Starting your own contracting business is an exciting and hectic endeavor. On the one hand, you’ll get to choose your clients and the types of projects you want to work on, and make your own schedule. On the other hand, there are state regulations you need to meet in order to run a legitimate business: Namely, Iowa contractor licensing requirements.
But you’re spending your time and money lining up subs, tools, employees, and all the other needs a new business has. You don’t have time to sort through Iowa licensing requirements. Levelset wants to help. We’ll go over who needs a license or registration, how to get one, and why compliance is important.
Working outside of Iowa? Check out our guide to licensing in all 50 states.
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Who needs a contractor license in Iowa?
There’s good news about contracting in Iowa: Licensing requirements are much more straightforward in the Hawkeye State than in some others.
Iowa requires all construction contractors and businesses performing construction work to register with the Iowa Division of Labor if they earn at least $2,000 a year. Those that make less than $2,000 fall under handyman-type exemption. Homeowners working on their own real estate are also not required to register.
Plumbing, HVAC/R, and mechanical contractors are required to obtain a license from the Plumbing and Mechanical Systems board. Electrical contractors need to acquire a license from the Electrical Examining Board of Licensing, Permit, and Inspection.
Do you need a license to file a mechanics lien in Iowa?
Iowa mechanics lien law does not explicitly state that a license is required to file a mechanics lien. So, an unlicensed contractor could potentially file a mechanics lien.
However, performing work that requires a license while not holding that license is never a good idea — and it might even work against you in court if you have to foreclose on a lien.
Looking to file a mechanics lien in Iowa? Make sure to check out Iowa Mechanics Liens: Everything You Need to Know + Free Forms.
How to get an Iowa contractor’s license
Whether you need to get a license or simply register depends on the type of work you do. As mentioned, most construction contractors simply need to register their businesses, while plumbers, HVAC/R, mechanical, and electrical contractors need licenses.
Construction contractor registration
As mentioned, anyone or any company engaged in construction work valued at over $2,000 a year needs to register their business with the Division of Labor. This includes subs and specialized contractors like roofers, drywallers, painters, finish carpenters, and the like.
To apply to the registry, construction contractors will fill out this application. Requirements for registration include:
- A completed and signed application
- An Iowa unemployment insurance account number (create an account here)
- A NAICS code (codes provided in the application)
- A $50 non-refundable check or money order or a notarized Fee Exemption Form
- Workers comp docs (if applicable)
- A $25,000 contractor bond
Once the application is complete, mail it into:
150 Des Moines Street
Des Moines, IA 50309-1836
Do keep in mind that processing can take up to 30 days. Depending on when you apply, the application and registration, as well as any applicable fees, will total between $50 (for registration only, no license) and $425. All licenses expire on June 30, 2023, so the longer you wait, the less you’ll have to pay (though you will have to renew right away).
Mechanical, plumbing, and HVAC/R licensing
Iowa contractor licensing requirements state those working in the mechanical, plumbing, or HVAC/R field must carry a license as opposed to a registration. This license is a function of the Plumbing and Mechanical Systems Board, which falls under the Iowa Department of Public Health.
To apply for a mechanical, plumbing, or HVAC/R license, use this application.
General licensing requirements include:
- Applicant must be 18 years old
- Provide documentation of criminal conviction related to plumbing or mechanical field
- Complete and submit application (with fees)
- Provide workers compensation docs
- Meet Department of Labor bond and registration requirements (this application also covers registration)
- Have a valid unemployment insurance number (create an account here)
- Supply proof of business address
- Provide proof of $500,000 public liability insurance and a $5,000 surety bond
Beyond those requirements, contractors applying for a license will also have to provide proof of a “Master of record,” which is a master-level license holder. This can be the applicant, the company owner, or someone the company employs.
Fees can range from $91.75 to $425, depending on when you apply.
Electrical contractor licensing
Iowa also requires electrical contractors to carry valid licenses. These are issued by the Electrical Examining Board Licensing, Permits, and Inspection division of the State Fire Marshal.
Applicants looking to apply for a license will use this application. To be eligible for this license, the company or applicant must be a Master Class A, B, or Residential Master license holder or employ someone who meets those requirements. You’ll also have to provide:
- Name of the responsible master electrician
- Name of contractor who will hold the license
- Business name and address
- Mailing address
- Previously obtain registration with Department of Labor
- Federal Tax ID number
- Certificate of liability insurance of at least $1,000,000
Penalties for unlicensed contracting in Iowa
States that make it relatively easy to get a license or registration number tend to have steep penalties for not obeying the rules. In Iowa, unregistered contracting carries with it a $500 citation for the first time.
After the first infraction, that fine can reach as much as $5,000 for subsequent violations.
Protecting your payments in Iowa
No one wants to pony up $5,000 for an unregistered contractor fine, but there are far worse fates a contractor can meet — namely, non-payment.
Construction companies grow on positive cash flow and starve without it. A bad string of non-payment can wreak havoc on a contractor’s books and accounts. That’s why it’s so important to protect your payments.
Regardless of whether you’re meeting the registration requirements, there are other details you’ll have to keep your eye on. For instance, subs and suppliers have just 30 days to send preliminary notices on all their projects to maintain their lien rights. On owner-occupied projects, GCs must provide a notice of lien rights and identify their subs.
Subs, suppliers, and GCs also have to keep their eyes on the calendar. Regardless of the tier, in Iowa, you have to file a mechanics lien within 90 days of last furnishing in order to protect their lien rights.
All subs, suppliers, and GCs should be paying attention to these dates and deadlines, as no amount of licensing will keep your business open without some cash coming in.