If you are getting a Georgia contractor license, you will take the Business and Law exam. Every applicant takes it, regardless of classification. There is no way around it. This post explains what the exam covers, how the open-book format works, and how to walk in prepared.
This is an independent guide, not affiliated with the Georgia Board of Residential and General Contractors, PSI, or NASCLA. Licensing details change, so verify current requirements against the Board's official publications before you act.
The exam at a glance
The exam is administered by PSI at computer-based test centers. The official figures, from the PSI Candidate Information Bulletin (revised 4/28/2025):
- 50 questions, multiple choice with four options and one best answer per question
- 70% to pass, which means 35 correct answers
- 120 minutes (2.4 minutes per question, a comfortable pace if you know your book)
- Open book: the only allowed reference is the Georgia-NASCLA Contractors Guide to Business, Law and Project Management, Georgia State Licensing Board for Residential and General Contractors, 3rd Edition
- $60 exam fee, paid when you register
Two things to know about the bulletin itself. First, make sure your reference is the 3rd Edition, not the 4th. The bulletin specifies the 3rd Edition, and the wrong edition will slow you down on exam day. Second, the bulletin's reexamination language is stale: it still describes a 2-attempt limit with a 1-year wait, but current Georgia law (O.C.G.A. section 43-41-6(g), as amended by HB 635 effective July 1, 2025) lets a failing applicant be reexamined at any regularly scheduled examination with no attempt limit and no waiting period. The statute controls.
The nine content areas
The exam follows an official content outline with nine areas. Here is what each one covers, with the question counts:
Licensing Requirements (5 questions). Who needs a license, the license categories, qualifying agents, renewals, continuing education, and unlicensed-contracting penalties. The $2,500 threshold lives here, as do the 180-day qualifying-agent replacement rule and the $1,000 minimum unlicensed fine. Small section, but every question is a number question.
Estimating and Bidding (7 questions). The Prompt Payment Act clocks (15 days for the owner, 10 days downstream), 1% per month interest, the 10% retainage cap with the stop-at-50% rule, bid withdrawal within 48 hours of bid opening, and the $250,000 Chapter 36 public-works floor.
Business Organization and Financial Management (7 questions). Business structures and liability, the financial-responsibility figures ($25,000 alternatives for residential, $150,000 net worth for General), insurance minimums by tier, and financial ratios.
Tax Laws (5 questions). Georgia income tax, sales and use tax on contractors, unemployment insurance (the $9,500 taxable wage base), and payroll basics. Do not study a 2026 income-tax rate as settled fact; 5.19% is confirmed for tax year 2025 only.
Labor Laws (5 questions). Workers' compensation (3 or more employees, no construction exception), wage payment, child labor, and the 25/50/25 auto liability minimums that trip up out-of-state applicants.
Project Management and Lien Law (6 questions). The lien timeline: 90 days to record after completion or abandonment, the 90-day affidavit of nonpayment that undoes a waiver, the 8-year statute of repose, and the double-lien-amount discharge bond.
Contracts (6 questions). Contract formation, the $500 UCC Article 2 writing threshold for goods, breach and remedies, and the big Georgia point: pay-if-paid clauses ARE enforceable when the contract clearly makes owner payment a condition precedent (Vratsinas, 2013). Do not let a distractor tell you they are void.
Risk Management (4 questions). Insurance types, the bond-versus-insurance distinction, and the financial-responsibility figures by tier. Smallest section; cheap points if you memorize the numbers.
Environmental and Safety (5 questions). OSHA basics (8-hour fatality reporting, 24-hour severe-injury reporting), the 48-hour Georgia Dig Law notice, stormwater, and lead-safe rules. Georgia is an EPA-authorized RRP state, administered through Georgia EPD.
How the open-book format works
Open book does not mean easy. It means the exam tests whether you can find the right answer in the right place under time pressure. With 50 questions in 120 minutes, you have about 2.4 minutes per question. That is enough time to look things up, but not enough to read chapters from scratch.
The winning approach: tab the book before exam day. Put tabs on the chapters matching each of the nine content areas, plus the appendices with the key figures. When a question asks about the qualifying-agent replacement window, you should be opening the licensing chapter, not searching the index for the first time. A full tabbing and lookup strategy is covered in the study guide post.
One warning: the book is the Georgia NASCLA edition, 3rd Edition. The national NASCLA book and the 4th edition will not match the exam's page references. Bring exactly the right book.
What trips people up
Three traps account for most failures:
Stale numbers from old sources. Georgia law changed recently, and old study materials have not caught up. The qualifying-agent replacement window is 180 days, not 120. The unlicensed-contracting minimum fine is $1,000, not $500. There is no exam-attempt limit anymore. If your prep material teaches the old figures, it is teaching you wrong answers.
The retainage rule. Most states reduce retainage at the halfway point. Georgia STOPS it: once 50% of the contract value is due and performance is satisfactory, no further retainage is withheld. If a question offers "drops to 5%," that is a distractor.
Similar-sounding clocks. The 30-day change notice, the 45-day business-information change report, the 90-day lien recording deadline, the 90-day affidavit of nonpayment, and the 8-year repose all sound alike under pressure. Learn the statute behind each number.
The numbers worth drilling first
If you only memorize ten figures before exam day, make them these:
- 50 questions, 35 correct, 120 minutes. The exam itself.
- $2,500. The licensing threshold. Above it, you need a license.
- 180 days. Qualifying-agent replacement window.
- $1,000. Minimum unlicensed-contracting fine.
- 15 days / 10 days. Prompt-pay clocks: owner to contractor, then downstream.
- 1% per month. Prompt-pay interest on late payment.
- 10%, stopping at 50%. The retainage cap and the stop rule.
- 48 hours. Bid withdrawal window and Dig Law notice.
- 90 days. Lien recording deadline and affidavit of nonpayment.
- 25/50/25. Auto liability minimums.
Try the free practice quiz
Reading about the exam is not the same as sitting it. Take the free 12-question Georgia Business and Law practice quiz to see where you stand, with explanations for every answer. Start the free quiz