You must be aware of how each state in the US handles licensing differently— even when it comes to something like being a general contractor (although they do share some similarities). Once you get an Alabama general contractors' license, it can lead anywhere from supervising crews at construction sites to designing commercial spaces.
So how do you get your general contractor's license in Alabama? What are the steps involved? Where do you start? We're about to answer all of these questions for you, so keep reading!
Who is a General Contractor?
According to the Alabama State Licensing Board for General Contractors, a general contractor is:
“One who undertakes to construct or superintend the construction, alteration, maintenance, repair, rehabilitation, remediation, reclamation, or demolition of any building, highway, sewer, structure, site work, grading, paving or project or any improvement in the State of Alabama where the cost of the undertaking including labor and materials is $50,000 or more.”
Types of Alabama General Contractor’s Licenses
For general contracting work, the state of Alabama grants two types of licenses:
- Prime Contractor: Any prime contractor attempting to complete commercial or industrial projects worth more than $50,000, or home projects worth more than $10,000, must obtain a license.
- Subcontractor: It is legally binding upon every subcontractor, who’s working for a licensed general contractor in Alabama, to obtain a subcontractor’s license provided that their contract exceeds $50000.
Aside from these two types of licenses, applicants can also apply for a specialty trade license in a variety of areas like concrete, carpentry, or masonry. You can find a complete list of contractor classifications on the licensing board's website. Not only that, but once you've obtained an Alabama driver's license, you'll be eligible for reciprocity in Arkansas, Mississippi, Louisiana, and Tennessee. Let's have a look at the steps you'll need to go through in order to obtain a General Contractor’s license in Alabama.
Eligibility Requirements for Alabama General Contractor’s License
Listed below are some important pointers to keep in mind prior to initiating the application process.
- Applicants (or their firms) must have a net worth and/or working capital not less than $10,000.
- A statement booklet must be completed by a certified public accountant or a board-approved public accountant for prime contractor applicants. This is something that subcontractors can handle on their own. Completing the confidential financial statement, the equipment questionnaire, and the experience statement is required. Although not included in the package, it is still required to accompany your application.
- You need to present your general liability insurance.
- You should submit the package to the board 30 days before their next quarterly meeting.
- The Business and Project Management Exam must also be taken and passed by prime contractors. More information about the examinations can be obtained on the company's website that administers them.
- If your company is registered as an LLC, you must register it with the Alabama Secretary of State and submit a certificate of registration with your application.
- Businesses in Alabama must apply for one or more tax-specific identification numbers, licenses, or permits, such as income tax withholding, sales and use tax (seller's permit), and unemployment insurance tax. For additional information on company registration and your tax requirements, contact the Alabama Department of Revenue.
- Workers' compensation insurance is needed for businesses with employees, either through a commercial carrier, self-insured, or through the state workers' compensation insurance scheme. For further information, go to the Alabama Department of Labor.
Do I Need a Contractor Bond to be Eligible?
In Alabama, unlike many other states, you do not need a contractor bond to start working as a licensed contractor. However, if you plan to work on a project with third parties on the job site — such as vendors, clients, or other independent contractors — bond insurance will cover them in the event of an accident.
It's vital to know that liability insurance does not protect these individuals on your job site, which is why all contractors should be bonded and insured. Contractor bonds, such as surety bonds, may be available through your liability insurance provider. Bonding businesses, on the other hand, can provide any bond you require.
How Much Does Alabama Contractor Licensing Cost?
The following table summarises the application and renewal fees:
|Type||Application Fee||Renewal Fee|
Money orders, cashier checks, and certified checks are all accepted forms of payment. It is not recommended to send a personal or business check.
Alabama General Contractor’s License Exam
All general contractors must pass the Alabama Business and Law exam, as well as any exams related to the specialty classifications for which they have applied. PSI Exams is the authority that creates and administers these exams. The Business and Law exam is a 50-question test with a passing score of 70%. The length and passing score will vary depending on the categories applied for, as with any trade exam.
PSI testing is authorized to conduct all examinations. You can schedule an exam, look for exam sites, and obtain information regarding exam fees here.
Filling out the Alabama General Contractor’s License Application
When filling out your application, bear in mind the following steps to avoid any inconvenience:
- Determine the type of Alabama contractor's license you need.
- Print the application packet or fill it out online.
- Obtain your insurance certificate.
- You can then register for and take your examinations as a prime contractor. Visit the PSI examinations page for more information on exams and how to register for them.
- Fill out the questionnaire and the booklet. For the financial statement, prime contractors will need a CPA, as well as proof of experience, such as references and work experience certificates.
- Complete the application.
Additional Documents Required
You need to include the following additional documents in your application:
- Completely filled booklet
- General Liability Insurance proof
- Passing exam scores (prime contractors)
- Application Fee.
Submit Your Application
As previously stated, you must submit your Alabama contractors license application at least 30 days prior to a scheduled board meeting. You may find the schedule here and send your application to the following address:
Alabama Licensing Board for General Contractors,
2525 Fairlane Dr.,
Montgomery, AL 36116,
Penalties for Unlicensed Work in Alabama
Working on any form of construction job without a license is almost always a terrible idea in any state. Alabama can be very strict in this regard. Working without a license can jeopardize your ability to collect money through a mechanics lien, but that's not where it ends.
Anyone who presents false information to the Board, impersonates another, or operates with an expired or revoked license will be found guilty of a Class A misdemeanor for each offense, according to Ala. Code 34-8-6. This carries a penalty of up to a year in county jail as well as a $6,000 fine. Not only that, but your license might be suspended, canceled, or you could be fined administratively.
Contracting with an unlicensed contractor can also result in a Class B misdemeanor for owners, architects, or licensed contractors. Therefore, obtaining a general contractor’s license for working in Alabama is worth the hassle.