How to Get a Tennessee Contractor License: A Step-by-Step Guide

To work as a contractor in Tennessee, you must hold a license issued by the Tennessee Board for Licensing Contractors, which operates under the Tennessee Department of Commerce and Insurance. To get licensed, you will need to complete several steps, from choosing the correct license classification to gathering all documents required for the application.

To help you go through these steps, this guide explains them clearly and in an easy-to-follow way.

1. Select the Correct License Type 

Tennessee contractor license classifications are divided into two main categories based on project size. For projects valued at $25,000 or more, you generally need a full contractor license along with the proper classification for the type of work involved, such as: 

• Roofing
• Masonry
• HVAC
• Specialties
• Environmental
• Mechanical
• Electrical
• Building
• Plumbing
• Highways 

For projects under $25,000, Tennessee offers the following license types:

• Home improvement – Covers work on existing residential homes, not new construction or commercial properties, and is required for home improvement projects valued at at least $3,000 but less than $25,000. It is required in nine counties: Shelby, Rutherford, Robertson, Marion, Knox, Haywood, Hamilton, Davidson, and Bradley.
• Limited Licensed Electrician (LLE) – Required for electrical work in counties where inspections are carried out by the State Fire Marshal rather than a local electrical licensing authority
• Limited Licensed Plumber (LLP) – Used for plumbing work in counties where the inspection authority rests with the State Fire Marshal

2. Form a Business Entity

As a contractor, you may operate under one of the following business structures: limited liability company, partnership, corporation, or sole proprietorship. Sole proprietorships have no filing requirement, while partnerships may file voluntarily through a notice with key details such as partner authority. Limited liability companies register through Articles of Organization, and corporations do so by filing a charter with the Secretary of State.

3. Pass the Required Exams

All applicants for a Tennessee contractor’s license must pass the Tennessee Business and Law exam, and some classifications also require a trade exam. Both exams must be passed before submitting the license application. The person who passes the exam on behalf of the business is known as the Qualifying Agent (QA). The Licensing Contractors Classification Outline shows which license types call for that additional exam.

The exam fee is $57.00, and testing is available in Johnson City, Knoxville, Memphis, Jackson, Chattanooga, and Nashville.

4. Secure a Surety Bond

General Contractors

For a Tennessee general contractor license, a surety bond is required when an applicant seeks approval to take on contracts with a higher dollar value than the maximum amount the Board would otherwise allow. The Board sets that amount at ten times the lesser of the applicant’s net worth and working capital. For example, if a contractor has $80,000 in working capital, the maximum contract amount would be $800,000.

If the contractor wants a higher monetary limit, they may use a surety bond as a financial guarantee to support the part that their working capital does not cover. The bond amount, however, is not based on the size of that shortfall.

Tennessee uses only two bond tiers: contractors seeking less than $1,500,000 must furnish a $500,000 bond, while those above that amount must secure a $1,000,000 bond.

Home Improvement Contractors

Home improvement contractors must post a $10,000 surety bond. It must also be accompanied by the surety’s written Power of Attorney.

5. Obtain the Required Insurance 

Tennessee does not apply one uniform insurance rule across all license types. Limited licensed electricians and plumbers are not required to carry insurance for licensing purposes. Home improvement contractors, by contrast, must obtain workers’ compensation and general liability insurance, with at least $100,000 in liability coverage.

For contractors, workers’ compensation coverage is required, along with general liability insurance in the minimum amount tied to the following monetary limits:

6. Get Your Documents Ready

The following documents must be submitted with your application to meet the Tennessee contractor license requirements:

• Surety bond

• Proof of workers’ compensation and general liability coverage (workers’ compensation is not required for applicants with no employees or for those who register as a Construction Services Provider or qualify for an exemption)
• A copy of the Tennessee Business and Law exam results, along with trade exam proof when required
• Corporate documents filed with the Tennessee Secretary of State, except when the applicant is operating as a sole proprietorship
• Financial statement – A balance sheet showing the entity’s assets and liabilities
  • A reviewed financial statement prepared by a licensed CPA is required for monetary limits of $3,000,000 or less. Note: Financial statement rules for renewals were updated as of November 18, 2025 — see the renewal section below for current renewal-specific requirements.
  • An audited financial statement is required for applicants seeking a limit above $3,000,000 or an unlimited license

• • Reference letter – A former employer or customer familiar with your completed projects, or a code official who has examined the finished work, must provide a reference letter

• List of experience

• Equipment list

• License fee: $250

7. Submit Your Application

You may submit your application either online or by mail to:

Tennessee Board for Licensing Contractors

500 James Robertson Parkway

Nashville, TN 37243-1150

Send your application with the $250 fee, which is nonrefundable, and list the State of Tennessee as the payee. The Board accepts cashier’s, personal, and company checks as well as money orders. Credit card and cash payments are not accepted.

Local Licensing Requirements for Tennessee Contractors

In Tennessee, contractors may need to meet bonding obligations at the municipal level, and many cities also require a separate permit in addition to the state-issued license. The examples below cover a selection of cities and counties; however, Tennessee has many more local bond requirements across the state, spanning cities such as Franklin, Hendersonville, Kingsport, Knoxville, Lebanon, Memphis, Morristown, Nashville-Davidson County, and others. Before starting work in any locality, always confirm current requirements directly with that city or county.

