In today’s competitive working environment, opportunities may arise where contractors and tradesmen will opt to work even without a valid license. But while this is alluring due to the substantial costs associated with acquiring a license, working without it can lead to severe consequences. If you truly want to scale your career, you need to think not only about protecting yourself, but also protecting your clients.
There’s a reason why employers check if a trade worker has a valid license. Other than it being a basic, lawful requirement, in the long-run, it protects both workers and their employers from stringent penalties and helps create a safer working environment.
So what are some of the penalties of working without a valid license? We dive into it below.
You are limited to what projects you can do.
Many people simply aren’t going to hire a contractor who doesn’t have a valid license. You may be limited to doing smaller, one-off projects, and those projects may not offer the same benefits as the larger ones. Though a license does cost some money to obtain, it’s going to pay for itself in terms of the projects that you can get.
Before applying for a license, it’s important to do your research. Usually, you’ll need a contractor’s license when the expenditures of the total job are going to be over $5,000. A contractor’s license will cover projects like erecting buildings, renovating buildings, and completing structured landscaping. But to take on jobs such as electrical or plumbing work, you’re likely to need a specific trade license.
You can face significant fines.
If your work requires a license, but you do not hold one, you can face significant fines and penalties. These fines and penalties can be up to $22,000 for an individual and $110,000 for corporations. The cost of acquiring a license pales in comparison to the fines and penalties associated with getting caught. There are also disciplinary actions, which can range from $11,000 for an individual and $50,000 for a corporation.
These penalties are also per instance. If you have conducted work without a license repeatedly, the fines and penalties could be much more significant, and will ultimately end up with you and your business to shut down, which can damage your reputation in the long-term.
Any work you’ve done may need to be redone, and you may be asked to reimburse your clients for any additional expenses. This will make it even more difficult for you to gain clients later on.
You lose credibility and trust.
If a client or employer finds that you aren’t licensed, that could substantially impact your reputation and credibility in the industry, as well as incite negative reviews about you as a worker. Employers could potentially begin to assume the reasons that you have not been able to get licensed and therefore have second thoughts about hiring you. Having a license adds that level of professionalism and credibility when applying for new roles or getting work from a client, as well as heavily increases the chances of getting you hired.
When it comes to contracting and trades, you’ll often find that word-of-mouth is the most important aspect. People will usually tell others what they think of a tradesperson. If you don’t have a license, or if you’re caught without a license, it’s likely that negative word-of-mouth will spread and limit you from accessing future jobs. You may see negative reviews popping up online and these reviews, as well as the negative image which comes with it, can’t be removed once established.
Employers value employing the right candidates, and clients want the most credible and trustworthy people doing the jobs for them. Being prepared for work with a valid license will help individuals trust you with these important tasks.
What if your license becomes expired?
If your license becomes expired for three months or longer, you’ll need to apply for a new license immediately before beginning work. You cannot continue to work as a tradesperson until you’ve acquired a current license. The fines and penalties are similar to not having a license at all.
How do you qualify for a license?
Various types of licenses require different qualifications.
For a general contractor’s license, you need to:
- Be 18 years of age
- Have the necessary qualifications and experience
- Be physically able to perform the work outlined in the license
- Have the required insurance. You will also need to show that you don’t have any unreasonable pending amounts of insurance claims
- You will have to be a full contractor rather than an apprentice or trainee. There are additional fees that need to be paid.
Why would someone work without a license?
The penalties of working without a valid license are serious. So why do we still find people working without a valid license?
Many tradespeople attribute these delays to the cost of acquiring a license. No matter what your reasons are, as a trade worker, it’s important to remember that the cost of being licensed will be offset by the trust and the wealth of opportunities that will come your way as a licensed contractor.
Others may simply not have the time or lack proper resource management to get a license. But one way or another, it is essential to get your license as soon as possible. If you’re unsure where to start, GotCred makes it easy to manage your licenses and credentials and keep up with them as needed so they stay up to date.
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