North Dakota Business License and Permit Requirements for Contractors

The licence that functions as North Dakota’s business licence for contractors

For a contracting business the operative permission in North Dakota is the contractor licence under N.D.C.C. chapter 43-07, issued by the Secretary of State as registrar. N.D.C.C. 43-07-02(1) makes it a precondition of acting as a contractor where "the cost, value, or price per job exceeds the sum of four thousand dollars," and of maintaining any claim, action, suit or proceeding in a North Dakota court related to your business as a contractor.

The classes in N.D.C.C. 43-07-07(1) then act as a value ceiling rather than a trade scope: class A unlimited, class B up to five hundred thousand dollars per project, class C up to three hundred thousand, class D up to one hundred thousand, with statutory fees of $450, $300, $225 and $100 on application and $90, $60, $45 and $30 on renewal.

The exemptions in N.D.C.C. 43-07-08 are narrow: authorised representatives of the United States, the state, or a county, municipality, irrigation district, reclamation district or other political corporation, and any person furnishing a fabricated or finished product, material or article of merchandise "that is not incorporated into or attached to real property by such person so as to become affixed thereto."

• Above $4,000 per job the contractor licence is mandatory, before the work.
• The class is chosen by the value of a single project, not by trade or turnover.
• Fees are set in the statute at 43-07-07, not on an agency fee schedule.
• No contractor bond: 43-07-11 was repealed in 1995.
• Liability insurance naming the Secretary of State as certificate holder is required.

Official sources: N.D.C.C. Chapter 43-07 (Contractors), published by the North Dakota Legislative Branch; North Dakota Secretary of State: Contractors licensing

Sales and use tax: you are the consumer, and you cannot show it as tax

North Dakota takes the opposite approach from a state that makes contractors collect tax from owners. The Office of State Tax Commissioner treats a contractor who incorporates tangible personal property into real property as the final user and consumer of that property, which makes the contractor liable for sales or use tax on the purchase price rather than the homeowner.

The billing consequence catches people who came from a retail background. The tax the contractor paid "can be passed to the customer as a materials cost. It cannot be itemized as a sales tax charge on the customer’s invoice." Putting a sales tax line on a construction invoice is therefore wrong in North Dakota even where the amount is right.

Two situations change the arithmetic. Where a contractor also runs a retail operation and pulls materials from stock bought for resale, the Tax Commissioner requires use tax on the contractor’s cost of those materials. Where materials were bought outside North Dakota, tax paid to the other state is credited: nothing further is due if the other state’s tax equalled or exceeded North Dakota’s, and the difference is due if it was less.

Public work adds a document. The Tax Commissioner requires a Contractor’s Clearance letter when bidding on state or local government contracts and states that these letters "automatically renew in November, unless the contractor has tax debt." That is separate from, and additional to, the tax-clearance condition in N.D.C.C. 43-07-11.1, which makes a contractor ineligible to enter a public contract until a satisfactory showing that all delinquent income, sales or use taxes have been paid, with a certificate from the tax commissioner satisfying the requirement.

Official sources: North Dakota Office of State Tax Commissioner: Tax Responsibilities for Contractors; North Dakota Office of State Tax Commissioner: Sales and Use Tax; North Dakota Office of State Tax Commissioner: Contractors; N.D.C.C. Chapter 43-07 (Contractors), published by the North Dakota Legislative Branch

Registrations that are not licences but will stop you all the same

North Dakota keeps several records that a contractor can lose without ever being told they had them. N.D.C.C. 43-07-04(3) makes the contractor licence dependent on the contractor maintaining liability insurance coverage, filing renewing or properly amending any fictitious name certificate required by chapter 45-11, maintaining active corporation or foreign corporation status, maintaining active limited liability company status or foreign LLC registration, filing or renewing a trade name registration as required by chapter 47-25, and maintaining LLP or limited partnership registrations.

The mechanism is not a fine. On twenty days written notice to the contractor at the last known address, the registrar classifies the licence as not in good standing. Subsection (4) then requires the contractor to "cease soliciting or entering new contract projects," and directs the registrar to use the procedures of chapter 28-32 to revoke the licence if the contractor fails to cure within thirty days of the notice or takes new work while not in good standing.

For a small contractor, the practical translation is that the $50 LLC annual report the Secretary of State sets at November 15 for a Business LLC, and the $25 trade name registration, are not administrative trivia. They are conditions of your ability to sign new contracts.

Official sources: N.D.C.C. Chapter 43-07 (Contractors), published by the North Dakota Legislative Branch; North Dakota Secretary of State: Limited Liability Company (LLC); North Dakota Secretary of State: Register a Business

Public work: three clearances a private job does not need

N.D.C.C. 43-07-12(1) requires all bids for a public contract project to enclose a copy of the licence or the current contractor year certificate "in the required bid bond envelope," bars award "unless the contractor is the holder of a license in the class within which the value of the project falls," and requires the licence to have been held "at least ten days before the date set for receiving bids." A bid without it "may not be read or considered and must be returned to the bidder." Subsection (2) exempts bids to the department of transportation, to the public service commission, and for federal aid highway funds.

N.D.C.C. 43-07-11.1 adds the tax condition: no contractor, resident or nonresident, is eligible to enter a public contract with a state department or any political or governmental subdivision until a satisfactory showing that all delinquent income, sales or use taxes have been paid, with a certificate from the tax commissioner satisfying it and the public body required to refuse execution without one. The Office of State Tax Commissioner operates the corresponding document, a Contractor’s Clearance letter required when bidding on state or local government contracts, which "automatically renew[s] in November, unless the contractor has tax debt."

