I wouldn't sweat it for cosmetic stuff like flooring and painting. Yes, you are supposed to have a license for any work above $1000, but most cities around PHX do not require permits or inspections for cosmetic work anyway and are unlikely to enforce that rule IF you're only doing cosmetic work. Just make sure you know what you're doing. Believe it or not it is possible to screw up painting, flooring, etc. so do the future homeowners a favor and call a pro if you're not 100% confident you know the proper materials and protocols for installation.
HOWEVER, if you plan on doing anything beyond cosmetic work (structural, mechanical, electrical, etc.), you should be using licensed contractors, especially if you're doing work that requires a permit. This absolutely will be enforced. In most cities, you're required to list a ROC# just to pull the permit.
PS That law isn't ridiculous. It's there for consumer protection. In your case it seems petty because you're just painting one house, but imagine if there was an unlicensed painter running around doing 100+ houses per year, 100's of thousands of dollars worth of revenue, all without proper licensing, liability insurance, backgrounds check, no warranties, etc. See how that could become a problem?
PPS The fact that you're familiar with these laws and asking these questions puts you ahead of 95% of the flippers out there. I just finished a job where 2 of the houses across the street were flips-in-progress. Major plumbing, electrical, and structural modifications with no permits and probably not a single licensed contractor in sight. Absolutely butchered by the looks of it. Keep exercising due diligence and use common sense and you will be fine.
