- Business Information in Tennessee
- Smart Guide for Starting a Business
- Workers' Compensation Requirements
- Workers’ Compensation Exemption for Owner(s) of Business (Employer)
(Exemption registration information as a “Construction Services Provider”)
- Internal Revenue Service
(Federal Employee ID Number / EIN / FEIN)
- Employee vs Independent Contractor
- Unemployment Insurance
Other License Requirements from Tennessee State Agencies
Our Board also regulates other licenses for projects less than $25,000 (Home Improvement; Limited Licensed Electricians; and Limited Licensed Plumbers). This information is also provided on our website.
Our Department of Commerce and Insurance regulates other licensing, such as: Alarm Systems Contractors; Fire Sprinkler Contractors; Home Inspectors; Architects; etc., and their contact information is available at Regulatory Boards.
Local Government Licenses, Permits and Inspections
Always contact the local county/city permit offices for their license and permit for inspection requirements. Contact information for all municipalities is available at: Local Government City and County Information. The Division of Fire Prevention inspects many areas. The law requires the contractor performing the work to obtain the permit
Reciprocal Agreements: There is a "trade" exam waiver agreement, only, which exists with several state license agencies, for contractors having an active license with many Boards in: Alabama, Arkansas, Georgia, Louisiana, Mississippi, North Carolina, Ohio and South Carolina. For commercial, the “NASCLA National Commercial” exam is also accepted in Tennessee. For example, this does not allow using a Georgia license in Tennessee (or using a Tennessee license in Georgia). Must obtain a license from each state before contracting or bidding.
Every contractor's license is assigned a monetary limit for the amount in which a contractor may bid or contract (total cost of the project, including materials, labor, profit, etc.). This amount is approved by the Board based upon the financial statement of a contractor, as well as their experience. Projects cannot be split into phases to circumvent the monetary limit law by having multiple contracts. A tolerance of 10% is allowed pursuant Rule 0680-1-.13 and T.C.A. 62-6-103 (with the exception of BC-A/r licensees). In addition, pursuant Public Chapter 469, a contractor exceeding the monetary limit on their license does not have the right to secure a lien. All contractors bidding to any contractor as a subcontractor, if they are performing electrical, mechanical, plumbing, HVAC, roofing or masonry, they are required to be licensed and must have a monetary limit to cover the entire portion of their work, including the cost of labor and equipment; as the prime contractor cannot delete the cost of materials, labor and equipment for these portions of the work which may be considered circumventing the license law.
Owner/Name on the License
The license is obtained in the name of the entity providing the financial statement as the owner. Therefore, it may be a sole proprietor, corporation, partnership, or LLC. In many cases, the license does not necessarily belong to the qualifying agent (person taking the exam) unless they are also the owner providing the financial statement, insurance, etc. The contractor must bid and contract in the exact name as well as in the mode of operation as licensed (see Rule 0681-01-25). For example, if the license is issued to "John A. Doe" licensed as a sole proprietorship, they cannot contract as "Doe's Contracting, Inc." which is registered as a corporation. Contractors registering with an assumed name with the Tennessee Secretary of State will need to include this name to be on the license in order to operate in the name, such as "Doing Business As" (DBA). See Rule 0680-01-.25 which requires operating in the exact name as licensed. Effective July 1, 2014, a contractor's license cannot be issued in a similar name of a current licensee.
The definition of contracting in T.C.A. 62-6-102(2), states in part:
- Contractor is defined as performs or causes to be performed activities, undertaking to, attempts to, or submits a price or bid or offers to construct, supervise, superintend, oversee, schedule, direct, or in any manner assume charge of the construction, alteration, repair, improvement, movement, demolition, putting up, tearing down, or furnishing labor to install material or equipment for any building, highway, road, railroad, sewer, grading, excavation, pipeline, public utility structure, project development, housing, housing development, improvement, or any other construction undertaking. (See Law, Rules and Regulations section.)
Prime Contractors - Prime contractors are those contracting directly with the owner and not to a contractor. Types of prime contractors include the following: Building (Residential, Commercial, Industrial); Electrical (including Low Voltage, Computer Cabling, Audio Visual; Alarm (see also "Alarm Systems Board"); Mechanical - Plumbing, HVAC (including geothermal well drillers who must also be licensed by TDEC); Fire Sprinklers; Heavy Construction (including Storm Damage Cleanup; Landfills; Clearing; Demolition; Crane Rigging, etc.) *Highway, Railroad & Airport (Base and Paving; Bridges; Grading, Drainage, Clearing Right of Way; Painting; etc., also see TDOT); Municipal Utility (including underground Piping; Water Lines; Gas Lines, etc.) Environmental (Asbestos; Lead; Underground Storage Tanks; etc.); Masonry (includes Bricks, Stone, Blocks bound by mortar, etc.); Specialties (Equipment Installation; Cell Towers; Playground Equipment Installation; Solar Panel Installations; etc.); and over 34 Building Subcategories: Landscaping; Roofing; Excavation; Painting; Demolition; Masonry; Flooring; Institutional Equipment, etc. See compiled list of license classifications for more types of contractors. Rules for classifications are published under Rule 0680-01-.16. For those acting as "Design/Build" contractors, make sure you also comply with the license laws of the Architects and Engineers.
