What Nevada expects from a new trade business

No license, no bid

The Nevada State Contractors Board licenses contractors under NRS 624. It's unlawful to act as a contractor or even submit a bid in Nevada without an active license in the right classification. The Board checks qualifications through written exams, background and financial responsibility, and sets bond requirements and contract limits on your license. Cities and counties can add their own requirements.

The handyman exemption is thin: repair or maintenance work worth under $1,000, labor and materials. It's off the table if the job needs a building permit, if it's plumbing, electrical, refrigeration, heating or air conditioning work, or if it's part of a larger project of $500 or more. Unlicensed people who advertise have to say so.

Without a license, you can't sue to collect. The Board can fine you $1,000 to $50,000 per violation, and you can be prosecuted.

On a home, a prime gives the owner the NRS 108.245 notice in the statute's wording before signing. A general building contractor on a single-family home also gives the owner, in writing, every sub and anyone supplying $500 or more of material. A licensee on an owner-occupied single-family home puts the Recovery Fund statement in the agreement. A construction attorney can tell you which classification fits.

Source: NRS Chapter 624 (624.031, 624.320, 624.700, 624.710, 624.720) · Nevada State Contractors Board · NRS Chapter 108, prime contractor's notice to the owner

Who to call: an attorney near you

One employee, and your subs can count too

In Nevada, anyone with a person in service under a contract of hire needs comp, unless a statute excludes it. Construction adds the catch: subs, independent contractors and their employees are treated as employees of the principal contractor. You're a principal contractor if you coordinate a whole project, contract to complete one, hire a sub, or pay one. If the coverage isn't there, you can be responsible for the claim. The Division of Industrial Relations says a licensed contractor is almost always on the hook in construction. A licensed principal contractor also can't use the rule that lets other businesses hire an independent enterprise and avoid being the employer.

A sole proprietor (including working partners) can elect to cover himself but isn't automatically covered. That doesn't erase what you owe as a principal contractor.

Penalties include money penalties, criminal prosecution and being ordered to shut down. An insurance agent who writes contractors can sort out who's covered on your jobs.

Source: Nevada DIR: Employer Coverage Requirements · NRS Chapter 616B (616B.659, sole proprietor election)

Who to call: an insurance agent near you

Getting paid: 31-day look-back, 90 days, 6 months

Nevada's mechanic's lien rules:

• Notice of right to lien: if you didn't contract directly with the owner, deliver it in person or by certified mail. Laborers don't send it. Without it you can't enforce a lien for materials, equipment or services. It reaches back only 31 days from when you give it, so send it early. Copy the prime contractor for information. Skipping the copy is grounds for Board discipline but doesn't invalidate the notice.
• Homes and apartments: before recording, everyone except laborers serves a 15-day notice of intent to lien on the owner and prime contractor. Doing so adds 15 days to your recording time. It doesn't apply to nonresidential work.
• Record the lien within 90 days of the latest of completion, your last delivery or your last work, or within 40 days of a valid notice of completion recorded and served on you.
• Serve a copy on the owner within 30 days of recording.
• Sue within 6 months of recording, but not before 30 days after it, unless the time is extended in a signed writing. An extension can't run past 1 year after recording.

If the work needed a license, you have a lien only if you were licensed. A construction attorney can put these into your paperwork.

Source: NRS Chapter 108 (108.226, 108.233, 108.245)

Who to call: an attorney near you

You pay at the counter, and tax stays off the invoice

The Nevada Department of Taxation treats construction contractors as the consumers of the materials they buy to fulfill a contract. You pay sales tax to an in-state vendor. If you buy from an out-of-state vendor that didn't charge Nevada tax, you report and pay use tax yourself, with credit for tax properly paid elsewhere.

When you bill the customer for the finished work, don't add sales tax to the invoice. The Department says if tax shows up there, it can treat the job as a retail sale and hold you liable for the tax.

Repairs and reconditioning follow different rules. A CPA who works with contractors can say which side your work falls on.

Source: Nevada Department of Taxation: Construction Contractors

Who to call: a CPA or tax pro near you

$425 up front and $350 a year

A Nevada LLC costs $425 to start because three things are due together: $75 for articles, $150 for the initial list, and $200 for the state business license. Then it's $350 every year ($150 annual list plus $200 business license), due by the end of your anniversary month. A late business license means a $100 penalty. Ask the Secretary of State what a late list costs.

The Commerce Tax only hits businesses with Nevada gross revenue over $4 million. If you pay wages, the Modified Business Tax is 1.475% of quarterly wages over $50,000, and you register for unemployment tax within 30 days of becoming an employer. No publication.

The state constitution bars an income tax on personal income, so pass-through profit carries no personal state income tax return and your federal numbers drive the planning. A CPA who works with contractors can run when an S-corp election pays off.

Source: Nevada Department of Taxation · Nevada Constitution, Art. 10, Sec. 1 · NRS Chapter 86, LLC fees and annual list · NRS Chapter 76, state business license · NRS Chapter 363B, Modified Business Tax · NRS Chapter 363C, Commerce Tax · NRS Chapter 612, unemployment registration

Who to call: a CPA or tax pro near you