If you’re considering starting a contracting business in Wisconsin, you might already know that you’ve got your work cut out for you. Not only is it difficult getting a new business off the ground, but Wisconsin contractor licensing requirements are pretty stringent and confusing.
But as a new business owner, you might not have the time to stay on top of everything Wisconsin requires from you. This guide should help. It will go over all of the Wisconsin contractor licensing requirements so there will be less guesswork on your way to getting started.
Contracting in another state? Check out The Ultimate Guide to Contractors License Requirements in Every State.
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Who needs a contractors license in Wisconsin?
The first question you’re probably asking is whether you even need a license for the type of work you plan to perform. The answer is most likely “yes” — but let’s take a closer look.
Essentially, anyone working on one to two-family homes, projects worth more than $1,000, or a project that requires a building permit, must carry a license. Also, electrical, plumbing, HVAC, asbestos and lead abatement, and well-drilling contractors need to carry licenses.
Outside of those specialty trades (which always require a license), Wisconsin’s WisBuild website points out this exemption:
“If you are not doing work on one or two-family homes, or you are doing work that does not require you to pull building permits, the state does not require a license for that type of work, but you will still need to comply with any license requirements at the local level.”
Do you need a license to file a mechanics lien in Wisconsin?
You’re wise to wonder if Wisconsin contractor licensing requirements affect mechanics liens. We’ll dig much deeper into the confusing and multi-layered licensing requirements, but the good news is that Wisconsin mechanics lien laws do not explicitly require a contractor to carry a license.
But, even though you could still file a lien, it’s never a good idea to contract while unlicensed if the state requires one. If the lien doesn’t spur payment during a dispute, you might have to foreclose upon it. The court might not look fondly upon your unlicensed status.
Filing a lien in Wisconsin? Check out How to File a Mechanics Lien in Wisconsin – Step by Step Walkthrough
How to get a contractors license in Wisconsin
Getting a contractors license in Wisconsin is not as straightforward as it might be in other states. It requires extra steps and classes. At least all licensing goes through the State of Wisconsin Department of Safety and Professional Services, simplifying the process at least a bit.
Wisconsin doesn’t explicitly offer a general contractor license. Instead, it requires contractors performing the typical duties of a GC to carry a Dwelling Contractor License. In order to get a Dwelling Contractor License, you must first acquire a Dwelling Contractor Qualifier license. To get the Qualifier license, you’ll need a Qualifier certification.
To obtain a Dwelling Contractor Qualifier Certification, you’ll have to take the state-mandated 12-hour initial training course and pass an exam. At that point, you can apply for a Dwelling Contractor Qualifier license. The course cost varies depending on the provider, but the application fee is $15, and the credential fee is $30.
The Qualifier License allows you to work on one and two-family dwellings, but if you plan to contract, you’ll then need to apply for a Dwelling Contractor license. There are two types of contractor licensing: Dwelling Contractor and Dwelling Contractor Restricted. Restricted licensees can only contract for work valued at less than $25,000. Their requirements are mostly the same, with an exception:
- Comply with worker’s compensation requirements
- Comply with unemployment compensation requirements
- Prove financial responsibility by:
- Securing a surety bond of at least $25,000
- Providing proof of liability insurance of at least $250,000. This does not apply for Dwelling Contractor Restricted applicants.
- Submit application and applicable fees.
The fees for Dwelling Contractor Licenses include a $15 application fee, a $25 credential fee, and an annual renewal fee of $25.
As mentioned, licensing for subcontractors also goes through the State of Wisconsin Department of Safety and Professional Services. It’s worth noting that as a subcontractor, if you’re working on one or two-family dwellings, you must also carry a Dwelling Contractor Qualifier.
Other than the Dwelling Contractor Qualifier license, the application process for electrical contractors is straightforward. Applicants can fill out this application and pay the appropriate fees, which range between $235 and $189.13, depending on the month. While a trade license might not be a requirement for application, it will be a requirement to perform the work.
Plumbing contractors in Wisconsin need to carry the appropriate Dwelling Contractor Qualifier license, as well as employ a master-level plumber. Master plumbers must have at least 1,000 hours of experience as a licensed journeyman per year for three years, or they can possess an engineering degree. They’ll also have to pass an examination before filling out this application. The application fee is $20, the exam fee is $30, and the credential fee is up to $500.
HVAC contractors that work on one and two-family dwellings need to carry a Dwelling Contractor License, but otherwise, applying for a contractor license is straightforward. Applicants will complete this application and pay the fees, which total $175 ($15 for application, and $160 for credentialing).
Business licenses and registration
Regardless of whether you’re a general contractor or a subcontractor, all businesses in Wisconsin need to register with the State of Wisconsin Department of Revenue.
Businesses will use the department’s website, create a login, and complete the registration online.
Penalties for unlicensed contracting in Wisconsin
While the different hoops the state requires you to jump through in order to carry a license might seem like a pain, it’s worth playing along.
While Wisconsin isn’t explicitly clear about the penalties for unlicensed contracting, it is a misdemeanor. This typically means that getting caught contracting without a license will cost you some cash in the form of fines — and possibly some jail time.
Protecting your payments in Wisconsin
Wisconsin contractor licensing requirements are multi-layered, but they’re not the only regulations that contractors need to keep their eyes on. Protecting their cash flow is essential, and doing so requires learning about Wisconsin’s mechanics lien laws and their requirements.
For example, contractors working in Wisconsin are required to send a preliminary notice on all their projects. While this is another regulation to abide by, these documents are worth their weight in gold. Not only can they help protect your lien rights, but they also serve as an introduction between you and the folks cutting the checks. Sending these docs is important, and prime contractors have just 10 days to do so, while subs and suppliers have up to 60 days.
There are requirements based on other visibility documents as well. If you send your preliminary notice and a payment dispute arises, you’ll probably have to file a lien. The state requires you to send a Notice of Intent to lien at least 30 days prior to filing the lien. This should be enough time to bring the issue to the property owner’s attention, hopefully sorting out the issue before having to file the lien.
Contractors must also keep their eyes on the window for filing a mechanics lien. GCs, subs, and suppliers have up to six months from the date of last furnishing labor or supplies to file a lien. But, since you have to provide a Notice of Intent to lien at least 30 days ahead of schedule, it could make scheduling a bit more difficult.
Finally, all contract participants have up to two years to begin enforcing their lien. This is a longer window than many other states, but after it passes, the lien expires and becomes unenforceable. If you let that happen, your chances of recovering any of your cash suffer tremendously, and so can your business.