Starting your own contracting business in Minnesota might be one of the best and most rewarding decisions you ever make. You’ll be able to make your own schedule, choose your clients, and be your own boss. But, despite calling your own shots, there are some rules you will need to follow, like Minnesota contractor licensing requirements.
But, as your lining up subs, suppliers, and staffing for your big endeavor, you don’t have the time to sort through all the Minnesota contractor licensing requirements. And for that reason, Levelset wants to help. We put together this comprehensive list of Minnesota contractor licensing requirements to streamline your search.
Working outside of Minnesota? For information on licensing in other states, check out The Ultimate Guide to Contractors License Requirements in Every State.
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Who needs a contractors license in Minnesota?
If you’re considering becoming a contractor in Minnesota, there’s good news: Minnesota is fairly straightforward with its licensing requirements.
Any individual or business that contracts directly with homeowners to build or improve a building constructed for habitation by one to four families (as well as detached garages) by offering work in more than one trade are required to have a residential building contractor or remodeler’s license.
So, general contractors, you will need a residential building license. Subcontractors performing work in more than one of the following trades also require a license:
- Interior and/or exterior finishing
- Drywall and plaster
- General installation
Also, any owner of residential real estate who builds or improves homes for resale or speculation requires a license. This includes new or existing buildings constructed for habitation by one to four families, again, including detached garages.
The exception to this rule is if you’re a residential building contractor performing less than $15,000 gross each year. But, you must provide a certificate of exemption.
Minnesota also requires electricians, plumbers, mechanical contractors, and roofers to carry a license. Contractors and subs outside of these parameters do not need a license, but all contractors must register with the state.
Do you need a license to file a mechanics lien in Minnesota?
Minnesota mechanics lien law does not explicitly state that a contractor must have a license to file a mechanics lien.
However, not holding a license when you should be can become an issue if you have to enforce the lien. The court might not look so fondly upon your claim. For that reason, it’s advisable to stay above board with any state licensing requirements.
If you’re looking to file a lien in Minnesota, get started with Minnesota Mechanics Liens: Everything You Need to Know + Free Forms.
How to get a contractors license in Minnesota
Not only are the rules for contractor licensing rather straightforward in Minnesota, but there’s also just one agency to deal with. Contractors looking to apply for a license will go through Minnesota’s Department of Labor and Industry.
Note: The following rules also apply to roofing contractors, and they use the same forms and requirements.
Minnesota doesn’t require a general contractors license, per se. However, general contractors will have to carry either a residential building contractor or a residential remodeler license. Each contractor will have to establish a “qualifying person” to take any exams and fulfill continuing education requirements. There no experience requirements for the qualifying person to meet.
The first step to getting either type of contractor license is to take a pre-license exam. The qualifying person will have to pass the exam before an applicant can submit application paperwork to DLI.
Once your qualifying person takes and passes the pre-license exam, you’re ready to take all the necessary steps for application. Here’s a quick breakdown of what you’ll need to do to apply:
- Register the business entity: Regardless of your business structure, you need to set up a business entity so the state knows your business exists for regulation and taxation purposes.
- Establish your FEIN: Sole proprietors won’t have to worry about this, as they can use their social security number. But, any other business entity needs a Federal Employer Identification Number on their application.
- Establish addresses: Before you can apply for a license, the business must have both a physical address to call home and a mailing address to receive mail. The two addresses can be the same, but a PO box doesn’t count as a physical address.
- List of owners and partners: You need to disclose the names of anyone who owns more than 10 percent of the business. It’s best to include as much identifying information as possible for that person.
- Your qualifying person: Just as you collected information to identify the owners, you’ll have to collect similar information to identify your qualifying person.
- Background check: You’ll have to submit to a criminal background check and verify your past employment before you’re able to apply.
- Insurance: Minnesota requires contractors to carry liability insurance, so you’ll have to prove that you do carry it when you apply. You’ll also have to prove that you carry worker’s compensation insurance if you have any employees.
