Start a construction company in Ohio

Ohio answers the licensing question by mostly not asking it, then regulating the contract instead. There is no state general contractor license. The Construction Industry Licensing Board licenses five trades, heating and air conditioning, refrigeration, electrical, plumbing and hydronics, and a builder who frames houses and subcontracts those trades never meets the board. What does reach that builder, everywhere in the state, is Chapter 4722 of the Revised Code, which governs the contract rather than the contractor.

The board’s licenses belong to people, not companies. Each one is issued to an individual as one of those five contractor types, and the license itself carries the individual’s name, number, expiration and the name of the contracting company associated with them, so the board tracks the pairing on the face of the credential. A contracting company can have a license assigned to it, which is the route a company takes to hold trade authority in its own right. Acting as or claiming to be one of those contractors without a license is prohibited outright, and on the request of the relevant specialty section the Attorney General may go to common pleas court for an injunction. The edges are drawn in volts: a licensed contractor may run related control wiring under 25 volts, and work limited to fire and burglar alarms, cabling, tele-data, sound, communication, landscape lighting and irrigation under 50 volts is not electrical contracting for licensing purposes.

Chapter 4722 is where a residential builder actually lives. It covers home construction service on a residential building, meaning a one-, two-, or three-family dwelling and accessory construction, and it counts both a new structure and the repair, improvement, remodel or renovation of an existing one. Once the cost of that service equals or exceeds $25,000, the supplier may not perform it without a written contract, and the statute lists what the contract holds: both parties’ details, the property address, a general description of the work, anticipated start and completion, the total estimated cost, any cost the estimate does not cover, dated signatures from both sides, and a copy of the supplier’s certificate of insurance showing general liability of at least $250,000. That insurance figure is not only a contract term. The definition of a supplier is a person who contracts to provide these services and who keeps a policy of at least $250,000 in force, so the cover is part of what makes you a supplier at all.

The money rules are tighter than most states bother with. A down payment may not exceed 10 percent of the contract price before performance begins, with a single exception of up to 75 percent of the cost of a special order item that is otherwise not returnable or usable. Payments from a construction loan are allowed. And if reasonably unforeseen but necessary extra costs pass $5,000 across the whole contract, the supplier has to give the owner an estimate before doing that work, in writing or orally depending on which the owner chose at signing. The contract has to carry a block, in the statute’s own words, where the owner initials that choice. All of this has one exit: a cost-plus contract is outside the written-contract, excess-cost and down-payment rules. Choosing the contract form changes which rules you are under, which is a decision worth making deliberately rather than by copying a template.

Eleven things are prohibited outright, and one of them imports a private standard into state law. A supplier may not fail to perform in a workmanlike manner, and the statute defines that as construction meeting or exceeding the minimum quantifiable standards promulgated by the Ohio Home Builders Association. Georgia does the same thing with a national association’s guidelines. Two states in this pilot, then, decide the quality question by pointing at a trade body rather than writing a standard themselves. The rest of the list is what you would expect and worth reading once: no charging for unapproved excess costs, no claiming work was done that was not, no representing that work is needed to meet the building code when it is not, no making performance conditional on the owner waiving rights the chapter gives. Enforcement sits with the Attorney General, who may investigate on complaint or on their own inquiry, subpoena records, and accept an assurance of voluntary compliance instead of proceeding.

The local layer has not gone away, and the board acknowledges it. A specialty section may discipline a licensee after a municipality suspends or revokes that person’s local contracting license or registration, so a city credential and a state trade license sit in the same file. Check the registration rules where the work happens before assuming the state answer is the whole answer. On the formation side Ohio is the cheapest state in this pilot to keep: $99 to file and no annual or biennial report at all, so the recurring cost of the entity is zero and the recurring cost of the business is insurance.

The counts on the plate above put Ohio in the middle of this pilot on both measures, with roughly five solo operators for every construction firm with payroll and about four and a half employees at the firms that have any. The regulatory design matches that shape more honestly than most. A state that licenses five trades and otherwise polices the contract is aiming at the small builder who subcontracts everything, which is what most of the market is, and it puts the burden on the piece of paper rather than on a board application.