The rules where you work $17
A first 30 days checklist, everyday forms, licenses, workers’ comp and taxes for Indiana, with a yearly calendar. Instant PDF download.
Buy the packet: $17Digital product, all sales final. Informational only, not legal, financial, tax or business advice.
What Indiana expects from a new trade business
Indiana is light on state licensing, and much of what you need comes from your county or city. Lien clocks on houses are short, and most home improvement contracts come with a 3-day cancel right. On sales tax, the way you write the contract flips who collects.
Plumbers get a state license. Check locally for the rest.
The state's business guide says plumbers are the only construction contractors Indiana licenses, through the Plumbing Commission. Plumbing contractors and journeymen both need a license, and a journeyman works under a licensed contractor, so going out on your own appears to mean the contractor license. You'll need four years of apprenticeship or qualifying experience, plus the exam. Working unlicensed is a Class A misdemeanor, and you can't sue for your pay.
Other contractor licensing is left to cities and counties. General contracting, electrical and HVAC aren't on the Professional Licensing Agency's list, and the state's workforce agency says HVAC is handled county by county. The business guide is undated, so confirm before you rely on it.
Local rules can have teeth. Terre Haute, for one, requires general construction contractors to register with a $10,000 bond, and it licenses electricians and mechanical contractors itself. Call the building department in each place you want to work before you bid.
On home jobs, the contract must be conditioned on the right party getting any needed license or permit before work starts. If you're unsure what a town requires, or whether your work counts as plumbing, a construction attorney can sort it out quickly.
Source: Indiana business guide, contractor services · Indiana PLA, professions · Indiana PLA, plumbing · IC 25-28.5 (Plumbers), 2026 Indiana Code · Indiana DWD, HVAC licensing · City of Terre Haute, license information · IC 24-5-11-9 (Home Improvement Contracts)
Who to call: an attorney near you
Hire a sub without the certificate and their injury can be your bill
Every employer under the act has to insure or get approved to self-insure. Casual laborers, farm workers and household employees are left out. Running without coverage is a Class A misdemeanor, and the board can award an injured worker up to double compensation plus medical expenses and attorney fees.
Sublet work without a board certificate showing the sub complied, and you're liable to the same extent as the sub if that sub's employee gets hurt. That rule has no dollar minimum. Anyone else who hires a contractor for work over $1,000 carries the same risk, except an owner having work done on their own owner-occupied home.
Owners can stay off the policy with a WCE-1 clearance certificate. Sole proprietors, partners, LLC members or managers, and independent contractors can use it. It costs $20 and lasts one year. It isn't valid until the Worker's Compensation Board stamps it, and it takes effect at midnight 7 business days after the stamp date. Even if you're exempt, you have to cover any employees. A corporate officer with an ownership interest can opt out by notice, once the carrier and the board have received it.
If you hire someone not covered, get a copy of their stamped certificate. It holds you and your carrier harmless. Ask an insurance agent who writes contractors what paper they accept as proof a sub is covered.
Source: IC 22-3-2 (Worker's Compensation), 2026 Indiana Code · IC 22-3-4 (Worker's Compensation administration and penalties), 2026 Indiana Code · Indiana WCB, compliance (IC 22-3-2-14.5, IC 22-3-5-1) · WCE-1 clearance certificate application · WCB notice of election and exclusion form · WCB, independent contractors · Indiana DOR, comp exemption clearance
Who to call: an insurance agent near you
Getting paid: homes get 60 days, not 90
You file a sworn notice of intention to hold a lien, in duplicate, with the county recorder:
- Within 60 days on a Class 2 structure: one or two dwelling units, a townhouse, or an outbuilding like a garage, unless regularly used as Class 1.
- Within 90 days on other buildings.
- Sue within 1 year of recording, or the lien is void. If the recorded lien shows when the debt is due, it expires a year after that date, so use whichever comes first.
The statute counts from performing the work without saying first or last day. It appears to mean your own last work. Don't cut it close.
Hired by anyone but the owner on a single or double family home the owner lives in? For repairs, give the owner written notice within 30 days of your first delivery or labor. For a new home built for the owner to occupy, it's 60 days, and a copy goes to the recorder. Without it you don't get the lien.
If an owner demands in writing that you sue, you have 30 days from receipt. A credit extends the suit date only if it's written, signed by all record owners and recorded within the year.
Watch for no-lien contracts on Class 2 work: they bind subs only if recorded within 5 days of signing. Home improvement customers can also cancel until midnight of the third business day after signing, over $150. A construction attorney can check your paperwork.
Source: IC 32-28 (Liens on Real Property), 2026 Indiana Code · IC 24-5-11 (Home Improvement Contracts), 2026 Indiana Code · IC 22-12-1-5 (Class 2 structure), 2026 Indiana Code
Who to call: an attorney near you
Your contract type flips who collects
Indiana's sales tax is 7%, and the Department of Revenue splits contractors by how the contract is written:
- Time and material (material and labor stated separately): you're a retail merchant. Register with the state, buy your material exempt for resale, and collect sales tax on the material portion.
- Lump sum, or anything else: you're not selling material. You pay sales or use tax on it when you buy, and you don't collect tax from the customer.
Installation charges stated separately on an invoice aren't part of taxable income. Pick the wrong setup, or mix them up, and you can owe tax you never collected. A CPA who works with contractors can help you choose.
Source: Indiana DOR Sales Tax Information Bulletin #60 (March 2024) · Indiana DOR tax guide for new and small business owners (July 2026)
Who to call: a CPA or tax pro near you
LLC, sole proprietor, or S-corp?
You form an LLC with the Secretary of State through INBiz. The paper filing costs $100. Online, the law sets a $75 filing fee and the Secretary of State adds an access fee. Its figures point to $95 or $96, and the exact amount shows at checkout. The business entity report comes up every two years, in the month you formed. It's $50 on paper. Online may differ, so check INBiz.
Pass-through profit lands on your personal return. The state rate is 2.95% for 2026, dropping to 2.90% in 2027, and counties add their own income tax on top.
Whether an S-corp is worth it depends on what the business clears after you pay yourself. Bring your numbers to a CPA and ask them to run it.
Source: IC 23-0.5-9 (Business filing fees), 2026 Indiana Code · Articles of Organization, State Form 49459 · Business Entity Report, State Form 48725 · Secretary of State regulatory analysis, fees · Indiana DOR tax guide for new and small business owners (July 2026) · Indiana DOR, tax rates, fees and penalties
Who to call: a CPA or tax pro near you
Education, not legal or tax advice. Rules change. Confirm anything here with a licensed pro in Indiana before you rely on it. Last updated November 2026.