Whether you are a Louisiana resident, or an out of state contractor looking to expand into the area, a contractor’s license is a must. A license is required to legally do most types of construction work in the state. This article will break down the types, requirements, application, and exams under Louisiana’s contractor licensing rules.
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Who needs a Louisiana contractor license?
The Louisiana State Licensing Board for Contractors (LSLBC) governs the licensing requirements for contractors operating within the state. So how do you know if you need one? Well, the LSLBC splits up contractors into a couple of different categories depending on the scope of work and the contract price of the anticipated projects.
Step 1: Identify the type of Louisiana contractors license you need
Louisiana provides a number of different categories, including a slew of subclassifications for specialty trades. However, this article will focus on the main types of licenses; commercial license, residential license, and a home improvement registration.
Commercial contractor licenses
This type of license is required for commercial projects whose full contract price, including labor and materials, is over $50,000. These types of projects also require that the subs and specialty trade contractors are also licensed. There are two exceptions to this requirement.
Subs performing electrical, plumbing, or mechanical work will only need a license on projects over $10,000. The second exception is in regards to hazardous waste work. This includes lead and paint removal, asbestos, and mold remediation. A license for these trades is required for any project whose value is more than $1. So essentially, they need to be licensed at all times.
Residential contractor licenses
A residential license is required for all residential projects that exceed $75,000. Residential property includes home improvements, or the new building of one to four unit family dwellings. Just like commercial projects, subcontractors and specialty trades working on the residential project need to be licensed, unless the contract price is less than $75,000.
Home improvement registration
The third main type of contractor license applies to all home improvement projects that are more than $7,500 but are still below the residential license threshold of $75,000. One type of work that this license doesn’t cover however, is swimming pools. Those types of installations or improvements are covered under a specialty trade license.
Step 2: Register your business with the LA Secretary of State
Before you can apply for a Louisiana contractor’s license, you’ll need to be a registered business. No one can conduct business within the state, without being registered with the Louisiana Secretary of State. This can all be done through their website, and you’ll need to decide the type of business structure you want to set up.
Each type of entity has its pros and cons, and different tax implications; whether it be a sole proprietorship, partnership, corporation, or an LLC. For more information on these entities, the US Small Business Association has a great, simple breakdown of each type of business structure. Once you’ve been registered to do business, it’s time to fill out you application.
Step 3: Filling out the Louisiana contractor’s license application
There is one application form that covers commercial, residential, and mold remediation licenses; which can be found on the LSLBC website. Click here to access the application form. Here is a list of all the information you’ll need to fill out you contractor license application.
Business registration information
The first portion of the application requires all of your registered business information. If you skipped step 1, stop. Go get registered with the Secretary of State. Once you do so, you’ll have your business registration certificate that has all the information needed to fill out this portion of the application. Along with filing out this section, the partnership agreement, articles of organization, or any other business registration documents should be sent with the application also.
Qualifying party information
So what exactly is a “qualifying party”? It may very well be you. A qualifying party is the person actually applying for the license. If you are as an individual or sole proprietor, this is clearly you. If you are applying on behalf of a company, then at least one person must be a qualifying person as a licensed representative of the company.
In this section, requires all the relevant information of the qualifying party. This includes all the basic stuff like; name, address, birthday, social security number, email address, and so on. In this section you will also be required to list all the classifications that are being applied for.
The last part of this section requires your initials next to each statement. This is the “Qualifying Party Affidavit,” which basically sets out that all the information provided is true, you understand the rules and regulations, and will keep all your information up to date. Also, don’t forget to have this notarized.
Financial statement affidavit
The financial statement is meant to ensure that the applicant has the required financial standing to become a Louisiana contractor. This should be prepared by an independent, unaffiliated accountant. The statement needs to show that the applicant has a net worth of at least $10,000. If not, the applicant can provide alternatives, such as a bond, letter of credit, or some other sort of security to meet the requirement.
In addition to the application, you’ll also need to provide proof of insurance coverage. This is required only for residential and home improvement applications. Insurance includes General Liability and, if you have or plan to have employees, Worker’s Compensation Insurance as well. The general liability insurance should cover up to $100,000. Copies of these should be emails to email@example.com after the application has been submitted.
Application & exam fees
The application fee is a nonrefundable payment which depends on how many classifications are being applied for. For one classification, the fee is $100, for two the fee is $195. A full fee schedule is provided on the LSLBC website.
In addition to the application fee, you will also be required to pay an exam fee for each of the two required exams. The fee is $120 per exam. Regarding trade exams, the fee is $120 per classification.
Step 4: Take and pass the required exams
If and when your application is approved, you will receive an Exam approval letter. This will authorize you to sit for the exam and provide you with your exam ID number. There are two exams that must be passed to obtain a Louisiana contractor’s license. The first is a general business and law exam, while the other will depend on the type of license and classifications selected in your application.
The business and law exam is a one-hour, open-book exam. This will cover topics such as licensing, bidding and estimating, contract management, job safety, tax basics, and other similar topics.
As for the trade exam, this can vary depending on which classification is applied for. These can be open-book or closed-book, and range from 50 to 115 questions. You can read a full breakdown of the exams and classifications here.
In order to pass, you’ll need to get a 70% or higher. So how long do you have to wait to get your results? You don’t. Exams are taken on the testing center computer, and you’ll know your score immediately. If you didn’t pass, you’ll have to wait 30 days to retake it.
But if you did, congratulations! You are now fully licensed to perform construction work in Louisiana! A confirmation of your contractor’s license will be coming in the mail soon.
Penalties for unlicensed contract work
Any person performing work that is covered under one of these license requirements can be facing some serious penalties. First off, the licensing board will assess a fine of, at maximum, 10% of the contract value. In addition to this fine, if the board brings the violation to the courts, the unlicensed contractor can face more fines for any actual damages caused and be liable for attorney fees and court costs.
If the contractor is licensed, but performing work not covered under they classification; they can also face these penalties. Also, depending on the severity of the infraction, the existence of any fraud or deceit, or previous history of violations; the board can also decide to temporarily suspend or completely revoke the contractor’s license all together.