What is a prepaid contracting business licence in Alberta?

A prepaid contracting business licence is a mandatory Alberta licence for businesses that collect payment before completing home improvement or renovation work. If a contractor asks for a deposit or any upfront money before finishing a job on a residential property, they are legally required to hold this licence under Alberta's Fair Trading Act.

The prepaid contracting rules exist specifically to protect homeowners from contractors who take deposits and then disappear, do substandard work, or fail to complete the job. Under Alberta's Fair Trading Act and the Prepaid Contracting Regulation, any business that enters into a contract for home improvements — where the consumer pays any amount before the work is fully completed — must be licensed with Service Alberta and Red Tape Reduction (formerly Service Alberta). This applies to a wide range of trades: renovators, roofers, window and door installers, siding contractors, landscapers, painters, and more.

The licence is issued at the provincial level by Service Alberta, which is separate from the City of Calgary business licence that contractors also need to operate locally. So a legitimate contractor doing renovation work in Calgary should have both: a City of Calgary business licence AND a prepaid contracting licence if they're collecting deposits.

What the licence requires of contractors is meaningful — they must maintain a trust account or security bond to protect consumer deposits, provide a written contract before work begins, and comply with cancellation rights. Consumers have a 10-day right to cancel a prepaid contracting agreement without penalty after signing, which is a powerful protection for homeowners who feel pressured into signing quickly.

For Calgary homeowners, here's what this means practically: Before handing over any deposit, ask to see the contractor's prepaid contracting licence number and verify it through Service Alberta's online registry. A contractor who can't produce this licence is operating illegally if they're collecting upfront money. You can verify licence status at servicealberta.gov.ab.ca or by calling Service Alberta at 1-877-427-4088.

Red flags to watch for include contractors who demand large cash deposits (more than 1/3 of the total contract is unusual), pressure you to sign immediately, or can't provide a written contract with a clear scope of work, timeline, and payment schedule.

Your next step before signing any home improvement contract is to verify the contractor holds a valid prepaid contracting licence, request a written contract, and review it carefully before handing over any money. For finding vetted local contractors, browse the Calgary Construction Network directory to connect with professionals serving Greater Calgary.