Introduction
Becoming a contractor in Arkansas is a beneficial step towards establishing yourself as a true professional as a contractor. An Arkansas contractor license not only enhances your professional credibility but also allows you to bid on and undertake projects legally. Before you begin contracting work in Arkansas, you should become familiar with what the state requirements are to be sure that you are compliant with the current rules and regulations. This article will provide you with a comprehensive list to help you navigate the Arkansas contractor license application process successfully.
In Arkansas, contractors working on commercial projects with a contract value greater than $50,000 must be licensed. Residential contractors working on any project with a value greater than $2,000 need to be licensed.
Arkansas Contractor License Types
There are different classifications of a contractor license in Arkansas, that you should review on the Arkansas Contractors Licensing Board page. This article focuses on the Commercial License and the Residential Builders License.
On the Arkansas contractor license application you will select if you are applying for a restricted or unrestricted license. A restricted license allows a contractor to perform a project up to $750,000. An unrestricted contractor license has no limit.
Filing Fee
The filing fee for an Arkansas contractor license is $100.
Arkansas Contractor Net Worth Requirements
A compiled report from a CPA must be submitted with your application. This report should not be greater than or equal to one year old. Below are the inclusions needed in this report:
- Report letter from an independent CPA
- Balance sheet prepared in accordance with GAAP or on an Income Tax Basis
- Footnotes are required for an Unrestricted license
The net worth for a Building classification in Arkansas is $50,000. Half of this net worth ($25,000) must be in cash.
Arkansas Contractor’s Bond
A fully executed $10,000 contractor’s bond can be submitted in lieu of a financial statement to obtain your license in Arkansas. The applicant will need to use the Surety Bond in Lieu of Financial Statement to complete this step. The bond must be in the Principal’s name & EIN, as registered with the Secretary of State’s office. This means that if you are planning to operate your business under an entity’s name, you will need to form your entity before completing the Arkansas contractor license application. If applying as a corporation, LLC, LP, LLP, attach a copy of the Articles of Organization/Filings from your entity’s Secretary of State’s office.
A contractor license can be approved but not released until the Bond and Power of Attorney is filed with the Board (unless the same entity has a lower-class license or registration).
Reference Forms
A contractor license applicant in Arkansas must have three completed reference forms. These forms should not be from a supplier or banker unless they have observed your work and can describe it. Also, the forms should be less than 90 days old.
Commercial & Residential Arkansas Contractor License
The applicant may apply for a residential license and a commercial license at the same time.
Arkansas Contractor Insurance Requirements
If you have one or more employee in Arkansas you will need to carry workers’ compensation insurance.
Arkansas Business and Law Exam
The Arkansas Business and Law exam is the testing requirement to obtain a contractors license in Arkansas. This exam is 50 questions and multiple choice. The applicant can take 120-minutes to complete this exam, and must pass with a 70%. The book used on this open book exam is the NASCLA Contractors Guide to Business, Law, and Project Management – Arkansas Edition.
NASCLA Exam
You may have noticed that Arkansas does not require the NASCLA exam. You are able to complete only the Business and Law exam to get your license. This is true! Arkansas also accepts the NASCLA exam to get your Arkansas contractor license if you have already taken it.
This is a great example of the reciprocity that the NASCLA exam has. In fact, 16 different states and the U.S. Virgin Islands accept and administer this exam. The states that currently accept/administer the NASCLA exam are Alabama, Arizona, Arkansas, Florida, Georgia, Louisiana, Mississippi, Nevada, New Mexico (newly accepted starting 2023), North Carolina, Oregon, South Carolina, Tennessee, Utah, U.S. Virgin Islands, Virginia, and West Virginia.
If you had previously taken the NASCLA exam in a different state, you would be able to get your Arkansas license with no additional testing.
Conclusion
Obtaining a contractor license in Arkansas is a multi-step process that requires careful planning, preparation, and adherence to the guidelines set by the Arkansas Licensing Board. By following the steps outlined, you can navigate the licensing process successfully. You can also establish yourself as a licensed professional in the construction industry. Remember, an Arkansas contractor license not only enhances your credibility but also opens up opportunities for growth and success in your career.