Guide to becoming a licensed contractor

OREGON CONSTRUCTION CONTRACTORS BOARD

7-2021

Welcome to the Oregon Construction Contractors Board’s Guide to

Licensing. This guide provides basic information and a checklist to guide

you through the process of licensing a construction contracting business.

How to get started

Many contractors start by working in construction. Some study

construction and business management. Tradespeople like electricians

and plumbers complete courses, serve an apprenticeship, and obtain a

license from the Building Codes Division as well as the CCB.

Regardless of how you reached the decision to operate your own

construction business, we want to help you through the CCB’s licensing

process.

Eligibility Requirements

• You must be at least 18 years old to be a contractor in Oregon

• Each license is issued to only one business

• To obtain a license as a commercial contractor, a business must

have owners or employees with construction experience

• A person with unpaid construction debts or certain criminal

convictions may not qualify to be licensed

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1.  Decide which contractor’s license (residenal or commercial) and what

endorsement type you need. To do this, you’ll need to know what type of work

you’ll perform, what structures you’ll be working on and what your role will be

on the job site. More informaon about this can be found on pages 4 - 9.

If you will work on pre-1978 homes, you will also need a special lead license.

See page 13 for more informaon about lead licenses.

2.  Designate one or more individuals as the responsible managing individual

(RMI), if required.

 Individual(s) complete 16-hour training  Individual(s) take and pass test

3.  Set up a business.

 Select and create business (sole proprietorship, partnership, corporaon, LLC)

 Select business name (check availability with OR Secretary of State -

www.linginoregon.com)

 Register business (except sole proprietorship or partnership) and/or business name

with Oregon Secretary of State at linginoregon.com)

4.  Obtain surety bond using exact enty name as registered with Secretary of

State, or for sole proprietorships and partnerships must be in the full legal name.

5.  Obtain liability insurance using exact enty name as registered with Secretary

of State and with the CCB listed as cercate holder.

6.  Determine if the business will have employees. If so,

 Obtain workers’ compensaon coverage and idencaon informaon

 Obtain federal employee idencaon number (EIN), if required

 Obtain state business idencaon number (BIN), if required

7.  Obtain other employer account numbers. You may need state and federal tax

numbers, for example. For informaon, contact the Oregon Department of

Revenue or the Internal Revenue Service.

8.  Complete license applicaon.

 Fill out appropriate parts of the applicaon based on business type and other

informaon.

9.  Submit your applicaon.

Submit applicaon form with:

 Surety bond  Cercate of insurance

 Copy of Test Score Report  License fee

LICENSING CHECKLIST

Setting up a Business

Before applying for a license, you need to set up your business. You may

form a business in many dierent ways. For example, you may choose to

simply operate on your own without a formal business structure. This is

a sole proprietorship. Or, you may choose to operate with others based

on an agreement between yourselves. This is a partnership. Or, you may

want a more formal business structure such as a corporation or limited

liability company (LLC).

There are pros and cons for each type of business structure. An excellent

resource for starting a business – including selecting a business

structure and registration requirements – is the Business Xpress website

at http://sos.oregon.gov/business/Pages/business-information-center.

aspx. Many business owners consult an attorney or accountant to help

decide which business structure is best for them.

Note: If your company uses any name other than the full legal name

of the sole proprietors, partners or business, you must register your

assumed business name with the Secretary of State.

Based on CCB’s data, construction contractors generally set up the

following types of businesses:

• Corporation: 31% of licensed contractors

• Sole proprietorship: 24% of licensed contractors

• Limited liability company: 43% of licensed contractors

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Responsible Managing Individual

Most endorsement types must have at least one Responsible Manag-

ing Individual (RMI). An RMI must be an owner of the business or an

employee who exercises management or supervisory authority in the

business. Most endorsements require that an RMI complete training and

pass a test. (See charts.)

About the Training

For most licenses, an RMI must complete a 16-hour training course. You

can take a course in person, online or in another format. The CCB ap-

proves providers who oer the training. You can nd a provider on CCB’s

website.

About the Test

The test is based on the NASCLA Contractors Guide to Business, Law

and Project Management (Oregon version). The CCB website lists the

current edition.

Your RMI will get a test score immediately after completing the test. A

passing score is 70 percent. If the RMI passes, your business may apply

for a license. If the RMI fails, he or she may test again.

You must apply for a CCB license within 24 months of passing the test.

Include a copy of your Test Score Report with your application.

Decide what type of work to perform

What Type of Structure Will You Be Working On?

