In the state of Washington, both general contractors and specialty contractors are licensed through the Department of Labor & Industries, Contractor Registration Section. Learn how to get a general contractor�s license in Washington state.
Who Needs a Washington Contractor�s License?
In Washington, anyone engaged in building altering, remodeling, repairing, or otherwise developing residential properties must obtain a contractor�s license. This includes people who do demolition work or move residential buildings.
The Licensing Process
The licensing process for general contractors is similar to the process for specialty contractors, but only specialty contractors are required to pass an exam. For general contractors, the licensing process consists of the following steps:
- Obtain an Employer Identification Number (EIN) from the Internal Revenue Service unless you are a sole proprietor with no employees.
- If the legal structure of your business is anything other than a sole proprietorship, register it with the Washington Secretary of State.
- Register your business with the Washington Division of Revenue to obtain a Uniform Business Identification Number.
- Complete an Application for Construction Contractor registration.
- Obtain a $12,000 surety bond (or Assigned Savings Account) and liability insurance ($250,000 combined per occurrence amount, with the Department of Labor and Industries as the certificate holder).
- Submit the completed application, surety bond, and insurance certificate, along with the required registration fee to the Department of Labor and Industries, Contractor Registration Section.
Why Is a Surety Bond Required?
A surety bond is the contractor�s guarantee to conduct business in accordance with all relevant laws, regulations, and industry standards as spelled out in the terms and conditions of the bond agreement. The bond provides protection for anyone who might suffer a financial loss because of the insolvency, dishonesty, or unethical conduct of a general contractor. The required bond amount ($12,000) represents the total that may be paid on a single claim against the bond.
How Does a Contractor�s Surety Bond Work?
Anyone who has suffered a financial loss due to a contractor�s violation of the surety bond agreement has the right to file a claim against the contractor�s surety bond. The company that issued the bond (known as the surety) will first conduct an investigation to ensure that the claim is valid.
Ideally, the contractor (known as the principal in the surety bond agreement) will pay any valid claim without delay. More often, however, the surety will pay the claim up front and then seek reimbursement from the principal. An indemnification clause in all surety bond agreements makes the principal solely responsible for paying claims, which means that the surety will pursue the principal for reimbursement of any claims paid in advance.
What Are the Costs of Obtaining a General Contractor's License?
The annual premium for any surety bond is calculated as a percentage of the required bond amount. The required bond amount is established by the Department of Labor and Industries (known as the obligee in the surety bond agreement), and the premium rate is determined on a case-by-case basis by the surety.
The surety�s main consideration in setting the premium rate is the principal�s personal credit score. The higher that credit score is, the lower the premium rate. If your credit score is good, you will probably pay somewhere between 1% and 3% of the $15,000 required bond amount.
Get Bonded Today
At Single Source Insurance, our knowledgeable agents will be happy to discuss your bonding needs to help you get the bond required for a contractor�s license. Apply online today.