Did you know that general contractors in Minnesota make about $56,294 a year?
If you're a general contractor, you're probably wondering if you need a contractor license in Minnesota and how to apply for one. You may even be wondering what a general contractor does and if you qualify for this title.
Luckily, Minnesota is straightforward with how general contractors obtain licensing.
If you or your business contracts with homeowners and build or improves a dwelling of now to four families, then you need to have a contractor license. The same applies to work done on detached garages, as you may need a Remodeler's license or a Residential Building Contractor License.
There's one exception; you make less than $15,000 gross each year as a residential building contractor. However, you'll need a certificate of exemption in this instance. However, it's best to have a contractor license no matter what.
This guide walks you through the process of acquiring a Minnesota contractor license. It also answers the question, "What does a contractor license cost?"
Keep reading to learn more.
What Is a General Contractor?
You're considered a general contractor if you manage the design of a project and its construction. You might only manage jobs if the architect designs the job's specifications. Each job is different.
Your responsibilities come before, during, and after construction.
Before construction, you're responsible for creating the construction budget and managing it. You're also responsible for hiring subcontractors if certain specialized tasks require completion. You'll also work with any architects to help bring their designs to fruition.
You'll maintain these tasks throughout the entire duration of the project.
While construction is underway, you'll need to oversee each job and ensure the project stays on schedule. You also have to handle schedule delays and setbacks. Your main role is to keep everyone working together and handling challenges as they arise.
Once the project is complete, you'll need to track and collect lien waivers and make sure all subcontractors are paid. You'll also manage issues with payments.
You're also the main contact person. It's your responsibility to check that the building's owner is satisfied with the scope of work. If not, you relay any messages to subcontractors.
For smaller projects, you may complete some of the work yourself instead of using subcontractors. It all depends on the type of job.
Steps for Getting a Contractor License in Minnesota
Minnesota not only has straightforward rules for contractors, but you only have to work with one agency when applying for your contractor license. You need to apply through Minnesota's Department of Labor and Industry.
Every general contractor needs a residential building license and subcontractors need a license if they perform work in more than one area. Areas include:
- Interior and/or exterior finishing
- Drywall and plaster
- General installation
If you're an electrician, mechanical contractor, plumber, or roofer, you also need a license. If you're a contractor or subcontractor not listed, then you don't need a license, but you do have to register with the state, as do all contractors.
General Contractor Licensing
Minnesota doesn't require a specific General Contractor license, but general contractors have to carry a residential remodeler license or a residential building contractor license. This also applies to roofing contractors, who follow the same guidelines as general contractors.
Every contractor needs a qualifying person who can take exams and any required continuing education. The qualifying person doesn't need experience requirements, unlike other states.
First, you need to take a pre-license exam, and the qualifying person has to pass the exam before application paperwork can even be submitted to DLI.
After the pre-license exam is passed by the qualifying person, you're set to apply. However, there are certain requirements you'll need to fulfill before you apply. Here's a list:
- The business entity must be registered, no matter what its structure is, and a business entity must be established to the state of Minnesota knows your business exists and can tax you
- Get a FEIN, although sole proprietors don't need one since they can use their social security number; all other business entities are required to have a Federal Employer Identification Number for when they apply
- A business address is needed for licensure, and you need a physical address and a mailing address; they can be the same, but a P.O. box won't satisfy the physical address requirement
- List all partners and owners, disclosing the name of anyone owning more than 10% of your business; include as much information as you have
- Gather the same information for your qualifying person
- Submit a background check; verify previous employment before you submit your application
- Carry liability insurance, as Minnesota requires it
- Carry Workers' Compensation Insurance if your business employs people
After you pass the pre-licensed exam, get your documents together, and pick up insurance, you can submit your application. Send it to the Department of Labor and Industry and include the appropriate licensing fee. It's based on your annual gross revenue.
If you make under $1 million, you'll pay $440. If you make $1 million to $5 million, you'll pay $540. If your annual gross revenue is over $5 million, you'll pay $640.
After you obtain licensure, be sure to renew it every two years to stay current.
Plumbing Contractor Licensing
Another type of license is a Plumbing Contractor License. This license is similar to electrical contractors, as you need to have a state-issued master-level license holder in your employ before a Plumbing Contractor License is applied for with the DLI.
You'll choose from one of two types of Master Plumber Licenses. The first is a Master Plumber and the second is a Restricted Master Plumber. Each type of license requires the applicant to take and pass an exam, but their qualifying requirements aren't as thoroughly described as requirements for electrical licenses.
