Do I need a contractors license?

digggs · Jan 2, 2006

Hello everyone,

I have a compact kubota 008 excavator and a New holland TD24DA compact tractor. I use them on my own properties in California and Nevada and am thinking of doing side jobs for other people. Is it required that I have a contractors license? Do I need general liablity insurance? How much do you think I should charge with the smaller equipment that I have? Is it better to charge by the job or by the hour?

If you have any advice or input on any or all of the questions above, all your thoughts are welcome.

Digggs

inveresk · Jan 3, 2006

Hi, Digggs, and welcome to tbn.

Definitely, to the question about indemnity insurance. Trying to limit liability is also a good reason to set up as a corporation if this is going to be more than just a hobby.

Pricing by the hour means you take no risks and get paid fairly for your labour but some clients don't like it as they think it's a license to go slow and not use your best endeavours. For this reason, pricing by the job can pick up more work but there is a risk that you end up underpricing so you need to be very specific about the nature and scope of work when you submit your quotation.

On contractor's licensing, this would, I think, depend on what you intend to do and on the construction codes and regulations in the areas you intend to work in.

AvoMan · Jan 3, 2006

California law requires anyone who repairs or improves the property of another have a contractors license, unless the cost of labor and materials for the job is under $500. This is provided in Calif Business & Professions Code section 7048. Violations are punishable by civil and criminal penalties. You absolutely need general liability insurance, which you will be unable to secure without a contractors license. More information is available on the State Licensed Contractors web site at www.cslb.ca.gov. The CSLB routinely conducts sting operations as part of its enforcement against unlicensed contractors. Beware.

digggs · Jan 3, 2006

AvoMan, Thank you for your information. I am not interested in becoming a contractor. Small jobs under $500 sound like the way to go....if at all! Do you know if that $500 is the total amount you can recieve from one person in a year? What if someone had more than one "job" for me. For example, what if someone called me back to do more work a month later? If it rains and I smooth out the ruts in thier driveway and then a month later it rains again and they call me back to clean things up. Also, does it make a difference if someone hires me by the hour rather than by the job?

Digggs

RobertN · Jan 3, 2006

Folks around here get $65-$85/hr for a small excavator. 5 or 6 hours puts you over $500.

If you quote by the job, make sure you have a clause. Rock clause if you want. Around here it is easy for what looked like a 4 hour job to double or triple because of rock, shale, and hard clay. And, that's lots more than $500...

digggs · Jan 4, 2006

RobertN,

Thank you for the hourly rates for you area. It gives me an idea of what I could charge. It looks like the $500 dollar amount could be reached very quickly on one "job"!

Digggs

MarkV · Jan 4, 2006

You would be taking a real risk without insurance, at least in my area. Besides the things that can happen to your equipment that would not be covered by homeowners off your property, damage or perceived damage to others property can happen quickly. Be prepared for sticker shock when you mention the excavator to an insurance company. Here what is often called landscapers insurance for a tractor is not too bad but all the policies have a clause about digging. For a backhoe or excavator the policies get right pricey. Guess when you hear what it cost to fix a fiber optic line that is cut you can understand.

MarkV

digggs · Jan 6, 2006

I appreciate all the good advise from everyone. Having a contractors license and insurance seems the way to go if someone is going to do anything over $500. Thank you for helping me stay out of trouble!

digggs

justanotherjoe · Jan 8, 2006

Check to see if insurance is cheaper for landscaping than excavating. Pushing surface dirt or trenching for sprinklers is way different than digging septics.

EddieWalker · Jan 8, 2006

I used to do some work in Nothern CA in a different life. Getting the license is all about jumping through hoops. I can understand some of it, but found it wasn't worth it to me. I told my clients up front that I wasn't licensed and most of the jobs I did were basic repairs or installations anyway. Well under $500.

The other thing to remember is the permit process. In the area I was in, you needed a permit for any job with a value of $100 or more. Pretty hard to do much under that amount.

A few contractors I knew no longer do business in that state due to the regulations and insurance amounts they were required to deal with. To be ligit, it's very dificult to make a profit competeing agains all the illigals operators. Both US citizens on aliens.

Good luck,
Eddie