In Minnesota, no business entity may lawfully gross more than $15,000 per year for residential building contractor services without first obtaining a license from the Department of Labor and Industry. A residential building contractor license authorizes the holding company to construct and improve individual dwellings for habitation of up to four families. Though licenses are issued to companies rather than individuals, each company must employ a "qualifying person" who is required to pass both a residential contractor exam and a business and law exam. To obtain a license, choose a qualifying person, form a legal business entity and obtain sufficient insurance.
A qualifying person
To operate as a licensed residential contractor, your company must employ an individual--referred to as a qualifying person--who has passed both required licensing exams. This person may be yourself or anyone else, so long as the person is employed in a management position. An individual cannot act as qualifying person for more than one unaffiliated company.
The Minnesota contractor exams are administered by Pearson VUE, a private testing company. Visit the Pearson VUE website to obtain detailed exam scheduling procedures, exam room rules and content outlines (see Resources). Both exams are open-book and can be retaken if initial attempts do not meet the 70 percent passing standard. Test takers will be provided with reference materials at the testing site.
A legal business entity
Contractor licenses are issued to businesses, not individuals. To establish a sole proprietorship, you need only file a Certificate of Assumed Name with the Minnesota secretary of state. The appropriate registration forms are available for download from the secretary of state's website (see Resources). After submitting the forms, you will receive an official certificate in the mail. Note that you must publish a notification of assumed name in an approved local newspaper for two consecutive issues to validate your certificate.
To establish another legal business form---a limited liability company or a corporation, for example---you must complete and submit the appropriate formation documents to the secretary of state. To download the required documents, visit the secretary of state's website, access the Starting a Business webpage (see Resources) and click on the appropriate link.
Sufficient insurance
Minnesota law requires licensed residential contractors to carry general liability insurance with a limit of at least $100,000 per occurrence. Appropriate policies can be purchased from insurance agencies across the state.
If the company intends to hire one or more employees, Minnesota law requires workers' compensation and unemployment insurance. Workers' compensation insurance can be purchased from insurance agencies across the state. Register for unemployment insurance online via the State of Minnesota website (see Resources).
A completed license application
Residential building contractor license applications are available for download from the Minnesota Department of Labor and Industry website. In addition to documentary proof that the preceding requirements have been met, the qualifying person must complete a request for a criminal background check. The appropriate form is included with the application materials. The completed application must be mailed, along with supporting documents and fees, to the indicated address.
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