• If you only intend to work on residential structures and small

commercial structures, complete the Application Form for

Residential License

• If you only intend to work on small commercial structures and

large commercial structures, complete the Application Form for

Commercial License

• If you intend to work on all three types of structures, complete

the Application Form for Residential and Commercial License

Structure Types

Type of

structure

Descripon Examples

Residenal

structure

• A site-built home

• A structure that contains one or

more dwelling units and is four

stories or less above grade

• A condominium, rental residenal

unit or other residenal dwelling

unit that is part of a larger

structure, if the property interest

in the unit is separate from the

property interest in the larger

structure

• A modular home constructed o-

site

• A manufactured dwelling

• A oang home

• Single-family

residence

• Apartment

complex or

condos 4 stories

or less

• Individual units

in a high-rise

building

Small

commercial

structure

• A non-residenal structure 10,000

square feet or less and is not more

than 20 feet high OR

• A non-residenal unit that is part

of a larger structure, if the unit has

12,000 square feet or less and is not

more than 20 feet high OR

• A non-residenal structure of any

size for which the enre contract

of all construcon work to be

performed on the structure is

$250,000 or less

• 7-11 stores

• Gas staons

• Fast food

restaurants

• Tenant space in

malls

• Under $250,000

construcon

projects

Large

commercial

structure

Any structure that is not a residenal

structure or small commercial structure.

• Apartment or

condos buildings

5+ stories

• Hospitals

• Parking garages

• Shopping malls

• Mg facilies

2. What is Your Role? Scope of Work?

 Are you going to oversee the entire job and arrange for

subcontractors? If so, you will be a general contractor.

 Are you going to limit your operations to one or two specialty

practices? If so, you will be a specialty contractor.

 Are you going to limit your work to contracts of less than $5,000 and

annual earnings of no more than $40,000 in gross volume? If so,

you will be a limited contractor.

 Do you own or have an interest in property and plan to arrange the

jobs, hire licensed contractors but do none of the work? If so, you

will be a developer.

The following lists job roles and their scope of work

Job Role Scope of work Limits or Excepons

General

contractor

May supervise, arrange for, or

perform an unlimited number of

unrelated building trades.

No limits.

Specialty

contractor

May perform work involving only

one or two unrelated building

trades.

The building trades may

change from job to job.

Limited

contractor

(residenal

only)

May supervise, arrange for,

or perform any number of

unrelated building trades

involving ONLY residenal or

small commercial structures.

A residenal limited

contractor may not:

• Perform work exceeding

$40,000 in gross annual

volume; or

• Enter into contracts to

perform work in excess

of $5,000 per job site

per year.

Developer • Own or have an interest

in the property being

developed

• Arrange for construcon

work or improvement of the

property, with the intent to

sell the property

• Act in associaon with one

or more licensed general

contractors who oversee all

phases of construcon on

the property.

A developer may not

perform any actual

construcon work on the

property.

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Select the Appropriate License Endorsement

Once you gure out the structure type and job role/scope of work, select

an endorsement(s) for your license. You may select one residential

endorsement and/or one commercial endorsement for the same license.

The following charts show each endorsement type together with bond,

insurance and other information.

Residential Endorsements

Classicaon Bond Insurance Other

Residenal Gen-

eral Contractor

(RGC)

$25,000 $500,000 per

occurrence

Training and test required.

Residenal Spe-

cialty Contractor

(RSC)

$20,000 $300,000 per

occurrence

Training and test required.

Residenal Lim-

ited Contractor

(RLC)

$15,000 $100,000 per

occurrence

Training and test required.

Residenal Devel-

oper (RD)

$25,000 $500,000 per

occurrence

No training and test required.

Restricted Residential Endorsements

Classicaon Bond Insurance Other

Home Services

Contractor (HSC)

$15,000 $100,000 per

occurrence

No training and test re-

quired. May ONLY operate

business oering service,

repair or replacement under

a home services warranty.

Residenal Lock-

smith Services

Contractor (RLSC)

$15,000 $100,000 per

occurrence

No training and test

required. May ONLY operate

a business oering locksmith

services. Must have an

owner or employee who is

cered as a locksmith.

Home Inspector

Services Contrac-

tor (HISC)

$15,000 $100,000 per

occurrence

No training and test re-

quired. May ONLY operate

a business oering home

inspector services. Must

have an owner or employee

who is cered as a home

inspector.

Home Energy

Performance

Score Contractor

(HEPSC)

$15,000 $100,000 per

occurrence

No training and test

required. May ONLY operate

a business issuing home

energy performance scores.

Must have an owner or

employee cered as a

home energy assessor.

Residenal Resto-

raon Contractors

(RRC)

$15,000 $100,000 per

occurrence

No training and test re-

quired. May ONLY operate a

business providing resto-

raon work.

Commercial Endorsements

Classicaon Bond Insurance Other

Commercial Gen-

eral Contractor –

Level 1 (CGC1)

$80,000 $2 million aggre-

gate

8 years of construcon

experience; training and

test required.

Commercial Gen-

eral Contractor –

Level 2 (CGC2)

$25,000 $1 million aggre-

gate

4 years of construcon

experience; training and

test required.

Commercial Spe-

cialty Contractor

– Level 1 (CSC1)

$55,000 $1 million aggre-

gate

8 years of construcon

experience; training and

test required.

Commercial Spe-

cialty Contractor

– Level 2 (CSC2)

$25,000 $500,000 per

occurrence

4 years of construcon

experience; training and

test required.

Commercial

Developer (CD)

$25,000 $500,000 per

occurrence

No experience, training

or test required.

