as long as the total cost of the work does not equal or exceed $25,000.
If you’re doing masonry work, the amount is increased to $100,000.
Can I Be My Own General Contractor in Tennessee?
There are some exemptions to the Tennessee contractors license law. One of them does allow you to be your own general contractor, but there are certain requirements and conditions.
Do I Need a Contractors License to Flip Houses in Tennessee?
No, you do not legally need a contractor’s license to flip houses. This applies at both the state and local municipality levels.
However, just because a Tennessee contractors license isn’t required doesn’t mean you shouldn’t consider getting one. Like a hammer or compound mitre saw, a Tennessee contractors license can be a great tool to have if you’re flipping properties.
With a license, you can do some or all of the work yourself without needing to hire a general contractor (remember, since the property is being offered for sale, the homeowner exemption we mentioned above doesn’t apply).
What Contractor’s License Should I Apply For?
Home improvement contractor, prime contractor, construction management—what’s the difference between each contractor’s license? Before we jump into the nitty-gritty details of the application process, let’s define what each license covers. That way, when you go to apply, you know exactly what license to pursue.
There are two categories of Tennessee contractor’s licenses:
Depending on the nature of the projects you plan to take on, you may need to apply for an additional license. For more information about the license classifications, check out this resource from the Tennessee Board for Licensing Contractors.
Projects under $25,000
Home Improvement Contractor: If you want to take on projects like repairs, improvements, or additions for remodeling projects, this license is for you. Keep in mind this license doesn’t allow you to take on plumbing, electrical, or HVAC projects.
Limited Licensed Electrical (LLE): This license is for electrical projects that do not require an inspection.
Limited Licensed Plumber (LLP): Similar to the LLE, this license is for plumbing projects that do not require an inspection.
Projects over $25,000
Prime/General Contractor: If you plan on working with the direct point of contact for the project that falls within the definition of contracting in Tennessee, this is the license you’ll want to look into.
Subcontractor: If you plan on working directly with the prime or general contractor, who is not the owner of the project, doing jobs like plumbing, electrical, HVAC, and roofing, this license is for you.
Construction Management: No matter what, this license is needed for any project valued at $25,000 or more.
Also, it’s important to note that no matter the type of contractor you are, you must indicate the type of work you want to do. You must apply for a license if your work falls under one of the categories:
Getting Your Contractor’s License Tennessee: What You Need to Know
Now that you know what the different licenses are, let’s take a look at what the requirements are and how to apply.
Take the “Business and Law” exam
Regardless of the type of license you want to apply for, you must take and pass the Tennessee Business and Law exam. And depending on your trade, you likely will have to apply for an additional license.
The tests are issued through PSI Testing along with other administrative things like scheduling, registration, testing locations, and more. Each exam has a $55 fee.
Prepare your financial statement
Tennessee law requires that all contractor’s license applicants prepare an Audited or Reviewed financial statement through a licensed independent accounting firm.
Reviewed Financial Statements are required for monetary limits of $1,500,000, and Audited Financial Statements are required for monetary limits that exceed $1,500,000. For more information on financial statements, visit the Tennessee Department of Commerce & Insurance website.
Submit a reference letter and proof of insurance
The next step in the application process is to submit a letter of reference. The letter must be from a past client or employer who has direct experience working with you. Or, you could also submit a letter from a code official who has inspected your work.
You also need to provide proof of insurance, specifically general liability insurance based on your monetary limit. You must also provide proof of worker’s compensation insurance as well.
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