Once you pass the test, gather all the documents, and sign up for insurance, you’re able to submit your application to the Department of Labor and Industry. Be sure to include the licensing fee, which adjusts based on annual gross revenue:
- Under $1 million: $440
- $1 million to $5 million: $540
- Greater than $5 million: $640
Once you have a license, you’ll have to renew it every two years.
Electrical contractors will follow similar guidelines to residential building contractors, with one significant twist: Their qualifying person must be a master electrician.
To become a master electrician in Minnesota, an applicant must meet certain experience and education requirements. These requirements include 60 months of work experience in a variety of the following:
- Planning for wiring, apparatus, and equipment for light, heat, and power
- Laying out the installation of wiring, apparatus, and equipment for light, heat, and power
- Supervising the installation of wiring, apparatus, and equipment for light, heat, and power
- Wiring for and installation of wiring, apparatus, and equipment for light, heat, and power
- Maintaining and repairing electrical wiring, apparatus, and equipment
- Line work
- Installing elevators
- Wiring and maintaining technology circuits or systems
- Wiring and maintaining process control circuit or systems
Once you have a master electrician on staff, you can move forward with your application, following most of the same steps listed above for residential contractors. Licensing fees range from $128 for a new license and an on-time renewal and $188 for a late renewal.
Similar to electrical contractors, plumbing contractors must have a master-level state-issued license holder on staff before they can apply for a plumbing contractor license with the DLI.
There are two types of master plumbers licenses: master plumber and restricted master plumber. Both require the applicant to pass an exam, though qualifying requirements aren’t as well-described as they are for other electrical licenses. These are the descriptions, taken directly from the DLI website:
“Master plumber: an individual who is skilled in the planning, superintending, and the practical installation of plumbing, who is otherwise lawfully qualified to contract for plumbing and installations and to conduct the business of plumbing and who is familiar with the laws and rules governing the same. This license authorizes the individual to perform plumbing statewide, for both interior plumbing and exterior water service, sanitary sewer, and storm sewer systems within the property lines.
Restricted master plumber: an individual who is lawfully qualified to contract for plumbing and installations and to conduct the business of plumbing in cities and towns with a population of fewer than 5,000 according to the most recent federal census, and who has at least four years of practical plumbing experience in the plumbing trade or two years experience as a plumbing contractor. This license authorizes the individual to work on both interior plumbing and exterior water service, sanitary sewer, and storm sewer systems within the property lines in those areas.”
Once there’s a master plumber on staff, plumbing and mechanical contractors can move forward with the application process, following many of the same steps as residential building contractors. However, this is the appropriate application. Fees range from $128 for new applicants and on-time renewals to $188 for late renewals.
Subcontractors that do not contract directly with the homeowner, or only offer one of the previously mentioned skills, do not have to carry a license. Also, commercial contractors are exempt from carrying licenses. But, all contractors in the state (aside from those already licensed) must register their businesses.
You can register your business online using this portal. Contractors requiring a license for their line of work will not be able to register their business, so there is no shortcut to staying above board.
Penalties for unlicensed contracting in Minnesota
Minnesota takes its contracting licensing very seriously, as it wants to protect consumers from fly-by-night, uninsured crews. That’s why contractors working without the proper licenses are subject to criminal charges. Minnesota can hit unlicensed contractors with a misdemeanor punishable by fines as well as time in jail.
Those are serious consequences for a state that makes licensing so accessible. It makes sense to stay on the right side of the licensing line.
Protecting your payments in Minnesota
Not only do contractors have to worry about licensing requirements to avoid fines and jail time, but they also have to deal with the same cash flow issues as contractors across the nation. Without the money coming in the door, your licensing won’t matter for long. Protecting your payments is crucial to survival.
General contractors in Minnesota have 10 days to send a preliminary notice, or Prime Contractor’s Notice, to the property owner to protect their lien rights. Subs and suppliers have 45 days to send a preliminary notice. Subs, GCs, and suppliers have up to 120 days from the last furnishing to file a mechanics lien, and one year to enforce it. Missing any of these deadlines could forfeit your payments altogether.
Whether it’s licensing or protecting your payments, Minnesota takes it seriously. Be sure to meet all the necessary requirements to stay above board and maintain healthy cash flow.