Note: Level 1 and Level 2 commercial contractors may perform the same

work

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Commercial Contractor Experience Requirements

The experience requirement refers to years of experience that one or

more “key employees” must have. “Key employee” means an owner

or employee who is a corporate ocer, manager, superintendent,

foreperson, lead person or any other person who exercise management

or supervisory authority over the business’ construction activities.

Qualifying experience includes:

• Years worked as a licensed contractor, journeyman, foreperson

or supervisor or as any other employee engaged in construction

work for a licensed contractor.

• Completing an apprenticeship program may substitute for up to

three years of experience.

• A bachelor’s degree in a construction-related eld may substitute

for up to three years of experience.

• A bachelor’s degree or master’s degree in business, nance or

economics may substitute for up to two years of experience.

• An associate’s degree in construction or building management

may substitute for up to one year of experience.

Employment Requirements

As you complete the CCB application, you will notice questions about

employees. Generally, a contractor that has employees is nonexempt

and must provide workers’ compensation insurance. A contractor

that does not have employees is exempt and does not need workers’

compensation insurance.

There are some exceptions to this general rule:

• If a contractor applies for a commercial endorsement, the

contractor must have “personal election” workers’ compensation

insurance even if the contractor does not have employees.

Contact your insurance agent or company about this product.

• If a contractor uses leased employees, the contractor must have

workers’ compensation insurance. Generally, this means providing

the CCB with the name and number of the licensed worker

leasing company’s policy. Contact your leasing company for this

information.

In addition to workers’ compensation insurance, a contractor with

employees must also obtain employer account numbers. These numbers

are used for payroll taxes. If you have employees, you will likely need to

provide these numbers.

• The Oregon Business Identication Number (BIN). Obtain this

number from the Oregon Department of Revenue.

• The federal Employer Identication Number (EIN). Obtain this

number from the Internal Revenue Service (IRS).

Obtain and Submit Surety Bond

You must submit a surety bond with your completed application. The

amount of the bond depends on the endorsement(s) you choose.

(See tables.) If you apply for both a residential and a commercial

endorsement, you must submit two surety bonds. The bond(s) is

continuous until canceled.

Many insurance companies oer contractor bonds. The price varies

depending on the bond amount and your credit rating. You can contact

your insurance agent, consult online listings or refer to a phone directory

to nd a bonding company.

If you plan to work on public works projects with a total project cost of

more than $100,000, you must also obtain a public works bond.

Obtain and Submit Certicate of Insurance

You must submit a certicate of insurance with your completed

application. The insurance must cover general liability, personal injury

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and property damage. It must also include “products and completed

operations coverage.” The amount of insurance must be at least the

amount indicated for the selected endorsement. (See tables.) If you

apply for both a residential and a commercial endorsement, you only

need to submit one certicate of insurance – in the higher of the two

amounts.

Many insurance companies oer contractor insurance. Insurance prices

vary depending on the amount of insurance needed and other factors.

Compare prices from dierent companies and make sure you understand

what your policy covers and excludes. You can contact your insurance

agent, consult online listings or refer to a phone directory to nd an

insurance company.

Submit Application Fee

The construction contractor application fee is authorized up to $325 for

a two-year license*. See the application for the current fee. You can pay

by credit card, debit card, personal check or money order. The CCB does

not accept cash.

Costs to Become Licensed

In addition to the costs to set up your business, there are also costs

to obtain a contractor’s license. You need sucient cash to pay these

expenses at the outset.

Item Paid to Cost

16-hour training Training provider Prices vary. Self study opons

may run as low as $20 (students

supply their own manual)$500

for live classes.

Test Tesng vendor $60

Surety bond Bonding company Varies**

Insurance policy Insurance

company

Varies***

Applicaon fee

(2 years)

Construcon

Contractors Board

Up to $325*

business

Secretary of State Consult with Secretary of State

* This amount is current as of summer 2021. Future fees may vary depending

on changes to Oregon law. ** For a business with good credit, the bond might

cost between 1% and 3% of the bond amount (e.g., at 2%, a $15,000 bond will

cost $300). A business with poor credit might expect to pay between 5% and

15% of the bond amount. *** At least one company esmates contractor’s

insurance between $380 and $1,380.(These are annual premiums).

1211 503-378-4621 | www.oregon.gov/ccb

201 High St. SE, Suite 600

503-378-4621 | Fax 503-373-2155

www.oregon.gov/ccb

Lead license

Oregon enforces federal regulations for contractors working on housing

or child-occupied facilities (daycare centers, for example) built before

1978. Under these requirements, only contractors that hold a special

license can bid or work on pre-1978 homes that disturb lead paint.

Renovation means modifying any structure or part of a structure that

disturbs more than:

 Six square feet of painted surface per room for interior work, or

 20 square feet of painted surface for exterior work

This includes projects involving ooring, windows, gutters, siding, and

painting. Window replacement is considered renovation.

To work legally on pre-1978 renovation projects that disturb lead paint

you must:

 Complete a training class approved by the Oregon Health

Authority

 Submit application for Lead-Based Paint Renovation License

along with education certicate

 Obtain a special LBPR License from the CCB