Embarking on your journey as a contractor in New Jersey is a very exciting time. From making your own schedule to choosing your customers, being your own boss has plenty of rewards. But not everything is up to you: There are specific New Jersey contractor licensing requirements that you have to meet in order to run a business successfully, and legally.
As far as state licensing requirements go, New Jersey isn’t the most complicated or difficult to maneuver. But there are some things you need to know to make sure you check all the boxes. This guide will help you sort through the New Jersey contractor licensing requirements and get to work running your own business.
For information on licensing in other states, check out The Ultimate Guide to Contractors License Requirements in Every State.
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Who needs a contractor license in New Jersey?
When it comes to licensing requirements, New Jersey has its own set of classifications for contractors.
Instead of using the term “general contractors,” New Jersey refers to this type of contractor as “Home Improvement Contractors” or “home building contractors” — and they have to register their businesses.
But, if a home improvement contractor deals in financed home repair contracts, they must carry a license issued by the New Jersey Department of Banking and Insurance. Note that this only applies to contractors dealing with payment schedules in excess of 90 days, not ongoing shorter contracts.
Plumbing, electrical, and HVAC mechanical contractors do have to carry licenses to contract within New Jersey.
Do you need a license to file a mechanics lien in New Jersey?
New Jersey mechanics lien law does not require a contractor to hold a license to file a mechanics lien. So potentially, an unlicensed contractor mandated by law to carry a license does have the right to a mechanics lien in New Jersey.
With that said, it’s never a good idea to contract for work requiring a license if you don’t hold that license. It can open your business up to many liability issues, fines, and penalties.
Learn everything you need to know about filing a mechanics lien in New Jersey with New Jersey Mechanics Liens: Everything You Need to Know + Free Forms.
How to get a contractor license in New Jersey
Whether it’s a license or a simple registration, you’ll probably have at least a hoop or two to jump through before you open your doors for business.
How to get a home improvement contractor license in New Jersey
New Jersey refers to general contractors as home improvement contractors or home building contractors. The state doesn’t require these contractors to carry a license, with one exception that we’ll go over in a bit.
Home improvement contractors have to register their businesses with the state’s Division of Consumer Affairs, just like any other business in New Jersey. Home building contractors need to register their businesses with the Department of Community Affairs.
But, if a home improvement or home building contractor deals in financed repairs with payment schedules more than 90 days, they will also have to apply for a license from the New Jersey Department of Banking and Insurance.
How to get a plumbing contractor license in New Jersey
Unlike other states, there is no contractor license for plumbers in New Jersey. However, to operate legally as a plumbing contractor, a licensed master plumber must own at least 10 percent of the company.
Master plumber licensing is a matter of the NJ Department of Consumer Affairs. To apply for a license, an applicant must meet these requirements:
- Be 21 years old or older
- Has completed a four-year apprenticeship program approved by the United States Department of Labor and has completed one year of practical hands-on experience as a journeyman plumber; or
- Has been awarded a bachelor’s degree in mechanical, plumbing, or sanitary engineering from a college or university accredited by a regional accreditation agency recognized by the Council on Post-Secondary Accreditation or the United States Department of Education, and has completed one year of practical hands-on experience as a journeyman plumber.
Once those requirements are in the bag, the would-be contractor will fill out this application, pay the $100 application fee, and take an exam.
How to get an electrical contractor license in New Jersey
Opposite of the plumbing regulations, electrical contractors in New Jersey do need to carry both a trade license and a contractor license. Both of these licenses go through the Division of Consumer Affairs.
Before a contractor can go into business for themselves, they must hold a journeyman’s license and meet these requirements taken directly from the Consumer Affairs’ website:
- Be over age 21
- Hold a high school diploma or equivalent certificate.
- Immediate 5 years experience working with tools, installation, alteration and repair of wiring for electrical light, heat, or power in compliance with NEC code. This time can not be spent supervising, engineering, estimating, or managerial task. In the alternative the applicant may satisfy the above experience with having;
- Four year apprenticeship program Federally approved agency with one (1) year experience certified by employer.
- Satisfied the requirements of a Qualified Journeyman and Complete one (1) year practical hands on experience and a Certification by an employer regarding the additional year.
- Earned a bachelor’s degree in electrical engineering with two (2) years hands on experience certified by employer
Once you meet all those requirements, you can create a login and apply for through Consumer Affairs.
How to get an HVAC contractor license in New Jersey
To operate as a HVAC contractor in New Jersey, prospective contractors must hold a master contractor’s license issued by the Division of Consumer Affairs.
The requirements, taken directly from the Consumer Affairs’ website are as follows:
- The person shall be 21 or more years of age and a citizen or legal resident of the United States, and shall have been employed in the HVACR contracting business for a period of five years next preceding the date of his application for a license.
- One or more of the five years shall have been spent while engaged or employed as an HVACR journeyperson or licensed plumber engaged in the work described.
- At least four years of the five years shall have been spent in an HVACR apprenticeship or other training program, including, but not limited to, steamfitter, pipefitter or sheet metal apprenticeship programs, approved by the United States Department of Labor, with proof of passage and successful completion of this program while actively engaged or employed as an apprentice as determined by the board.
- Successful completion of an HVACR program given by an accredited technical school, trade school, county college or community college shall satisfy two years of the minimum four years that must be spent in an approved apprenticeship or other training program.
- In lieu of the above requirements a person shall have been awarded a bachelor’s degree: a. in HVACR technology from an accredited college or university in the United States which the board finds acceptable and, in addition, shall have been engaged or employed in the practical work of installing HVACR systems for one year; or b. from an accredited college or university in the United States which the board finds acceptable and, in addition, shall have been engaged or employed in the direct supervision of the installation of HVACR systems for three years.
Contractors must submit these applications online, along with electronic forms of any documentation required.
Penalties for unlicensed and unregistered work
Registration is pretty universal in New Jersey, so it makes sense that the state would have some strict penalties for working while unregistered.
The penalty for working without registering is a civil penalty of up to $10,000 for the first offense and $20,000 for each subsequent offense. If those fines weren’t steep enough, there can also be criminal charges and additional fees.
Getting paid as a contractor in New Jersey
If you’re starting your career as a contractor in New Jersey, there’s one fact you need to familiarize yourself with: Cash flow is always a concern in the construction industry. It doesn’t matter how much money you have on paper; if you don’t have enough cash coming in each month, it’s hard to stay afloat.
Not only do contractors have to concern themselves with registering with the right agencies and carrying the correct trade licenses, but they also have to worry about slow payments crushing their cash flow. But, if New Jersey contractors keep an eye on certain requirements and deadlines, they can protect their payments and improve their cash flow.
New Jersey subcontractors and suppliers need to send preliminary notices on every private project within 60 days of last furnishing to protect their mechanics lien rights. On public jobs, that window shrinks to 20 days from first furnishing.
Should payment still be an issue, contractors, subs, and suppliers have no more than 90 days from last furnishing to file a mechanics lien to recover their payment.
Whether it’s maintaining the proper registration or doing what it takes to protect your lien rights, keeping an eye on the details will help build a successful contracting business in New Jersey.