Your Quick Guide to Becoming a Licensed Contractor in New Jersey

With several big public projects underway, as well as a marked growth in multifamily construction, which once again reached pre-recession levels, industry experts are forecasting busy times for construction contractors in the next two years. The good news is that there will be work for different kinds of contractors, as even small businesses are starting to invest in renovation, spurred by the wave of economic recovery.

So if you have been considering becoming a contractor in New Jersey, you have picked the right time. As with any industry, you need to get a good understanding of the licensing requirements before you dive in. Though it may seem complicated at first, it really isn’t. So without further ado, here’s how to get a contractor’s license in NJ in a few simple steps.

#1 Find Your Regulatory Body

New Jersey doesn’t have a contractors’ state license board, so different contractors need to find the authority they have to register with.  In the case of general contractors (or home improvement contractors), as well as most other types of New Jersey contractors, the licensing authority is the Department of Consumer Affairs.

Note, however, that pursuant to the Public Works Contractor Registration Act, if you want to participate in public works project, you have to also register with the Department of Labor and Workforce Development. You need to apply for a Contractor Registration Certificate which is valid for 1 year and costs $300. If you have been a registered contractor for two consecutive years and have no violations on your record, you can save $100 by getting a two-year renewal.

#2 Fill in the Forms

Since the state of New Jersey treats contractors as business entity, you will also have to get several business ID numbers, used for taxation purposes. You can obtain these by filling in the Business Registration Application and submitting it to the Division of Revenue.

Another important form, this time directly linked to your profession, is called the Home Improvement Contractor Application for Initial Registration. To fill it in you will have to provide your physical address, your type of business, as well as information about other owners, if any. The form will also give you a better idea on what your rights and responsibilities as a New Jersey home improvement contractor are.

#3 Buy Insurance

Your Home Improvement Contractor Application for Initial Registration will not be complete without the number of your insurance on it, as well as a copy of the policy. New Jersey contractors need to hold liability insurance for a minimum of $500,000 per accident.

The insurance will provide coverage for you in case you suffer a work-related accident. It should not be confused with a surety bond, which you will also need.

#4 Get a NJ Contractor License Bond

Speaking of surety bonds, in your case the one you need is called a New Jersey Contractor License bond. It serves the opposite purpose of your insurance, as it is designed to protect not you but your clients, as well as the state. It is a regulatory measure put in place to make sure contractors comply with state laws and that a defrauded client can seek their rights.

Find out what your New Jersey bond will cost by filling out the short form below.

Wondering how to calculate your surety bond cost? Similarly to your insurance, contractor license bond costs are paid in annual premiums. The price will be determined largely by your personal credit score, though other factors are also considered, such as time in the industry, professional experience and financial statеments.

If you have a good credit standing you should expect premiums of about 1% – 3% of the total bond amount, while a bad credit score may raise premiums as high as 15%.

#5 Finalize your application

All that remains for you to do is sign a disclosure agreement in which you should list your past criminal violations as well as those of anyone who owns more than 10 percent of your business. When all the details are sorted out, send your Home Improvement Contractor Application to:

Department of Consumer Affairs
Regulated Business Section
124 Halsey Street
Newark, New Jersey 07101

The application should be accompanied by a non-refundable fee of $90. If successful, your New Jersey contractor’s license will be valid for a full year.

You now know everything you need to know on how to get a contractor's license bond in NJ. For any questions about your contractor license bond, don’t hesitate to contact us.