When you're first getting into the process of hiring a contractor, you'll want to dig deep to get an idea of his or her business history. This means requesting -- and duly verifying -- proof that he or she is currently state licensed in your area, if applicable in your area. Rules vary by state, so if you live in the U.S., check out this list to find out whether your contractor needs to be licensed or registered to work on your project.
Other items to check up on include paying employees legally and carrying workers' compensation, property damage and liability insurance. Membership with a reputable professional association is also a good sign. On a similar note, find out if the contractor has ever declared bankruptcy or if anyone's ever taken legal action against him or her. Get the specifics too, like how long he or she has been in business and under what names. You should also find out how a contractor's business is structured and where it's physically based.
It's important to confirm whether the contractor has any recent, relevant experience, so get a list of references who have had projects similar in scope to yours and follow up with them. Don't be shy about making phone calls and visits. Ask other customers questions about their experiences dealing with the contractor and their satisfaction with the finished product. You can obtain other third-party verifications from state licensing bodies, professional associations, state and local courts, insurance providers, suppliers, Better Business Bureaus and municipal departments.
Once you've investigated and compared contractors' histories and qualifications, find out more about their business practices by asking them the questions on the next page.