Do Subcontractors Need a License in North Carolina

The Short Answer: It Depends on the Contract Value

Under N.C. Gen. Stat. § 87-1, a general contractor license is required for any construction project where the total cost is $40,000 or more. That threshold was raised from $30,000 in October 2023 under House Bill 488.

If your individual subcontract is below $40,000, you can legally perform that work without a state general contractor license — as long as you're working under a licensed general contractor who pulled the permits and holds overall project responsibility.

But here's where it gets complicated.

What Counts Toward the $40,000

The threshold applies to the total project cost, not just your labor. It includes:

• Labor costs
• Materials (even if the homeowner supplied them)
• Subcontractor fees
• Municipal permit costs
• Applicable sales tax

This is a per-project calculation, not an annual total. You could do fifty $35,000 projects in a year and never need a license. But one project at $40,000 triggers the requirement.

And splitting a single project into multiple smaller contracts to stay under the threshold is illegal. The NCLBGC actively prosecutes "cost creep" cases where projects expand beyond $40,000 mid-construction without a licensed prime contractor.

Working Under a Licensed GC

The most common arrangement for unlicensed subcontractors is working under a licensed general contractor. In this setup:

• The licensed GC holds the prime contract with the property owner
• The GC pulls all necessary permits
• The GC retains ultimate responsibility for the project
• You perform your trade work under the GC's license and supervision

This is legal in North Carolina as long as the GC is genuinely managing the project — not just lending their license number. The NCLBGC investigates arrangements where a licensed contractor's name is on the permits but an unlicensed person is actually running the job.

Specialty Trade Licenses Are Separate

Even if the project is under $40,000 and you don't need a general contractor license, certain trade work requires its own state license at any dollar amount:

• Electrical work — licensed through the NC State Board of Examiners of Electrical Contractors (NCBEEC)
• Plumbing, HVAC, and fire sprinkler work — licensed through the NC State Board of Examiners of Plumbing, Heating and Fire Sprinkler Contractors (NCPHFE)

These boards operate independently from the NCLBGC. A general contractor license doesn't authorize you to do electrical or plumbing work, and a plumbing license doesn't substitute for a GC license on projects over $40,000.

Work that doesn't fall under a specialty trade board — like painting, flooring, tile installation, or basic carpentry — doesn't require any state license as long as the individual project contract stays under $40,000.

The Real Risk of Working Unlicensed Over $40,000

The penalties for unlicensed general contracting above the threshold are significant:

Criminal exposure. Under N.C. Gen. Stat. § 87-13, operating without a license on a qualifying project is a Class 2 misdemeanor. The Board can pursue civil injunctions and recover up to $5,000 in attorney's fees.

Unenforceable contracts. This is the penalty that hits hardest in practice. Contracts entered by unlicensed contractors on projects above $40,000 are legally unenforceable. If a client doesn't pay you, you can't sue to recover the money. Courts won't enforce the contract.

No mechanic's liens. Unlicensed contractors cannot file mechanic's liens in North Carolina for work above the threshold. That eliminates your primary tool for getting paid on construction projects.

Client clawback. Property owners can sue unlicensed contractors for full reimbursement of all funds paid, even after the work is completed and accepted.

When It Makes Sense to Get Licensed

If you're regularly bumping up against the $40,000 threshold, turning down larger projects, or watching material cost increases push your estimates into the licensing zone, it's probably time to get your own license. Rising construction costs have made the $40,000 line harder to stay under than it was even a few years ago.

Our North Carolina General Contractor License Guide walks through the full licensing process — from LLC formation through exams and issuance — so you can stop turning down work and start bidding on your own projects.

See more North Carolina guides →