to deliver what they promised or demand more money to do it. It happens every day, and some of these "contractors" aren't contractors at all. They're scam artists, swindling people out of their money before disappearing and leaving their customers high and dry.
So why do you need a license? In short, the biggest advantage is that having one offers mental freedom to potential customers, in turn encouraging them to hire you over your unlicensed competitors.
The Arizona Registrar of Contractors offers a list of what must be done to obtain a contractor's license:
- Submit the license application as well as an app for examination from the Arizona Registrar of Contractors - read the instructions carefully.
- Complete the testing requirements for your classification.
- Fill out all your forms properly, or they may be returned to you. This means proofreading the entire thing and making sure you signed and dated it. Simple mistake, but it happens.
- Submit your completed application with the required bond and fees.
Being licensed not only ensures your credibility, but it also offers higher earning potential - but not on the way you're thinking. It doesn't mean you can charge more for the same job done by an unlicensed contractor. Rather, it means you can tackle the jobs that are larger and more profitable in the first place. Customers hiring licensed contractors are generally willing to pay those higher rates and will therefore look at your business first.
A license also provides protections to your clients. Most licensing agencies require contractors to be insured in the event that they are injured on the job. This offers peace of mind to customers that they won't be sued over a freak accident that occurs during construction. This, among other homeowner protections are in place to keep the process neat and clean should a claim arise.
So what are you waiting for? If you're a contractor looking to get licensed, contact the Arizona Contractor License Center today to get started.
Comments
Denny
In Arizona, do we need a contractor's license to hire a licensed contractor, for profit. In otherwords, we pay the contractor, then mark-up the price and invoice a customer.
Posted On: August 9th, 2018
Brian
Denny, great question! In AZ the customer hires a licensed entity to do the work therefore all work that is performed under the contract should be done by a licensed entity. The idea behind this is the customer is under the impression that all work will be done by a licensed entity. Remember all W2 waged employees under a licensed entity are covered under that licensed entity.
Posted On: August 10th, 2018
marc
this makes no sense--"Most honest contractors avoid getting a license so they can underbid the higher-priced competitors who do have one."- 2nd paragraph- first sentence. I think most honest people get a license and dishonest ones do not so that they can avoid paying taxes, avoid paying administrative fees and insurance so that they can underbid higher priced competitors who do pay those legally required fees to be a contractor. How can you say MOST HONEST ---AVOID. That statement also then says that dishonest (contractors) ones seek a contractors license. Without a contractors license- it makes it an uneven playing field. Consumers are naive- and many don't know or care when they have a plumbing emergency, and AC emergency or other- they just want it fixed and often for the lowest price. That is where the unlicensed person comes in----who of course do not pay taxes, have no bond or insurance, and really no business---its just a name and phone number. I have seen incredibly incompetent " experts" who are not licensed---they have some (a few hand tools)--they watch a couple you tubes--and think they are ready to go. Typically- You can spot them by their lack of business cards, a professional vehicle--but drive a car or truck- and lack of , lack of basic parts (spares) on hand. They wont take checks or credit cards--its a cash business. Some of them fix most problems, some of them make matters worse--but if they make a mistake or rip off a consumer- they change their number and good like finding them. i often hear from customers, "he wont return calls". So why would an honest contractor avoid a license?
Posted On: September 25th, 2020