If you have experience working as a construction laborer or craftsman, you may have considered becoming a general contractor. Perhaps you’re interested in climbing the “corporate ladder” of construction. Or maybe you’re just looking for a raise in pay. Working as a general contractor requires a broad knowledge of construction and a good bit of business skills. But when done right, general contracting can be a lucrative career. If this sounds like a good option to you, you’re going to have to start by figuring out how to become a general contractor in Georgia.
Types of Contractors in Georgia
If you’re considering becoming a general contractor in Georgia, you may want to start by figuring out what type of contractor you want to be. There are three levels of licensing for contractors in Georgia:
- Residential-Basic Contractor – Licensed to build and perform renovations on single family homes, two-family homes, and single family townhomes up to three stories.
- Residential-Light Commercial Contractor – Licensed to build and renovate single, double, and multi-family homes, plus multi-use commercial buildings.
- General Contractor – Licensed to build and renovate all types of residential and commercial buildings without limits on size or type.
Depending on the sort of work you plan to do, you may consider which type of license is best suited to you. However, the education, experience, and financial requirements to get a license increase as the type of buildings you can work on expands.
Becoming a Residential-Basic Contractor
Becoming a residential-basic contractor is a good place to start your contracting business. It is the easiest license to qualify for and will get you started working the most quickly. To become a residential-basic contractor you will need to have the following qualifications:
- Be at least 21 years old
- Pass a criminal background check
- Have at least 2 years of experience working for a residential-basic contractor or in a related field
- Get a general liability insurance policy worth at least $300,000
- Demonstrate knowledge of building codes, safety regulations, and general contracting knowledge by passing a written exam
Once you have met all the requirements you will have to submit an application for the license along with a $200 non-refundable application fee.
Becoming a Residential-Light Commercial Contractor
Many contractors build their businesses on just a residential-basic license, so it is worth considering why you want the residential-light commercial license. If you decide you want to expand your business to work on apartment buildings, multi-family homes, and some commercial properties, it makes sense to get a residential-light commercial contractor license. To qualify for this type of license you will need all of the same qualifications as a residential-basic contractor, plus the following:
- A liability insurance policy worth at least $500,000
- One of the following experience qualifications:
- A bachelor’s degree from an accredited university in engineering, architecture, construction management or a related field, plus one year working under a licensed contractor
- Post-secondary education from a non-university, such as from a vocational program or community college, plus work experience equivalent to a bachelor’s degree plus one additional year of experience
- Four years of experience working under a licensed contractor
If you have the education, experience, and desire to work on more types of buildings, this is a good license to obtain. The same $200 application fee applies. It is also a good stepping stone towards a general contractor license.
Becoming a General Contractor
A general contractor is not limited by the type or size of a building. A general contractor can renovate or even build buildings of any type or size, including all kinds of residential and commercial buildings. If you plan on building a full service construction business, this would be the way to go. It’s definitely not the only way to be successful as a contractor, but it does open you up to another tier of construction.
The requirements are the same as a residential-light commercial contractor with one important difference: you must show a net worth of at least $150,000. This can be done with a signed letter or statement from a Certified Public Accountant. If you will only be taking contracts of $500,000 and less, you can get a General Contractor Limited license. The limited license only requires $25,000 in certified net worth.
Why is There a Net Worth Requirement?
The net worth requirement may seem a bit arbitrary, or even discriminatory, until you realize its purpose. When you take on a construction project, there is a lot of money that has to be laid out to get started. The contractor needs to purchase materials, purchase or rent the necessary equipment, and pay laborers and subcontractors. And all of this will have to be done before the contractor receives full payment for the project. In other words, it takes capital. The larger the job, the more capital is required. That’s why you need less net worth to take on jobs under $500,000.
The net worth requirement is to protect a client from signing a contract and then finding that the contractor doesn’t have the funds to start or complete the project.
This also explains another quirk of the net worth requirement. Just like an individual, an organization or company can only undertake construction projects with the appropriate license. The company gets that license by hiring a contractor who will act as the qualifying agent, basically lending their qualifications to the company. The qualifying agent should have the skills necessary to oversee all contracting activities of the company. If a general contractor will be working as a qualifying agent, the net worth must be held in the company’s name. This makes sense if you think about working capital. The company, not the contractor, will have to be able to cover the expenditures necessary to get a project going.
Get Real Experience
Georgia has certain experience requirements for its contractor licenses. But you shouldn’t look at experience simply as a box to check. You can apply for a residential-basic contractor license with as little as two years of experience. But the knowledge gained from experience is much more valuable than just fulfilling a qualification.
To be a successful contractor, even a residential-basic contractor, you need to have broad and detailed knowledge of construction. That knowledge is best accumulated through experience. In fact, experience may be the only effective way to build the knowledge you will need.
A contractor needs to be familiar with every aspect of the construction process.
Since they will be overseeing all the different specialized laborers, a contractor needs to be proficient in every specialty. They need to know when it’s too cold to pour concrete, when a fireplace is too heavy for a second floor, or how to tell if a foundation is properly waterproofed. They also need to be familiar with the building codes and standards for all of their tradesmen. That means everything from master masons to HVAC installers. The best way to gain that knowledge is through experience combined with a good deal of education and book learning.
A General Contractor is Usually Running a Business
If you plan on becoming a contractor, you are probably planning on running your own business. That means that in addition to all of the necessary constructions skills and knowledge, you need business skills. A contractor running a business will have to deal with everything from bookkeeping to employee management to customer relations.
A contractor, more than any other construction worker, needs to be a people person.
There are tools that can help you in running a business. First and foremost, there’s no need to figure it out alone. If you haven’t worked closely with a contractor for at least two years, you shouldn’t even be considering becoming one yourself. If you have worked with a contractor for two to five years, you may be ready to make the leap into your own business. Consider becoming a member of the National Association of Home Builders. You can build a network of peers and learn from veterans in the business.
Finally, use technology to your advantage. Every field has its own set of technology tools that makes it run smoother. Accountants would never try to work without spreadsheets and accounting software. Graphic designers today have to be familiar with a whole suite of design software programs. The same is true of construction. There is no reason to run a construction business without the help of construction management software.
We’ve talked about what construction management software is good for in some of our other posts.
If you want to run an efficient and professional construction contracting business in the twenty-first century, Needo has got you covered.
Just contact us and we’ll be happy to chat about how we can help you do your job better.