Alabama General Contractor License: Get Licensed to Work

Do you need a general contractor license in Alabama?

In Alabama, you have a little more opportunity to work without a license than in some other states. A General Contractor license is required for commercial projects with a value of $50,000 or more, and a Residential Home Builders license is required for residential projects with a value of $10,000 or more.

Alabama has two licensing boards for contractors:

• The Alabama Licensing Board for General Contractors (LBGC) issues General Contractor licenses for the construction, alteration, maintenance, or repair of commercial/industrial or public projects.
• The Alabama Home Builders Licensure Board (HBLB) issues Residential Home Builders licenses for building, renovation, and repair projects on residential buildings with up to three floors and up to four residential units. 

Note that a licensed General Contractor must also obtain a Residential Home Builders license in order to perform new construction of residential buildings.

Types of contractor licenses in Alabama

Both General Contractor and Residential Home Builders licenses have different classifications that applicants must choose from.

For General Contractors, there are six major license classifications:

A full review of the General Contractor classifications is available on the Alabama Licensing Board for General Contractors website.

For Residential Home Builders licenses, there are three classifications:

A full review of the Residential Home Builders licensing classifications is available on the Home Builders Licensure Board website.

Alabama general contractor license requirements

There are no educational requirements for obtaining a General Contractor license or a Residential Home Builders license. But both the LGBC and the HBLB require proof of experience.

In many cities, like Huntsville, Alabama, professionals and businesses also have the additional requirement of obtaining a business privilege license. It is important to check with each city in which you plan to work to see if any additional licenses are required. 

How to get a general contractor license in Alabama

Let’s take a look at the steps you must take to get your General Contractor or Residential Home Builders license:

Alabama general contractor exam

The Business & Law exam for General Contractors is administered by PSI testing centers, and the HBLB Business & Law and HBLB Skills exams are administered by Prov testing centers.

Here is some information about each exam:

Does Alabama reciprocate general contractor licenses?

Reciprocal license agreements let general contractors from other states apply directly for an equivalent license in Alabama.

Alabama reciprocates its General Contractor and  Residential Home Builders contractor licenses with the following states:

Note that with the Residential Home Builders reciprocity agreement, you may be exempt from taking the HBLB Skills exam, but you will still be required to pass the HBLB Business & Law exam.

How much does a general contractor license cost in Alabama?

The cost of an Alabama contractor license varies depending on the type of license you want to hold and the exams you need to take. In general, you can expect to pay around $250-$510 for the initial licensing process. 

For General Contractors, here are the relevant fees:

For Residential Home Builders, here are the relevant fees:

*If both exams are taken on the same day, the cost is reduced to $130.

Renewing your general contractor license

General Contractor licenses in Alabama must be renewed annually. The Licensing Board for General Contractors determines your renewal month based on the first letter of your company name. See the chart below for details or consult the Licensing Board’s renewal information page.

Renewal forms are available online only, and notices for renewal are no longer mailed to licensees. If you fail to renew your license within a year of its expiration date, you’ll need to resubmit your license application and retake all examinations.

Residential Home Builders licenses must be renewed annually and expire December 31 of the year they were issued. Renewal notices are sent online and through paper mail on October 1 of the current year. 

You can renew online via the Home Builders Licensure Board’s online renewal portal between October 1st and December 31st of each year. However, if you miss the deadline and your license expires, you must submit the correct expired application form and pay the $600 expired application fee to be reinstated.

Additionally, to maintain an active license, there are continuing education requirements of six credit hours each year for ages 60 and under. Visit the Home Builders Licensure Board’s website for more information.

How to start a contracting business in Alabama

With your Alabama general contracting license in hand, you’re well-equipped with the knowledge and expertise the industry requires. 

The next logical step? Establishing your own general contracting business and paving the way to greater profits.

Starting a business in any industry has specific requirements, and Alabama’s general contracting industry is no exception. But before you break ground on your new venture, familiarize yourself with the essential steps and prerequisites:

• Research Alabama’s business requirements: The Alabama Small Business Commission provides resources and support for businesses in need of guidance. 

• Insurance and bonding: Alabama requires general contractors to have both liability and workers’ compensation insurance. Ensure you understand the coverage amounts and types suitable for your business size and type.

• Understand local licensing: While you have a state-level license, some Alabama cities or counties may require additional permits or licenses to operate. It’s crucial to research local regulations to remain compliant.

• Register your business: All businesses in Alabama need to be registered with the appropriate state and local entities. This often includes registering your business name and obtaining a sales tax license if you’re selling goods or services.

• Taxation: Get acquainted with the Alabama Department of Revenue’s guidelines on state business taxes. The Department has a collection of resources catered to small businesses called the Business Essentials For State Taxpayers (B.E.S.T) and also has a handy checklist for new business owners, which includes information about selecting your business structure, obtaining an Employer Identification Number (EIN), and registering your business name.

• Employee regulations: If you plan to hire a crew, familiarize yourself with Alabama’s labor laws, wage regulations, and safety requirements.

There are also some practical considerations for general contractors who are thinking of starting their own company, including: 

• Pricing your services appropriately
• Securing financing and setting up an accounting system
• Finding the necessary equipment and product suppliers
• Setting up general contracting business software
• Creating a sales strategy
• Generating leads for your general contractor business 

Does a general contractor license in Alabama increase your earning potential?

Yes, getting your general contractor license in Alabama definitely boosts your earning potential. Alabama has strict limits for what residential and non-residential contractors can charge without being licensed. Getting your license opens the door to many projects that you wouldn’t otherwise be able to bid on or complete.

With a license, you’ll join the ranks of highly paid general contractors, potentially earning north of $120,000 a year. And if you open your own general contractor business, that number could be considerably higher.