Master plumbers are skilled in planning, superintending, and installation of plumbing. They're lawfully qualified for plumbing contracts and installations and can conduct plumbing business. They're also familiar with state laws and rules regarding plumbing.
This type of license allows the contractor to work anywhere in the state and can work on interior plumbing and water service outdoors. They can also work on sanitary sewers, storm sewers, and any property lines.
A restricted master plumber can contract for plumbing installations. They can also conduct plumbing business in cities and towns with less than 5,000 people.
They must have at least four years of plumbing experience as a trade or two years of experience as a plumbing contractor. They can work indoors and outdoors on water service, sanitary sewers, storm sewers, and on property lines.
Plumbing and mechanical contractors can apply once there's a master plumber on staff. They'll follow the same steps residential building contractors follow. Fees for new applicants and on-time renewals are $128 and late renewals are $188.
Electrical Contractor Licensing
Just as residential building contractors do, electrical contractors follow the same guidelines, with one major change: they have to have a master electrician as their qualifying person.
In Minnesota, master electricians need experience and education. They also need at least 60 months of work in various areas.
This includes planning for wiring, equipment, and apparatus for power, light, and heat. They also need experience laying wiring, equipment, and apparatus wiring for power, heat, and light.
The master electrician also needs experience supervising wiring, apparatus, and equipment installation for heat, light, and power. They're well-versed in ways to maintain and repair electrical wiring, equipment, and apparatus. They also need experience with line work and installing elevators.
Technology systems or circuits are another areas where wiring and maintenance experience is required, along with process control systems of circuits.
After you find a master electrician to hire, proceed with your application. Be sure to follow the same steps as residential contractors. Prices are the same, as new licenses and on-time renewals cost $128 and late renewals cost $188.
If you have subcontractors that don't work with the homeowner or property owner directly or offer just one of the skills mentioned earlier, then they don't need a license. Commercial contractors also don't need licenses and are exempt from carrying them. However, all contractors need to register their businesses.
Contractors who require a license can't register their business until they do so, so be sure to obtain appropriate licenses at all times.
Are There Penalties If You're Unlicensed?
Most states are very serious about contractor licenses, and Minnesota is no exception. Minnesota works tirelessly to ensure all consumers work with the best contractors around and aren't scammed by uninsured crews that do a sub-par job, incomplete work, or fail to show up for the job.
In fact, any contractors working with required licenses may face criminal charges. They may find themselves charged with a misdemeanor, fines, or even jail time.
Since Minnesota makes licensing extremely accessible, it's not worth the stiff penalties when licensing is readily available.
Can Unlicensed Contractors File a Mechanic's Lien?
In Minnesota, a contractor doesn't need to be licensed to file a mechanic's lien. However, it can be challenging to enforce the lien without a license.
The judge or court is more inclined to side with a licensed contractor than someone who isn't, so secure licensing no matter what.
Benefits of a Minnesota Contractor License
Now that you know how to obtain your Minnesota contractor license, it's important to understand the benefits of being an MN contractor. Here are some popular reasons why you need this essential license.
The best way to build credibility with prospective clients- and to outpace the competition- is with a contractor license. It shows them you're highly trained and skilled in your area and took the time to secure licensing. Yes, you'll still need to market your business, but you can do so while promoting that you're a licensed and insured contractor.
Once you obtain licensure, you can hire subcontractors. One way this helps you make money is if you need help for a project but don't want a permanent employee.
You can hire subcontractors, retain a piece of the profit, and can avoid performing any labor. A contractor's license makes this something you can legally do, along with hiring subcontractors to finish projects you're hired to complete.
Take on Larger Projects
When you're licensed, you can bid on larger jobs. You'll be able to use your license to tackle jobs such as bathroom and kitchen remodels, something that's a lot more profitable than small-scale repairs. In fact, the average cost of a bathroom remodel is $6,500, and securing a license can help you score jobs such as these.
Acquire Higher-Paying Projects
Specialty services typically have fewer qualified contractors, thus costing more. If you're licensed, you can take on jobs such as mold remediation, HVAC, plumbing, electrical, and more, as you'll have less competition than an unlicensed handyman would.
Get Your Contractor License in Minnesota
Now that you know how to obtain your contractor license in Minnesota, you can take the necessary steps to apply. Remember to refer back to this guide if you need a refresher on the cost of each license or the specific requirement for each type of contractor license.
Are you gearing up to apply for your contractor license in Minnesota? At Contractor Training Center, we offer application assistance services to ensure you complete all the necessary forms and supporting documents to obtain your license with ease!