What’s the Difference Between a Contractor and a Handyman?

Updated: Jun. 27, 2024

Are you wondering whether to start a contracting or handyman business? Read this guide to learn the skills and licensing requirements of each.

At the surface level, handyman and contracting businesses appear to do the same thing: repair, renovate and build. And while each exchanges expertise and labor for money, they’re not the same. Here’s the difference between a contractor and a handyman.

What is a Handyman?

A handyman is a tradesperson who handles relatively small projects or repairs. Their projects typically last a day or two, and state law may limit their contracts to a certain value.

In general, handyman projects don’t require trade licenses or permits. We’re talking things like pressure washing, gutter cleaning, furniture assembly, sink or window repair, picture hanging, painting, some flooring work, and interior trim and moldings.

A handyman will also typically charge customers by the hour (with a minimum number of hours) or the day. This allows customers to hire a handyman to tackle several small projects without paying a fortune.

What is a Contractor?

A contractor typically handles much larger projects than a handyman. These take more than a day or two and require a contract with the customer. The contract contains all of the details of the project, including a payment schedule.

There are two types of contractors: general and trade. General contractors may have experience in several areas, including project management. Trade contractors typically focus on one specific area, like electrical, plumbing or carpentry. When a general contractor hires a trade-specific contractor for a project, that tradesperson is called a subcontractor.

Most states require contractors to carry licenses. These require a certain amount of experience or time in the trade, along with testing, fees and specific amounts and types of insurance.

What Types of Licenses Does a Contractor Need?

Rules on the types of licenses a contractor or handyman needs vary by state. However, the following are some common types of contractor licenses.

Business license

Almost all contractors — whether general, trade or handyman — are required to register their business with the state where they work. This ensures everyone operating a business within that state understands ethical practices and pays their appropriate amount of taxes.

General contractor license

This allows a contractor to engage in a prime contract with a customer. A prime contract is the main or first contract among other subcontracts. Say you hire a general contractor to build a garage. They’ll sign the prime contract with you the homeowner, then sign contracts with subcontractors to build the structure.

That’s not to imply general contractors can’t do the build themselves. In many states, a general contracting license allows the holder to build the frame and sheath it, as well as install exterior and interior finishes. In other states, pros performing these types of projects aren’t required to carry a license at all.

Electrical contractor license

This is required for any professional performing electrical work. In most cases, these pros must possess or employ someone with a master electrician’s license.

Plumbing contractor license

Contractors are required to carry this license to perform plumbing repairs or installations. Like electricians, plumbing contractors must possess or hire someone with a master plumber’s license.

Roofing contractor license

In many cases, roofing contractors might only require a general contractor license. But some may need a roofing contractor license. The license requirements may include higher-than-typical insurance limits due to the dangerous nature of roofing projects.

HVAC contractor license

Contractors who work on heating or air conditioning systems must carry these. Many plumbers also carry HVAC contractor licenses because the two lines of work often intertwine.

Other licenses

These may include excavation, masonry and cement, landscaping, pool installation, drywall/painting and glazing, among others. State laws vary, so anyone starting a business must research which license they need.

When Should a Handyman Get a License?

There are a few instances where a handyman might consider getting a license.

Depending on the state, a handyman might need a license if they sign a contract for more than a set amount, or if they bill more than a specific amount within a certain period of time.

Another instance could be if a handyman wants to charge more for their services or attract new clientele. “Licensed and insured” is an appealing tagline that inspires trust in a new or prospective customer.

While becoming licensed to perform additional services may sound appealing, it may not be realistic. These licenses require years of experience in the trades. Unless the handyman can prove he or she has the required experience, they won’t be eligible to take the tests.

When Does a Contractor or Handyman Need Insurance?

Always. Anyone performing work for another person needs to protect themselves and their customers with an insurance policy.

The usual policy is general liability, which protects the contractor if a third party gets hurt, or experiences property loss and blames the contractor.

Other policies include:

  • Worker’s compensation: Protects employees if they become ill or get hurt on the job

  • Builder’s risk: Protects the property, tools and materials should an accident or natural disaster occur on the site while under construction

  • Commercial auto insurance: Covers all vehicles registered to the business, as well as employees and third parties in the event of an accident or theft

Contractor or Handyman?

Deciding which business to start is ultimately up to you.

Pros who like to work directly with customers, handle small projects and move around a lot during the day should consider a handyman service. However, for those who want to build large structures, use their years of expertise or simply hire other pros to work for them, a contractor license like the ones listed above is best.

Determine the type of work you want to do first, then decide which business fits your circumstances.