Michigan Business License and Permit Requirements for Contractors

The authorisation that decides whether you can take the job

For residential work, the controlling authorisation is the Article 24 licence from LARA's Bureau of Construction Codes. LARA describes Article 24 of Public Act 299 of 1980 as licensing and regulating persons engaged in the construction of a residential structure or combination residential and commercial structure, and persons who undertake the repair, alteration, addition, subtraction or improvement of such a structure "for compensation other than wages for personal labor". Nothing you file with any other agency substitutes for it.

LARA issues that authorisation in several shapes: Individual Residential Builder, Maintenance & Alteration (M&A) Contractor, Builder Company, M&A Company, Residential Builder Salesperson and Branch Office. The M&A licence is issued by craft, and LARA lists the crafts as carpentry, concrete, excavation, insulation work, masonry, siding, roofing, screens and storm sash, gutters, tile & marble, house wrecking, swimming pools and basement waterproofing, noting that the crafts you may practise "are listed on the license".

The one place Michigan sets a floor is MCL 339.2403(f), which exempts work on one undertaking or project by one or more contracts "if the aggregate contract price for the labor, material, and any other items for the undertaking or project is less than $600.00", and expressly withholds that exemption where the work is part of a larger operation or where the job is split into contracts under $600.00 "to evade this act". That is the only project-value threshold in Article 24 that we could verify on a reachable official source.

Official sources: LARA Bureau of Construction Codes: Residential Builders; LARA Bureau of Construction Codes Licensing Section; LARA Maintenance & Alteration Contractor License Information; Michigan Legislature: MCL 339.2403

The trade authorisations, which are separate programmes

If your work is plumbing, electrical or mechanical, the Article 24 licence is not the one you need. LARA licenses each of those trades through its own programme with its own experience requirements. A plumbing contractor licence requires the applicant to hold a master plumber licence or employ one as a representative, and LARA states that "the contractor license will not be issued without master plumber representation". Only a sole proprietor, a partner in a partnership, an officer of a corporation or a member of an LLC may apply for it.

An electrical contractor licence requires no examination, but LARA states it requires an associated master electrician who is "in charge of and responsible for Michigan code compliance of all installations of electrical wiring and equipment", that a master electrician "can only associate with one Electrical Contractor at a time", and that without one the contractor licence "is put on hold". If the applicant lives outside Michigan, the master electrician they hire must live in Michigan. LARA also states that "Michigan does not hold reciprocity with any other state/country" for these licences, and that the City of Detroit issues its own electrical licences and registrations locally.

Mechanical contractor licensing is granted classification by classification. LARA requires a minimum of three years of experience in each classification applied for and an examination passed for each one, across classifications including hydronic heating and cooling and process piping, HVAC equipment, ductwork, refrigeration, limited and unlimited heating service, limited and unlimited refrigeration and air conditioning service, fire suppression, solar heating and cooling, solid fuel and vented decorative gas appliances, LP distribution piping, and fuel gas piping and venting. LARA states licensed mechanical contractors "can perform installations, alterations, servicing, and secure permits".

Official sources: LARA Plumbing Examination, Licensing and Application Information; LARA Electrical Examination, Licensing and Application Information; LARA Mechanical Examination, Licensing and Application Information

The tax, coverage and entity records that sit underneath

A sales tax licence is a real licence with a real expiry. Treasury states that entities "must register for sales tax with Treasury to receive a sales tax license" and that the licence "is valid January 1 through December 31". The tax itself is 6 percent of the total price of taxable retail sales to the final consumer, with a 4 percent rate for residential electricity, natural or artificial gas and home heating fuels, and Treasury states that "Michigan does not allow city or local units to impose sales tax". Filing frequency is assigned by Treasury each year, and "all filers must submit an annual return by February 28, regardless of assigned filing frequency".

Workers' compensation is not optional at a smaller headcount than most new contractors assume. The Workers' Disability Compensation Agency requires coverage of "all private employers regularly employing 1 or more employees 35 hours or more per week for 13 weeks or longer during the preceding 52 weeks" and "all private employers regularly employing 3 or more employees at one time", noting that the three-employee test "includes part-time employees". A partner counts as an employee of the partnership, a corporate officer as an employee of the corporation, and a manager-member as an employee of the LLC; only a sole proprietor working in their own sole proprietorship "is never an employee of that business".

If you trade through an entity, the annual filing with LARA's Corporations Division keeps that entity alive. LLCs and PLLCs file an annual statement by February 15, profit and professional corporations file an annual report by May 15, and nonprofit corporations by October 1. The LLC and corporation fee is $25.00 and the PLLC fee is $75.00 with a $50.00 penalty after February 15. Failing to file "will result in the dissolution, revocation or not good standing status of your business after a two-year grace period or one year for foreign corporations".

Official sources: Michigan Treasury: Sales and Use Taxes; Michigan WDCA: Workers' Disability Compensation Insurance Requirements; LARA Corporations Division: Annual Reports and Annual Statements

Local permits and the conduct rules nobody mentions at signup

Holding every state authorisation still does not answer the permit question on a specific job. Michigan Administrative Code R 338.1551(5) requires that "all construction, renovations, alterations, or repairs must comply with the Michigan construction code", which is administered and enforced through local building departments, and LARA notes that Detroit issues its own electrical licences and registrations. Treat the state licence as the entry ticket and the local permit as the per-job requirement.

Three administrative rules govern how a licensed Michigan contractor must operate, and they apply from day one. R 338.1532 requires the name, licence number and actual business address as shown on the licence in all advertising, and prohibits using a phone or post office box number alone. R 338.1533 requires all agreements and changes to agreements to be in writing and signed by the parties, with copies to the customer, clearly stating cost, the type and amount of work and the type and quality of materials. R 338.1534 requires a complete, accurate set of books and records.

Two more rules describe what happens when something goes wrong. R 338.1535 lets the department require a sworn financial statement within 30 days on notice, where there is an unsatisfied judgment, a lien filed against the licensee, or a reasonable belief the licensee lacks the financial resources to meet contractual obligations. R 338.1551 requires a reply to a forwarded complaint within 15 days, and provides that failure or refusal to correct "a structural matter that is materially deficient, dangerous, or hazardous to the owners is presumed to be dishonest or unfair dealing". Neither of those is a licensing formality; they are the enforcement surface.

Official sources: Michigan Administrative Code R 338.1511 to R 338.1566; LARA Electrical Examination, Licensing and Application Information

Check the official page yourself before you file or sign

Michigan publishes its contractor rules across at least four agencies: LARA's Bureau of Construction Codes for the licence, LARA's Corporations Division for the entity, the Department of Treasury for tax registration and returns, and the Workers' Disability Compensation Agency for coverage. No single page carries all of it, and each one changes on its own schedule.

Before you file an application, sign a contract, or hire anyone, open the specific LARA page for your licence type, confirm the hours, the renewal date and the fee, and keep a dated copy of what you read. LARA publishes a licensing phone line at 517-241-9316 and an email address for the Licensing Section, and it warns that "application fees are non-refundable" and that processing "may be up to 3-5 weeks". A ten-minute call before you pay is cheaper than a non-refundable application filed into the wrong licence type.

Official sources: LARA Bureau of Construction Codes Licensing Section; LARA Bureau of Construction Codes: Residential Builders