• City of Chattanooga – Street and sidewalk excavation contractors must secure a permit, which requires a city business license, a $25,000 street obstruction and excavation bond, and compliance with other city requirements.
• City of Gallatin – Excavation, mechanical, gas, and plumbing contractors must file a $10,000 permit bond, while general contractors must provide a $50,000 bond.
• City of Goodlettsville – Contractors who plan to work in the city must file a permit bond with the Codes and Building Department. General contractors with projects of up to $25,000 must submit a $10,000 bond; those whose projects exceed $25,000 must post a $50,000 bond; and excavation, gas, mechanical, plumbing, and electrical contractors must furnish a $40,000 bond.
• Hamilton County – All contractors seeking to perform work in Hamilton County must obtain a $10,000 contractor’s surety and performance bond.
• Johnson City – Contractors engaged in mechanical or gas installations, electrical wiring, steamfitting, plumbing, and building work must hold a business license and furnish a $10,000 surety bond.

Tennessee Contractor License Renewal

Financial Statement Rules Updated (Effective November 18, 2025)

The Tennessee Board for Licensing Contractors updated its financial statement rules effective November 18, 2025. The changes apply specifically to license renewals and represent a relaxation of the previous requirements for contractors with higher monetary limits.

Previously, contractors renewing with a monetary limit above $1,500,000 were required to submit a reviewed or audited financial statement prepared by a CPA. Under the updated rules, a CPA-compiled financial statement is now sufficient for renewal at those limits. Contractors with limits of $1,500,000 or less may continue to submit a self-prepared, notarized balance sheet. An audited financial statement remains required for unlimited license renewals. The Board retains the right to require a reviewed or audited statement in cases where it determines it is in the public interest.

Note: These changes apply to renewals only. The financial statement requirements for new (initial) license applications are unchanged — a CPA-reviewed statement is still required for all initial licenses with monetary limits of $3,000,000 or less, and a CPA-audited statement is required for limits above $3,000,000 or for unlimited licenses.

Renewals must be received by the Board no later than 30 days before the expiration date. There is no grace period to continue operating once the license expires. However, contractors retain renewal rights for up to 12 months after expiration — renewing during that window incurs a late fee of $20 per month. After 12 months without renewal, the contractor must complete a new license application to reinstate.

Your renewal filing must include the $200 fee, the required disclosures and answers, proof of insurance, and a financial statement. Under the updated rules effective November 18, 2025: contractors with a monetary limit of $1,500,000 or less may submit a self-prepared notarized balance sheet; contractors with a limit above $1,500,000 must submit a CPA-compiled financial statement (previously, a reviewed or audited statement was required at this threshold). An audited statement remains required for unlimited licenses. For limited liability companies and corporations, their registration with the Secretary of State must remain in good standing.

FAQs

How long does a Tennessee contractor’s license remain valid?

A Tennessee contractor’s license is valid for two years from the date it is issued.

What are the penalties for unlicensed contracting in Tennessee?

Anyone who undertakes work, bids, offers to perform services, or secures a permit without holding the license required for that work commits a Class A misdemeanor. It carries a penalty of up to $2,500 in fines, up to 11 months and 29 days of imprisonment, or a combination of both.

Does Tennessee have reciprocal exam agreements?

Applicants may qualify for a trade exam waiver if they passed the test through the respective licensing authorities in Alabama, Arkansas, Georgia (commercial only), Louisiana, Mississippi, North Carolina, South Carolina, and West Virginia. Tennessee also accepts the NASCLA National Commercial and Electrical exams.

Trade exam waivers are available when the reciprocating state is where the applicant is domiciled (home state), or the applicant must have taken an exam comparable to Tennessee’s current PSI exam in one of the reciprocal states. Tennessee also accepts the NASCLA National Commercial and Electrical exams. The exam waiver covers the trade exam only — all applicants must still pass the Tennessee Business and Law exam and complete the full license application process, including financial requirements and insurance. The applicant must attach a copy of their out-of-state license and exam score to the application.

What legal or disciplinary history must be disclosed to the Board?

The Board requires applicants to report any criminal record, court proceedings such as pending arbitration and lawsuits, adverse rulings, complaint records for both resolved and unresolved cases, disciplinary matters, bankruptcy, and any breaches of licensing law, whether they arose in Tennessee or another state.

Is there a handyman license in Tennessee?

Tennessee does not issue a separate handyman license. The licensing requirement depends entirely on the dollar value of the project and the county where the work is performed. Work valued at less than $3,000 (including materials and labor) on existing residential property does not require any state license. For work valued at $3,000 or more but less than $25,000 in the nine designated counties — Bradley, Davidson, Hamilton, Haywood, Knox, Marion, Robertson, Rutherford, and Shelby — a Home Improvement Contractor license is required. For any project valued at $25,000 or more anywhere in the state, a full contractor license from the Tennessee Board for Licensing Contractors is required. Handymen performing trade-specific work, such as electrical, plumbing, or HVAC, may also need a Limited Licensed Electrician (LLE) or Limited Licensed Plumber (LLP) license, depending on the county, regardless of project value.