What Missouri expects from a new trade business

Electrical is statewide, the rest is local

The statewide construction license in Missouri's statutes is for electrical contractors, through the Division of Professional Registration. A statewide license lets you work in any jurisdiction regardless of local licensing. A local license only works where it was issued, or where no license is required. Some utility, railroad and low-voltage work falls outside that law, so ask the Office of Statewide Electrical Contractors whether your job needs it.

General contracting, remodeling, roofing, plumbing, HVAC, painting and other trades are left to local rules. Call the building department in each city or county where you work before you bid. Don't assume a trade is unlicensed just because the state doesn't license it. If you can't get a clear answer, ask the Division of Professional Registration.

On home jobs, the big rule is the Notice to Owner, covered in the lien section. A consumer credit sale solicited at the buyer's home also needs a written agreement with a Notice of Cancellation. The buyer can cancel until midnight of the third business day, and you refund within 10 days. A construction attorney can look over your contract.

Source: RSMo 324.900, statewide electrical contractor definitions · RSMo 407.700, home solicitation sales · RSMo 407.705, buyer's right to cancel

Who to call: an attorney near you

In construction, one employee triggers comp

Most Missouri employers don't need comp until they have five employees. Construction is different: one employee is enough if you erect, demolish, alter or repair improvements. Family members count toward the number.

Sole proprietors and partners aren't covered themselves unless they elect to be. The Department of Labor says LLC members are presumed covered unless they opt out. A corporation whose only employees are no more than two owners can file to withdraw from the law. Your employees still have to be covered.

Subs matter here too. On a building job, the statute treats the contractor as the employer of his subs' employees and their subs' employees on the site. So get certificates before anyone starts.

Knowingly going without coverage is a class A misdemeanor, with a state penalty that can reach three times the annual premium or $50,000, whichever is greater. An insurance agent who writes contractors can tell you how your owner role and your LLC get handled on a policy.

Source: RSMo 287.030 (employer defined) · RSMo 287.040 (contractors and subs) · RSMo 287.090 (exemptions, elections) · Missouri Department of Labor: Workers' Compensation for Employers · RSMo 287.128 (penalties)

Who to call: an insurance agent near you

Getting paid: a printed notice, then 6 months and 6 months

Missouri's mechanic's lien law has traps up front and two short clocks after them:

• Original contractors: give the owner the statutory Notice to Owner in 10-point bold type before you take any payment. Put it in the contract, or give it at delivery, at the start of work, or with your first invoice. The statute sets no dollar minimum, covers every original contractor, and makes this a condition of having a lien at all. The exception is a new residence where the buyer has lien protection through a title insurance company registered in Missouri.
• Subs and suppliers: serve the owner or agent with notice 10 days before filing. On residential property, a recorded Notice of Rights replaces it.
• Owner-occupied remodels of four units or less: a sub or supplier has no lien unless a Consent of Owner signed by an owner is attached to the lien. Without it, the owner's full payment to the contractor is a complete defense.
• Residential sale: if the owner records a notice of intended sale, record your Notice of Rights at least 5 calendar days before the closing date or forfeit your lien rights.
• File the lien with the circuit clerk within 6 months after the debt accrues. Rented equipment is on a 60-day clock from when it's removed.
• Sue within 6 months of filing, or the lien ends.

A construction attorney can drop the wording into your contract.

Source: RSMo 429.012 (notice to owner) · RSMo 429.080 (filing deadline) · RSMo 429.100 (subcontractor notice) · RSMo 429.170 (six months to sue) · RSMo 429.013, Consent of Owner · RSMo 429.016, residential Notice of Rights

Who to call: an attorney near you

You're the final user, until title says otherwise

By Missouri's rule, a contractor is generally the final user and consumer of materials that become part of a finished real property improvement. Your supplier charges you tax. You build it into your price.

The exception turns on title. If title to an item passes to the customer before it's attached to the real property, you don't pay tax on your purchase and you collect tax on the sale price. If title passes after attachment, you pay at purchase and don't collect. Unless you and the customer expressly agree otherwise, title generally passes after installation is complete.

If you also run a store, you're a dual operator. Buy for inventory on a resale certificate, then pay tax when materials come out for a job. A CPA who works with contractors can help you decide how to write that.

Source: 12 CSR 10-112.010 (contractors), Missouri Secretary of State

Who to call: a CPA or tax pro near you

No annual report, but confirm the filing fee

You form an LLC with the Missouri Secretary of State. Get the current filing fee from the Secretary of State's business page before you file. Missouri has no annual report for LLCs, so there's no yearly state fee to keep the company alive. No franchise tax and no publication either.

Pass-through profit goes on your personal return under Missouri's graduated rates, and the top rate is set to keep stepping down as revenue triggers are met, so check the current table with your tax preparer.

When an S-corp election makes sense depends on what the business clears. A CPA who works with contractors can run it.

Source: RSMo 143.011 (individual income tax rates)

Who to call: a CPA or tax pro near you