Does a Handyman Need to Have a Contractors License?

There are very few areas where a handyman can get a handyman license, so the question becomes: How can I work legally as a handyman and still make a good living?

It seems that every state in the Union has licensing requirements for all aspects of construction.  You have to be a licensed contractor to do any major work…jobs like rewiring a house or remodeling a bathroom.  If you are an unlicensed handyman you must look to the exceptions to the licensing requirements.  What kind of work can be done without a license?

Most states have some kind of “Minor Work Exemption” rule. There are often maximum dollar amounts for a job or some specific types of work that don’t require a license.  These exemptions are where the handyman makes his or her money!  But guess what?  Every state has different rules!

I’ve found that one state sets the maximum dollar amount for labor and materials at $750, while another is $1,000.  Still another state says that you can do up to $3,000 but you have to show that you have liability insurance.

Some states won’t let you do any plumbing or electrical work and won’t allow you to do any work that requires a permit.  It’s maddening really.  InCalifornia, where I live, the limit is $500 but there is an exception which allows the sale or installation of finished products that don’t become a fixed part of the structure regardless of the dollar amount.  So I can assemble furniture and garage storage cabinets all day long!

Everywhere you go you’ll find different rules and it’s impossible to quote them here.  But they all seem to have one thing in common.  They won’t let the handyman break the job down into smaller components to make the totals “fit” the rules and the job can’t be a part of a bigger job that exceeds the limit.

Obviously the government is trying to protect vulnerable consumers from unscrupulous, unlicensed contractors and they have the minor work exemption rules in their sights as a means of protection.  Because of this, we will continue to see the licensing requirements getting tighter and enforcement becoming stricter.

So what is the handyman to do?  How does a handyman business succeed?  Well, we take a closer look at what we are being allowed to do.

We can do repairs all day long.  We can do maintenance, we can do minor jobs like installing trim, power washing and staining a deck, doing trash hauling, touching up paint, or minor dry rot repairs, furniture and cabinet assembly.  We can repair a fence, build a gate and install a screen door.  There are lots of jobs that we can do.  In fact, almost everything we can do a licensed contractor will not want to do.  The jobs are too small for him to send out a worker. There is a definite niche for a handyman and a great need for honest, reliable handymen and women!

Don’t let the licensing limitations stop you.  Use them to your advantage.  Find partners to work with that will refer you the kind of business you can do.

The years spent as a handyman may count toward your experience requirements if you apply for your contractor’s license.  Call a local contractors testing school to find out what you can do now to prepare for getting your license.  They will also be a great resource for information on what types of work you can do in your area without a license.

Nothing I’ve said here has stopped me from making a good living as a handyman.  Whatever you do, I hope you take away from this question one simple idea.  As an unlicensed handyman it’s not our job do bathroom or kitchen remodels or to frame out additions.  That is not the kind of work we should be looking for and we can’t legally build a business based on large jobs.

About Licensing and Insurance

Check with your state or local licensing authority to determine if your handyman work will require a license.  To protect your assets it is very important to get the necessary licenses and that you have general liability insurance.

Who is Required to Have a City Business Tax Certificate?

If you do work within the city limits, where ever you are, there is probably a business license requirement.

Here is a quote from the City of Santa Rosa’s website:

 “Any person whose business is located in the city or conducts business in the city must apply for a business tax certificate within 30-days of the date the business commences. Conducting business in Santa Rosa without a business tax certificate can result in penalties, violation notices, citations and court action.  Whether you’re operating from home or a storefront, office or industrial park, you’ll need a Business Tax Certificate.”

As you can see, cities are anxious to register your business and collect a business tax!  Is your city the same?  Fortunately these taxes are usually very small but they do require some extra paperwork.

Go to your city’s website or call your city hall.  If you’re required to have one, bite the bullet and get it for every city in which you will be doing business.

How Large a Deposit Should I Request?

There are limits on what you can request as a deposit.  Check the laws in your state for the exact limits.  In California, contractors are prohibited from asking for a deposit of more than 10% of the contract price or $1,000, whichever is less.

You’ve heard the horror stories about “tradesmen” asking for a 50% deposit and then skipping town with the money.  Don’t be mistaken for one of these people.   If you have to request a deposit, even if you’re not a contractor, follow the contractor laws for your state.  Following this rule will increase your credibility and increase your chances of getting referrals.

I have chosen to never ask a customer to pay for materials in advance.   I charge all of my purchases on an air miles visa card.  This gives me thirty days to pay and a free round trip ticket when it comes time for a vacation.  If you can, do the same.

If you don’t have the available credit and the job has a large materials requirement there are solutions.  Have the homeowner buy the materials so that they are on hand when you arrive.  You can also go to the store together and let the homeowner choose and purchase the materials.  Handled this way, the homeowner will know that they are paying nothing but cost for the materials and you will have stayed within the law.  Don’t ask for a large deposit.

Can I Get a Contractors Discount When Buying Materials?

Any discounts you receive have the potential of being either extra profit for you or additional savings for your customer.  It’s a winning situation either way so don’t hesitate to ask for a discount.

I have found that the major chains have differing policies.  One chain flat out said no, that they do not offer contractor discounts while another said they would sometimes discount very large purchases.  That let me out on both counts!

The smaller chains and small independent hardware stores will be more willing to talk since these stores have local ownership and more flexibility due to their higher margins.  They will probably be willing to give you at least 10% off.  I suggest you approach them when you’ve got a large purchase on your cart.

Some suppliers will allow you to make purchases on account.  This can be helpful for a couple of different reasons.  First, this will give you 30 days to pay and maybe even a contractor’s discount.   But also, this account will establish a history of purchases.  This history may serve as proof of experience if you choose to pursue your contractors license.  Check in with a local contractors licensing school to see what steps you can take to satisfy the experience requirements.

Should I Hire Handyman Helpers?

The hiring of employees can be a great way to increase your income as a handyman.  Here is California, handyman helpers would earn from $15 to $25 per hour.  After figuring in payroll taxes and workman’s compensation insurance the cost per hour would be closer to $25 to $35 per hour.  Marking up the employee cost to $50 to $70 per hour to the client would net a profit.  Multiply this number by several workers at multiple locations and it starts adding up to some real money.

Besides hiring helpers to do some of the grunt work, workers can add flexibility to your scheduling.  They will enable you to overlap jobs.  This is particularly helpful when jobs take longer than expected or run into additional problems.   Tuesday’s work can start on schedule while your worker picks up the loose ends of Monday’s job.  Several jobs can be started at the same time and you can leave a job site to estimate new work or to pick up additional supplies.  The pool of jobs that you can take on will be bigger because you can accept more labor intensive jobs that you wouldn’t normally do.

Employees create many challenges.  Can you find any that are qualified?  Will they be honest and dependable?  Will the quality of their work be up to your standards?  Will there be enough of the right type of jobs to keep them working?  With the slim markups that you’ll be making on employee labor hours you can’t afford to have them sitting idle.  Your job turns into a supervisory and a marketing position where you’ll be applying your skills to meeting with new clients, estimating work, marketing your business and managing employees.

When you get to the point where you are turning away work because your schedule is full, it’s time to hire some helpers and build your empire!

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