How to Get a General Contractor License in Alabama

The board's law page defines a general contractor as one who undertakes to construct or superintend the construction, alteration, maintenance, repair, rehabilitation, remediation, reclamation or demolition of any building, highway, sewer, structure, site work, grading, paving or project in Alabama where the cost, including labor and materials, is $100,000 or more. Swimming pool construction is covered at $5,000 or more.

Subcontractors are covered too. A subcontractor performing a contract of $100,000 or more ($5,000 for pools) under a licensed prime must be licensed. A prime may receive bids from unlicensed subcontractors, but the subcontractor must be licensed before beginning work. When a prime awards a subcontract it becomes an awarding authority, and if an unlicensed sub starts covered work, the prime and the sub are both in violation.

Awarding authorities, architects and engineers must put notice in their bid specifications that a general contractor license is required before a prime can bid. The board also reminds applicants that its license is separate from the state and county privilege license.

The prime application costs $300, paid by cashier's check or money order; personal and company checks are returned. It must be on file at least 30 days before a regularly scheduled board meeting, and the board meets quarterly. The instructions list what goes with it:

Your financial statement sets your bid limit. The board accepts an audited, reviewed or compiled statement prepared under generally accepted accounting principles by a CPA or a board-approved licensed public accountant; the Alabama Department of Transportation booklet is also accepted. Cash or tax basis statements are not, and deficits are not acceptable. Every applicant needs a minimum net worth and working capital of $10,000.

Two tools can raise a limit once those minimums are met. A line of credit from a state or federally chartered bank or savings association may lift working capital to the level of net worth. A personal or parent company financial statement, backed by a notarized guaranty agreement, may raise the bid limit by one step. Existing licensees use a separate bid limit increase request form.

The subcontractor application costs $150 and must be completed in full. It requires three references from general contractors, architects, engineers or awarding authorities you have worked for, with the project location, description, contract amount and date for each. The board's page notes that a subcontractor may bid to a general contractor but cannot start the job until licensed.

The board's testing page says every application received since January 22, 2008 requires a trade exam as well as the Business and Law exam. PSI Services gives both. The prime instructions call the business exam Alabama Business and Project Management, while the PSI bulletin titles it the Business and Law Examination; it is 50 questions in 120 minutes with a 70 percent passing score.

A complete application must be on file before you can register, and the instructions warn that testing eligibility may not be decided until the board has reviewed it. After you pass, it is your job to send passing scores to the board. The trade exam depends on the classification: the PSI bulletin lists dozens, from building construction, highways and streets and municipal and utility work to roofing and sheet metal, masonry, concrete and elevator work.

Alabama has reciprocity with Arkansas, Louisiana, Mississippi, North Carolina and Tennessee. The prime instructions name the general contractor boards of Arkansas, Louisiana, Mississippi and Tennessee and the North Carolina State Board of Electrical Contractors. You need a license in good standing held for at least one year in the same classification, and the qualifying party in Alabama must be the same person who qualifies the license in the other state.

Reciprocity waives only the trade portion. The board's reciprocity page states that the business law portion is not waived, and the application must be on file for 30 days with an out-of-state verification form before a license can be issued.

Alabama licenses renew each year in a month set by the first letter of the company name, from March for names beginning I through L to December for names beginning with A. The renewal fee is $200 for a prime and $100 for a subcontractor, forms are online only, and renewals sent more than 45 days before expiration may be returned. A license not renewed within a year of expiration requires a new application and both the trade and business and law exams again.

If you are working toward the Business and Law and trade exams, ContractorPrepHQ has Alabama practice built from the PSI outlines and references: original questions, a diagnostic, topic drills with explanations and timed practice exams with a readiness score. Business and Law prep is $99 and trade prep is $149 with Business and Law included, both a one-time price with lifetime access and a 30-day money-back guarantee. It is independent practice and has no role in the board's application review.