Starting a contracting business in Maryland is an exciting endeavor. As a business owner, you’ll be able to call the shots and make your own decisions. But you can’t just throw a decal on the door of your truck and call yourself a contractor. There are Maryland contractor licensing requirements that you must meet.
But Levelset understands that starting a business is a hectic and busy time. You don’t have time to sort through all the different requirements Maryland puts on contractor licensing. That’s why we put together this guide, so you’ll know what it takes to stay above-board with Maryland contractor licensing requirements.
Working in a different state? Check out our guide to contractor licensing in all 50 states.
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Who needs a contractor license in Maryland
Maryland’s contractor licensing requirements are different than many other states. Most of the requirements for licensing revolve around home improvement type contracts. If you intend to complete work on residential projects, individual condominiums, or multi-family units with less than five residences, you’ll need a license.
But, all businesses in Maryland need to register with the state, regardless of the type of work they’re doing.
Do you need a license to file a mechanics lien in Maryland?
Maryland mechanics lien laws make no specific requirement for licensing in regard to filing a lien. Other than interior designers and corporations, unlicensed contractors can file a lien against a property in the event of a payment dispute.
With that said, it’s never a good idea to perform work that requires a license without holding the said license. Should the dispute go to court, the court might look less fondly upon your claim knowing you should be holding a license but aren’t. It doesn’t send the right message.
Contractors can consider it the same for registering. Your business is supposed to be registered, and though you might have the right to a lien, you won’t be doing yourself any favors in court by skirting registration laws.
Read the step-by-step guide: How to file a mechanics lien in Maryland
How to get a Maryland contractors license
Maryland licensing has many steps you’ll have to go through before you can obtain your license. Whether you’re a home builder, GC, or subcontractor, it’s important to understand what’s required.
Registering a contracting business in Maryland
All businesses need to register before they can operate in the state of Maryland. This includes everything from large GCs to the smallest subcontractor.
- Obtain a federal tax ID number from the IRS
- Apply for Maryland Tax Accounts and Insurance
- Obtain the trade license
- Purchase business insurance
Once your business is registered, you’ll proceed with obtaining a license.
Home improvement contractors licensing
Contracting businesses that plan to work on residential buildings will have to obtain a license from the Home Improvement Commission, which is a subdivision of the Maryland Department of Labor, Licensing, and Regulation. This includes contractors entering into a contract directly with the homeowner and subcontractors not dealing with the homeowner directly.
Maryland Home Improvement Law considers “home improvement” as the addition to or alteration, conversion, improvement, modernization, remodeling, repair, or replacement of a building or part of a building designed for use as a residence or dwelling, or a structure or land adjacent to that building.
These parameters are very broad — and they include obvious trades like carpentry, painting, landscaping, and masonry. But, they also include obscure work like installing built-in closet organizers, caulking, and even sod installation.
For a long list of trades (that the state itself claims is not exhaustive), click here.
Before a contractor can apply for a home improvement license, they’ll have to pass the licensing exam given by PSI, which costs $63. To apply for a Home Improvement Contractors license, contractors will use this application. Applicants will have to complete the following steps:
- Name the business (contractors should already do this when they register with the state)
- Prove financial solvency or produce a surety bond
- Provide real estate assessments, bank statements, and a credit report
- Hold a certificate of liability insurance valued at $50,000 or more with the Maryland Home Improvement Commission as the Certificate Holder
- Provide records of any felony convictions, drug offenses, and all misdemeanors committed after January 1, 1991
Mail your application package with a photo and check or money order made payable to the MHIC for $370 to:
Maryland Home Improvement Commission
PO Box 17409
Baltimore, Maryland 21297-1409
Electrical contractor licensing
To operate an electrical contracting business, Maryland requires contractors to hold a master’s electrical license. Those contractors must seek licensing through the state’s Board of Master Electricians.
To qualify for a master’s electrician license, the applicant must have seven years of experience in electrical work on all types of electrical equipment. To qualify, a master electrician or similarly qualified employee of a governmental unit (like an inspector) must have supervised those seven years. Applicants can substitute up to three years if they complete a formal course of study or professional training in electrical installation.
To apply, would-be contractors will need to take and pass an exam with PSI.
Plumbing contractor licensing
Maryland plumbing licensing falls directly under the Department of Labor, Licensing, and Regulation. The state requires plumbing contractors to hold a journeyman or master plumbers license to take plumbing contracts.
To qualify for a journey-level license, the applicant must have held an apprentice license for at least four years and completed 7,500 hours of training under a master plumber. They’ll also have to take a 32-hour course in backflow prevention and pass a written exam.
Master electrician applicants must have held a journey-level license for at least two years and completed at least 3,750 hours of training under the direction of a licensed master plumber. They’ll also have to pass a written examination.
Plumbing licensing applicants can fill out this application.
Some local jurisdictions have different requirements for sub-trades working in commercial settings. Most often, would-be contractors can find this information by contacting the clerk’s office in each county in which they plan to perform work.
Penalties for unlicensed contracting in Maryland
Maryland takes a pretty hard line on unlicensed contracting. Contractors working without a license can be found guilty of a misdemeanor in Maryland. The first offense is punishable by a fine of up to $1,000 and 30 days in jail. Subsequent offenses bump those consequences up to $5,000 maximum and up to two years in jail.
Those are some of the steepest terms of any state against unlicensed contracting, so you can bet Maryland will enforce the rules when it has to.
Protecting your payments in Maryland
Maryland has some hefty fines and consequences in place for unlicensed contractors, but there’s almost as much risk for licensed contractors who don’t protect their cash flow. All it takes is a few months of slow payment and contractors could find themselves scrambling to keep the lights on.
While Maryland might not require contractors to send preliminary notices, they can be a powerful tool for combating slow payments. Not only do these documents serve as a professional introduction between your company and the GC or project owner, but they can also outline your terms and conditions around payments. It’s best practice to send a preliminary notice on any and every project — even when it’s not mandatory.
Maryland subcontractors and suppliers looking to protect their lien rights must send a notice of intent to lien within 120 days of last furnishing. Very often, an NOI is all it takes to get the ball rolling and get a check cut. General contractors are not required to send notice, as they should outline their payment terms in the contract with the homeowner.
Finally, if payments are still slow, general contractors, subs, and suppliers have 180 days from last furnishing to file a mechanics lien. And if they have to push the issue, they have up to one year from filing the lien to initiate enforcement.
When your payments are on the line, these aren’t deadlines worth messing with. Be sure to do what it takes to protecting your payments.