N.D.C.C. 43-07-06 then allows any body with power to enter public contracts to impose "reasonable requirements and conditions as conditions precedent to the awarding of a contract ... in addition to the requirements imposed by this chapter." Read the solicitation, because the state floor is not the whole answer.

N.D.C.C. 43-07-01(4) is worth knowing before you subcontract on public work: a "public contract" is one exceeding four thousand dollars and "includes subcontracts undertaken to perform work covered by the original contract or any part thereof when the contract cost, value, or price of the work included in the subcontract exceeds the sum of four thousand dollars." Your subs are inside the same regime you are.

Official sources: N.D.C.C. Chapter 43-07 (Contractors), published by the North Dakota Legislative Branch; North Dakota Office of State Tax Commissioner: Contractors

Electrical and plumbing are licensed separately, by their own boards

A contractor licence under chapter 43-07 is about the value of your contracts, not about your trade. The trades are licensed under their own chapters, and one of the grounds for discipline in N.D.C.C. 43-07-14(1)(e) is "Engaging in work without any trade or professional license as required for the work pursuant to local, state, or federal law." The contractor licence does not cover the trade licence, and holding one while lacking the other is itself a complaint ground.

Electrical work sits under N.D.C.C. chapter 43-09. Section 43-09-09(1) provides that "A person may not undertake or plan to undertake with another person to plan, lay out, supervise, install, make additions, make alterations, or make repairs, in the installation of wiring, apparatus, or equipment for electric light, heat, or power or for a power limited system, unless licensed by the board." Section 43-09-10 names the classes: master electrician, journeyman electrician, class B electrician and power limited electrician. Section 43-09-11 sets the ladder, including eight thousand hours for a journeyman "which experience may not be obtained in less than three years," one year as a licensed journeyman before master, and eighteen months in farmstead or residential wiring for class B.

Chapter 43-09 also carries a rule that catches contractors who intend to sub the work out. Section 43-09-09.2(1) provides that where a licence is required, "a person may not advertise to contract for electrical services without being licensed as or being associated with a class B electrician, master electrician, or power limited electrician, unless that person intends to contract the electrical services with a licensed electrical contractor." Section 43-09-16 lists who is outside the chapter entirely, including utility employees up to the first point of service attachment, telecommunications and cable staff, appliance dealers connecting appliances to an existing receptacle, and an individual installing a nonelectrical system.

Plumbing sits under N.D.C.C. chapter 43-18, and its trigger is geographic. Section 43-18-11 provides that no person, firm, corporation or limited liability company "shall engage in the business of a master plumber, journeyman plumber, or plumber’s apprentice in any location of this state having a public system of waterworks or sewerage unless registered and licensed to do so by the board." Section 43-18-10 requires a firm installing plumbing in such a location to have a licensed master plumber in charge at all times, and adds that "In cities of less than one thousand population and in all rural areas, a licensed journeyman plumber may engage in the business of installing plumbing." Section 43-18-09 gives the state plumbing code "the force and effect of law."

We publish no electrical or plumbing board fee for North Dakota. N.D.C.C. 43-09-13 and 43-18-13 leave the amounts to the boards, and those boards publish their schedules on hosts that are not official government sites, so we do not carry the figures. Get them from the board itself.

Official sources: N.D.C.C. Chapter 43-09 (Electricians), published by the North Dakota Legislative Branch; N.D.C.C. Chapter 43-18 (Plumbing), published by the North Dakota Legislative Branch; N.D.C.C. Chapter 43-07 (Contractors), published by the North Dakota Legislative Branch

Local requirements: why this guide stops at the state line

North Dakota cities and counties permit and inspect construction on their own authority, and several trade rules are expressly geographic. The plumbing licence requirement in N.D.C.C. 43-18-11 applies "in any location of this state having a public system of waterworks or sewerage," and N.D.C.C. 43-18-10 allows a licensed journeyman plumber to run the business of installing plumbing "In cities of less than one thousand population and in all rural areas." Where you are standing changes the answer.

We publish no municipal fee, bond amount, insurance minimum, dollar threshold or renewal cycle for any North Dakota jurisdiction, and that is a deliberate editorial rule. No local jurisdiction has cleared our publication review, and a stale municipal figure is worse than an instruction to ask. Ask the building department for the exact project address, and treat contractor authority, a local business licence, a tax endorsement and a permit account as four different things.

Official sources: N.D.C.C. Chapter 43-18 (Plumbing), published by the North Dakota Legislative Branch; N.D.C.C. Chapter 43-07 (Contractors), published by the North Dakota Legislative Branch

Check the official page yourself before you file or sign

North Dakota is unusually well documented compared with most states in this library: the contractor licence classes, the fees, the thresholds and the penalties are all in the statute itself rather than in an agency fee schedule, and chapter 43-07 can be read end to end in one sitting. That is a good reason to read it rather than to trust a summary, including this one.

Three limits on what you just read. We publish no bond figure, because N.D.C.C. 43-07-11 was repealed in 1995 and no bond requirement survives in the chapter. We publish no electrical or plumbing board fee, because the statutes leave those to the boards and the boards publish on hosts that are not official government sites. And we publish no unemployment insurance date or figure, and no municipal fee, bond, threshold or renewal cycle for any North Dakota city or county, because we could not source the first on an official host and our own rules bar the second while no local jurisdiction has cleared publication review.

Official sources: N.D.C.C. Chapter 43-07 (Contractors), published by the North Dakota Legislative Branch; North Dakota Secretary of State: Contractors licensing