When applying for your contractor’s license there will be numerous sections to fill out appropriately. From financials to experience in the field you must accurately complete the contractor’s application for your state. One of the common questions we hear from students is “what is the difference between a contractor license qualifier and licensee?”. This is an important question as it will set up how you will operate your business and your license.
What is a Contractor License Qualifier
A qualifier for a contractor license is the individual that meets the testing and experience requirements. A qualifier completes the necessary exams to obtain the license and has the construction knowledge and background.
If there are requirements for experience the qualifier must have the proper years of experience in the field.
The contractor license qualifier must also be the appropriate age. Most states have a minimum age of eighteen (18) to become a licensed contractor.
Some states allow a contractor license qualifier to qualify for two (2) licensees. Typically there are requirements that the qualifier must have involvement in the day-to-day activity of the license, but this opens opportunity to serve in multiple ways.
The Value of Being a Qualifier
If you have not noticed yet, a contractor license qualifier is extremely valuable. By passing your contractor license exams you become a candidate to be a company’s qualifier. Whether that your own company or a company that is starting up, or maybe even a company that has recently had a qualifier quit.
What if a Qualifier Quits
If a qualifier quits, the licensee then becomes unlicensed. They must not continue on with construction projects until a new contractor license qualifier replaces them. Some companies have begun paying for employees to complete their exams to become qualifiers. This ensures that there is someone in line to continue the contractor license for the entity if the current qualifier were to move on.
Often times there is a contractor qualifier agreement that is signed between the licensee and the contractor qualifier. This is to set the standards for the how the business will operate and what each party should expect. This is a smart idea to set the stage upfront for how the relationship should go between the contractor qualifier and contractor licensee.
What is a Licensee?
A contractor licensee is the license holder. This means that they are the entity that holds the contractor license and can perform the work. But remember, without a qualifier the licensee is no longer licensed.
The licensee has the financial standings to be able to operate in their state. States require a minimum net worth, working capital, or bond limit to operate. The licensee must meet those requirements to complete a contractor license application.
Forming an Entity
If you are planning to start an LLC or a corporation for your business do this before you complete the contractor license application. It is a fairly common mistake to complete the license application as yourself before forming an entity. This will require you to reapply as your entity later down the road. Avoid this extra step by filling out the contractor license application as your entity on the first submission! This means you must create a bank account for your entity and have the required net worth or cash on hand in your entity’s bank to meet your state’s requirements. Or your entity must be bonded per your state’s bonding requirements.
Conclusion
It is important to understand the difference between a contractor license qualifier and a contractor license licensee. Knowing in detail what each of these are will allow you to complete your license application correctly the first time. It will also keep you aware of how the business will run. If you are the qualifier for a separate licensee, you should know your worth. If you are the qualifier for your own license, know the provisions that would need to be made if anything were to happen to you. We hope this article gave you a good understanding of the difference between a contractor license qualifier and a contractor license licensee.