I’m taking a course to get the knowledge to hopefully pass the nc residential contractors state licensing exam. It’s a very interesting course and I figure the worst that can happen is that I’ll learn something.
The financial requirement for getting a limited residential license is that you have at least $17,000 in the bank… On any given day, I’m lucky if I have $700 in the bank.
I’ve talked with another contractor who gave me the impression that there are ways around this, but he never would go into detail.
I guess this must be considered clandestine information, but how do people pull it off without having that much cash.
My credit is maxed out (lot’s of tools to do the remodeling, repair, misc, etc… work I do) so taking out a loan isn’t really in the cards for me, so I know I wont be building any houses for another year or so, but I’d still like to get the license.
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The state wants to be sure you are serious about your business and ties net worth to the licensing requirements. Going belly up because you don't have the cash flow to keep up with day to day living expenses and the holdups of the construction draw system and the invoices that pile up as you build and the taxes and fees that are always due is not good for your self or your customers.
You may not intend to get in over your head but the state can't take that chance so they make sure you can cover your startup costs with a predetermined cushion. How they arrive at a specific number, I don't know.
Your bank would have to provide your proof of cash on deposit in a business account. Usually there is also some form of CPA generated statement to go along with this. Established businesses have their P&L statement but newbies get by with a statement of assets, ie. cash on hand and liabilities.
I guess if you want the license you may have to take out a loan from the family or friends, deposit that in a business account, get your bank statement and then repay the loans. Trouble with that, sometimes, is that the state is savvy and will require three months of bank statements to prove you actually HAVE the cash and didn't just prop up the account to meet the one time minimum requirement.