Does Delaware Require a Contractor License Bond?

The nonresident contractor bond under 30 Del. C. 375

This is the state-level contractor bond this page covers, and it is a tax bond rather than a license bond. Any nonresident person or firm must file a surety bond with the Department of Finance, payable to the State. It covers state income taxes, state occupational or business licenses, unemployment compensation contributions, and income taxes withheld from employees' wages. The amount is 6% of the contract or subcontract price on all contracts of $20,000 or more; when two or more contracts in one calendar year total $20,000 or more, the bond is 6% of the aggregate amount. The bond must be filed before construction begins. The Division of Revenue bond form names the State of Delaware as obligee, sets the amount at 6% of the contract, and keeps the bond in effect until those liabilities are paid in full.

The threshold wording differs across sources: the statute says "$20,000 or more," while Division of Revenue guidance words it as contracts "exceeding $20,000." That difference matters only for a contract of exactly $20,000, so confirm the treatment with the Division of Revenue.

Deadlines and penalties

Notify the Department within 20 days after completing each Delaware construction project. Failing the bond requirement carries a civil penalty of up to $10,000 for each occurrence, assessed by the Secretary of Finance. Willful failure is a misdemeanor, punishable on conviction by a fine up to $3,000, imprisonment up to 6 months, or both.

Steps

1. Confirm the state license. Any contractor doing business in Delaware registers with and obtains a business license from the Division of Revenue. Under 30 Del. C. 2502, the fee is $75, valid until January 1 and renewable yearly.
2. Pay the gross receipts fee. Contractors also owe a gross receipts license fee of 0.6472%, with a $100,000 monthly deduction.
3. Check whether the nonresident bond applies. The bond under 30 Del. C. 375 applies to nonresident contractors and subcontractors on Delaware contracts of $20,000 or more.
4. Calculate the amount. The bond is 6% of the contract, or 6% of the aggregate when two or more contracts in one calendar year reach $20,000.
5. File before construction. File the bond with the Department of Finance before construction begins; cash bonds and bank letters of credit are accepted in its place.
6. Report and keep it in force. Notify the Department within 20 days after completing each project, and keep the bond in force until the Secretary of Finance releases it.
7. Check trade and local needs. Confirm any trade license requirement with its board, and check local requirements with the city or county building or licensing office.

Sources

• 30 Del. C. ch. 25 (contractor license)
• 30 Del. C. § 375 (nonresident bonds)
• Delaware Division of Revenue — Contractors (Resident and Non-Resident)
• Delaware Division of Revenue — Tax Tips for Contractors
• Non-Resident Contractor Bond form
• Non-Resident Contractor Cash Bond Receipt
• Non-Resident Contractor Irrevocable Letter of Credit
• 24 Del. C. ch. 14 (Board of Electrical Examiners)
• 24 Del. C. ch. 18 (Board of Plumbing, HVACR Examiners)

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