If you build things for a living in Tennessee, you need to make sure your license stays current. The process for getting and keeping a TN Contractor’s License involves a lot of steps that can get complicated pretty quickly if you’re not careful!
We’ve written before about “How General Contractor Accountants Can Help You Avoid Costly Mistakes.” In this post, we’ll help walk you through the process of TN contractor’s license renewal and show you which mistakes to avoid so you can stay legal and keep securing valuable contracts.
TN Contractor’s License Renewal 101
General Contractor Requirements
In the state of Tennessee, if the project you are bidding on is valued at $25,000 or higher, you are required to have a contractor’s license.
That price includes all of the labor, materials, and other expenses you expect to incur. In fact, you aren’t even allowed to discuss bidding on a project or negotiating a price with a potential client unless you are licensed.
The $25,000 benchmark applies no matter what role you expect to play:
- Prime (General) Contractor – Dealing directly with the owner of the project
- Subcontractor – Working under the general contractor to perform specific duties such as electrical, mechanical, plumbing, HVAC, roofing, etc. (Masonry subcontractors are required to be licensed if the job is $100,000 or more.)
- Construction Manager – Keeping things on time and on budget from beginning to end
Subcontractor specialties such as painting, flooring, landscaping, and excavation are not required to possess a license as long as they are working in contract with the Prime contractor. However, if they deal directly with a client on a project valued at $25,000 or greater, they must get a contractor’s license as well.
How to Get a Contractor’s License in TN
Tennessee provides plenty of details online to help you get your contractor’s license. Here is a link to the state’s page on “How to Become a Licensed Contractor.” From there, you can find links to several additional pages.
The among of information they provide can actually be a little overwhelming. So here are the basic steps you’ll need to follow in order to get a contractor’s license in TN:
- Testing – Everyone is required to successfully pass the TN contractor’s exam, Costs for the exams are $53 for “Business and Law Management” (everyone takes) and $53 for the trade exam (BC, CE, CMC, and all the subcategories of each). These tests are done online through PSI Testing Services.
- Financial Statement – A “Reviewed” or “Audited” financial statement must be prepared by a licensed CPA and included with your application. Income tax returns and other financial statements you compile on your own are not acceptable.
We have prepared many of these kinds of statements for our clients over the years and can help you get the reports you need to get licenses in TN. Schedule a call with us to get things done right the first time! - Reference Letter & Insurance – You will also need to include a recommendation from a past client or code official familiar with your work. Additionally, you must provide proof of General Liability and Workers Compensation insurance.
- Register Your Business – If your business is a Corporation, LLC, or Partnership, you must register it with the state of TN. You can do this through the TNTAP website, or we can help.
- Complete a Notarized Affidavit
- Submit Your Application – The Board meets every other month and applications are due by the 20th of the month prior.
- Board Review – You may be required to interview with the Board in order to be approved.
- License Issued
How Much Is a Contractor’s License?
New contractor licenses are issued for $250. These are good for 2 years, after which you must apply for renewal. The cost to reinstate a contractor’s license in TN is $200.
How to Renew a Contractor’s License in TN
Contractors in Tennessee can manage their licenses through the state’s CORE (Comprehensive Online Regulatory & Enforcement) system. To renew your license, here are the steps you’ll need to follow:
- Log in (or create an account) at core.tn.gov.
- Complete the online application and pay the $200 renewal fee.
- Attach an updated financial statement (prepared by a licensed CPA) and proofs of insurance
- Verify current registration of your business with the state
If you are not planning to use a license for a year or two, you also have the option to “Retire” a license. The cost is only $25, which makes it much cheaper than renewing it later for $200. Details are available here.
Other Licenses for TN Contractors
The TN Board for Licensing Contractors also issues several other licenses for other specialties and for general contractors wanting to bid on jobs valued at less than $25,000. These are issued in conjunction with other state agencies (Tennessee Department of Commerce and Insurance, Tennessee Department of Environment and Conservation) and include:
- Home Improvement License
- Limited Licensed Electrician
- Limited Licensed Plumber
- Alarm System Contractors
- Fire Sprinkler Contractors
- Home Inspectors
- Architects
Issues to Avoid With Licenses
Even though the State of Tennessee has made it fairly easy to apply for and renew your contractor’s license online, there are several issues you need to make sure you avoid in the process. It’s simple if you have everything in order.
That’s why we recommend that you let us help guide you through the process. We’ve been doing this for over 40 years, and we understand that the quicker you get licensed…the quicker you can get to work and make some money!
Things to Consider (and some mistakes to avoid) When Renewing a Contractor’s License:
What if the QA leaves?
Your contractor’s license can be issued in the name of your company, but it must be completed (and the test must be passed) by a primary individual known as the “Qualifying Agent” (QA). If that person leaves the company at some point after the license is issued, your company has 90 days to submit a QA Notice of Change. If that person is required to pass an exam, they must do so within 3 months.
Compiled Financial Statements Can’t Be Self-Compiled
Income tax statements and Compiled Financial Statements you put together yourself are NOT acceptable. We mentioned it earlier, but it is worth repeating because it is a mistake that can cost you a lot of time and stress. Have your financial statements put together by a licensed CPA firm to avoid having your license delayed or denied.
Business Name Availability
Check to see if your business name is available first! Imagine how frustrating it would be to go through the entire process of applying for your contractor’s license in TN only to find out at the end that your business name is already taken! You can do a public search for registered business names in TN here or on verify.tn.gov.
Make sure the business name matches on all documents.
Your business entity must be filed with the exact same name on all forms. Bidding and contracts must be done using the exact name that is on your license as well. “Close enough” is not good enough.
Do not bid on contracts before you receive your license.
It could result in your application being held up for 6 months (or denied altogether) in addition to civil penalties.
CRS CPA Can Help You Stay Licensed in TN
For the past 40+ years, we have helped contractors and other small business owners all across Tennessee apply for and renew the licenses they need to stay in business. We know how important it is to your livelihood to get it right so you can get to work.
Give us a call at (731) 668-4482 or schedule a call with one of our small business pros to get started!
