Contractor licensing: what to check before bidding

Before submitting a contractor bid, check that your license covers the work and legal entity, the job location adds no unmet requirement, and the bid includes the required bond and insurance documents. Whether your trade needs a license at all is covered in when you need a contractor license.

Check your license record and permitted scope

Where a state licenses your trade, use its public lookup or contact the board. Search both your own name and the business name. Where licensing sits with cities and counties instead, the lookup is the local one, and it may not be online at all.

Check these four items with the licensing authority:

• Status and expiration. Active, inactive, delinquent, expired and suspended are not interchangeable words, and some states let you hold a license "inactive" in a way that does not permit contracting. Renewal cycles differ by state and often by license type — annual and biennial are both common — so read the date rather than assuming last year's rhythm holds.
• Classification. A license covers named scopes of work. Bidding a job that runs outside your classification is the same problem as bidding with no license. If the invitation mixes trades, ask your board which parts you may carry yourself and which need a licensed sub.
• The name on the record. Licenses are issued to a specific person or a specific legal entity. If you were licensed as a sole proprietor and later formed an LLC, the license may not follow the LLC. California, for example, explains when a change of entity requires a new application. Ask your board in writing before you put the new entity name on a proposal.
• The qualifying individual. Where a state licenses a business through a named person — a qualifying individual or responsible managing officer — that person leaving usually starts a clock to name a replacement, and the board sets the window.

Ask what the job's location adds

Check local requirements as well as your state license.

A different city or county. Many cities and counties require their own business license or business tax registration to work inside their limits, separate from any state contractor license, and some want it before you may bid rather than before you may start. Call the finance or business tax office where the work is and ask three things: do I need a business license from you, is it due before I bid or before I start, and how long does it take to issue?

A different state. Reciprocity is patchy. Some states hold agreements with named neighbors for named trades; plenty of pairs have none. Where it exists, it may waive an examination rather than the whole application, as California's reciprocity rules illustrate, so you may still be filing, paying and waiting. Treat "I heard those two states reciprocate" as a rumor until the board that would license you confirms it for your trade and classification. Out-of-state work can also mean registering with the secretary of state and picking up a payroll and sales tax footprint — worth a call to your CPA the same week, not after the first invoice.

Check license bonds and required insurance

Some licenses require a surety bond backing specified obligations under license law. It has coverage, claimant and amount limits; it is not the same as a project performance bond. California CSLB's bond guidance explains that distinction and the consequences of a lapse. If it lapses or the surety cancels, boards commonly treat the license as suspended or subject to suspension until it is restored, and nothing about the certificate on your wall changes. Ask your agent whether the bond is current, then check what the board's record shows.

Check two sets of insurance requirements:

• What your license requires. Ask the board which liability and workers' compensation coverage or exemption filings apply to your business and when they expire.
• What this customer's contract requires. Send the insurance requirements to your agent. Ask whether the policy already includes the required limits and endorsements, such as additional-insured status, or needs changes. Texas insurance guidance explains that a certificate cannot grant coverage or rights absent from the policy.

A certificate holder receives evidence of insurance; an additional insured has coverage rights provided by the policy or an endorsement. Before requesting the certificate, ask the customer which entities need each role and confirm the coverage with your agent. A certificate made out to the management company when the contract is with the association is a redo.

Which documents must accompany the bid?

Holding something and showing it at bid time are two different requirements. The bid documents tell you the second one.

• Government work. Public agencies commonly require registration in their procurement system before a bid is accepted, and federal solicitations generally require SAM registration, subject to the applicable solicitation provisions and exceptions. Bid bonds, prevailing wage acknowledgments and specific forms may all be due with the bid itself.
• Minority-, women- or veteran-owned business programs. These are certifications issued by a certifying agency, not a box you check. If a solicitation carries a participation goal, you either hold the certification already or you are looking for a certified partner.
• HOAs and property managers. Expect to attach your license number, a certificate of insurance and often a W-9.
• Residential. Check the board's rules for license numbers and required contract notices. California's advertising guidelines, for example, include contract proposals among documents requiring the license number.

Confirm processing times before the bid deadline

Ask the board, local office, certifier and insurance agent for their current processing times. An endorsement or new registration may need more time than retrieving an existing document. Start early enough to meet the solicitation's submission requirements.

Here is the whole check, and who to call for each part.

Review license details on reused quotes

Check license, bond and insurance details whenever you reuse a proposal. In DoneQuote, add any required license number or statement to the quote text or saved agreement terms, and attach the forms the job requires. Review them before sending and update reused wording when details change. Saving text does not verify license status or decide whether the bid meets local requirements.