While design and construction principles are the same throughout the industry, every state has its own general contractor legislation. Some states are vague about the process, but North Carolina has well-established and specific licensing thresholds, classifications, and limitations that must be considered when starting out in your general contracting career. Today, we’ll review some of the most pertinent requirements for general contractors working in North Carolina.

There Are Two Exams Contractors Can Take

Every state has an exam requirement before you can become a fully licensed contractor, but they vary from state to state. North Carolina has two different exam paths for potential general contractors to consider. The first is the North Carolina general contractor exam, which is state-specific. It includes information about NC construction laws, business principles, and different trade areas, such as masonry and roofing.

Your other option is to take the NASCLA Commercial General Contractor Exam, which is mostly standardized across states. This exam covers all the same general principles, but it does not include the state-specific business and law elements because it is used across a wide range of states. If you choose this, you will also have to take a separate NC-specific business and law exam, which is only 40 questions.

These exams are rigorous, which is why many contractors choose to take a North Carolina general contractor license exam prep program to prepare them for the opportunity. With a specialized test prep program, you’ll get customized study materials that will help you better retain the information you need to succeed.

There is No Full Reciprocity With Other States

An NC general contractor license is only valid in the state of North Carolina; if you want to work in another state, like South Carolina, you will need to apply for a license there as well. However, if you have already passed your exam in North Carolina, you can apply for an examination waiver to be used when applying for a license in South Carolina, Tennessee, Louisiana, Georgia, Mississippi, Alabama, and Florida. However, just like in North Carolina, you may have to take a state-specific legal portion of the exam.

You Need a License for Projects Above a Certain Dollar Amount

Not everyone who works in North Carolina technically needs a general contractor license: you only need one if you are working on a project that costs more than $30,000. If you’re a general handyman doing some light renovations in a neighbor’s home, you don’t need a license, but getting your license does offer numerous benefits when it comes to growing your business, as it opens up more lucrative opportunities so you can run a highly successful business. It also ensures that you don’t get in over your head and run afoul of the law should the project grow in scale before you’re finished.

Those getting licensed need to ensure that they have the financial backing to complete projects worth more than $30,000 and be legally qualified to run a business in the state of North Carolina. Like many other states, you also have to be of good moral character, which is determined through a background check.

North Carolina Has Multiple General Contractor Classifications

Some states have a catch-all general contractor license that will cover pretty much any possible project, or they are based on the dollar amount of the project, but North Carolina is different: it has five different classifications based on the type of project you’re completing. These are building, residential, highway, public utilities, and specialty applications. If you have an unclassified license, that means that you can work on any project of any type.

There Are Three Limitation Levels

In addition to classifications, there are also limitations, which are based on how much working capital you have to complete projects. Working capital is defined as your business’s current assets minus its liabilities.

Those with less than $75,000 of capital have a limited license and can work on projects of up to $750,000, while those between $75,000 and $150,000 have an intermediate license and can work on projects worth up to $1.5 million. If you have more than that available, then you have an unlimited license and can bid on any project, regardless of its size.

If you gain more working capital and want to increase your limitation, you have to fill out an application for limitation increase; it cannot be done when you renew.

Insurance Requirements Vary at the Local Level

Some states require every contractor to be insured, but North Carolina does not have a statewide requirement for insurance or bonding. However, some specific counties and cities, such as Charlotte, do require insurance. You will need to check with the municipality to ascertain what that city requires from you. Regardless of whether it is required in your area, it’s a good idea to have business insurance anyway to protect your assets.

North Carolina’s strict rules may be frustrating, especially if you are new to the construction business, but they are a vital resource to protect both contractors and customers; they are part of the reason why NC has such a safe and robust contracting industry. Carefully review these requirements before you apply for your contractor exam and stay abreast of any developments to ensure you have a rewarding construction career.