- *Highway Contractors (HRA) - See important changes with the Tennessee Department of Transportation (TDOT) for PRIME contractors (except mowing and liter removal contractors) at TDOT Contractors. Highway contractors must be licensed within 21 days after winning a bid. The "Business and Law" exam is required; there is not a trade exam for the HRA (Highway, Railroad and Airport) construction classifications; only the "Business and Law" exam is required. Licenses must be approved by the Board which only meets six (6) times a year (see Public Meeting Information). If a license is needed prior to the Board meeting to be awarded a TDOT contract, the contractor may request an early review through the Hardship process. Follow all licensing steps!
Subcontractors - Contractors bidding to another contractor (not to the owner) are considered subcontractors. The law requires only the following types of subcontractors to be licensed as a contractor: *Electrical, *Plumbing, Mechanical, *HVAC and Roofing whenever the total cost of the project for each of these portions is $25,000 or more; *Masonry subcontractors when the total portion is $100,000 or more. The total cost of each portion includes materials and labor which cannot be provided by another contractor to circumvent the law (see Rule 0680-01-.13). In addition, a sub to a sub, etc., all subcontractors for these portions are required to be licensed as a contractor. *Subcontractors must be listed on the outside of the bid envelope or electronic bid cover.
Bidding - Pursuant to T.C.A. § 62-6-119(b), the prime is required to list the following subcontractors on the outside of their bid envelope, whenever each portion of the work requires a license: Electrical, Plumbing, HVAC, and Masonry. In addition, the well driller’s TDEC license information, name, number, expiration date and classification (G or L) must be listed if the project includes geothermal heating and cooling vertical closed loops. Only one (1) subcontractor may be listed for each classification. If the subcontractor listed on the bid envelope hires subcontractors, sub to a sub, etc., all subcontractors must be licensed. See bidding requirements in Rule 0680--01-.24 and new legislation.
PC644 - Effective July 1, 2014, Bid Document Procedures amended to allow corrections and omissions to the bid envelope within 48 hours.
PC355 - Effective January 1, 2014, Roofing Subcontractors must be licensed as a contractor, whenever the roofing portion is $25,000 or more, with a BC-21 (roofing) classification. In addition, contractors licensed with the following classifications would be acceptable to perform roofing: BC (residential commercial and industrial); BC-A (residential roofing); or BC-B (commercial roofing); or BC-C (industrial roofing). Roofing subs are not required to be listed on the outside of the bid envelope, however, all roofing subcontractors must be licensed as a contractor.
Construction Managers of any kind must be licensed as a contractor if the total project exceeds $25,000.
Joint Ventures: All contractors must be licensed to contract as a joint venture and may combine their monetary limit to bid a project. However, they must both have the classification on their license which is incidental and an essential part of the total project. It is advised to always include the license information of all parties on a joint venture; must be in the exact names as licensed. Joint Venture rule is 0680-1-.11 and may be reviewed from the Laws, Rules and Regulations section of the website. BC-A/r licensees cannot joint venture.
Violations: A contractor who contracts, offers to engage or obtains a permit without a license or proper classification and monetary limit is in violation of T.C.A. §62-6-120. Therefore, would be ineligible to be awarded the project, may not receive a license for six months, cannot participate in any re-bidding of the project, and subject to civil penalties. Bidding requirements entail listing the license name, number, expiration date and the classification pertaining to bid, on the outside of the bid envelope for the prime and specified subcontractors. (Refer to T.C.A. §62-6-119.)
Public Information - Files with the Board are considered public information, with the exception of the "Financial Statement" and it is considered confidential by law T.C.A. 62-6-124. "Social Security" numbers are redacted and not released. License applicants are required to provide their Social Security Number (SSN) to be used for identification purposes, only, and will not be a part of public record. This is under the authority of 42 U.S.C. 666.
Unlicensed Activity: Unlicensed contractors do not have lien rights and limited to recovery of documented expenses in court (TCA 62-6-103).
Criminal Prosecution: Contractors who take money and do not complete the project may be arrested and convicted for felony theft. See "Consumer Resources" for more information.
Exam Preparation Schools: A school providing exam prep courses must be licensed with our Board as a Pre-Licensing Contractor Exam Provider before offering prep courses online or workshops.
- If you take any class and notice the provider is violating the law, please contact us. Violations of the law include: providing exact questions and answers from the exam; guaranteeing passing the exams, encouraging to take exams for licenses not needed or in an area not experienced (in a means to sell more books); referring you to a CPA or assist in preparing your financial statement; or if they are not listed on the approved provider list, please contact us, as they may be in violation of the law.