There was a time, as a young carpenter, when I performed side jobs for cash. It was a way to get through slow times, make extra money, or put something away in savings. I didn’t really understand business, or the liabilities surrounding performing work without a license. Soon enough, my side jobs started to become more serious, so I got serious about thinking of my services as a business. I didn’t know it at the time, but getting my business license was one of the best decisions I’ve ever made.

A big part of doing business is managing liabilities prudently for the good of the homeowner and contractor. When a homeowner hires a contractor who is not licensed and bonded, they immediately incur a heap of risk, and are forced to play the role of a general contractor. By hiring a contractor for cash who is not licensed and bonded, the homeowner could end up facing a significant financial or circumstantial hardship. Here are some examples:

  1. The cash contractor or his crew gets hurt badly on the job site. Most homeowner’s insurance policies will not cover these workers.
  2. The cash contractor fails to get permits, and there is damage to the home due to improper installation. Again, the homeowner’s insurance policy may not cover this.

  3. The homeowner may have difficulty selling their home if permits were not obtained.

Washington State Department of Labor & Industries (L&I) encourages homeowners to hire a registered contractor, and offers tools to assist you in that process. L&I Contractor Compliance Chief Dean Simpson says “hiring a registered contractor is the consumer’s best chance for a successful remodeling or repair project. Before registering contractors, L&I makes sure they have a valid bond, liability insurance, and workers’ compensation insurance in case their employees are injured.  Those are all important protections in case something goes wrong with the project. Be sure to check whether contractors are registered by going to, or calling L&I at 1-800-647-0982. You’ll be glad you did.”

As you can see, it’s essential to find the right licensed and bonded contractor for your project. The following information should help you make a good choice.

1. Understand the Difference Between Bonded and Insured

Our friends at L&I offered this helpful explanation:

“Contractor bonds are a type of surety bond issued by banks or insurance companies, which agree to pay a specified amount if the contractor fails to fulfill a contract. On the other hand, liability  insurance is similar to auto insurance. If the contractor damages the homeowner’s property or injures someone during a project, liability insurance is intended to cover that.”

2. Do Some Research

Review websites like the L&I resource,

which provides consumer tips about hiring contractors, questions to ask, and more concepts to think about. These resources will give you some understanding and confidence when getting bids on your project, even if it’s your first time.

3. Remember These Tips

Hold on to these three tips, which L&I shares with consumers:

  • Always get three written bids.       

  • Don’t pay in full until the job is done to your satisfaction.      

  • Check the contractor’s references.

The key to hiring a contractor is all about trust; it’s about finding the best fit for you and your project. So when you’re conducting interviews with potential contractors, my recommendation is to focus less on price, and more on communication, expectations, experience, professionalism, and attitude. In the end, these are what make the difference in having a great experience and a quality project!