The rules where you work $17
A first 30 days checklist, everyday forms, licenses, workers’ comp and taxes for North Carolina, 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 North Carolina expects from a new trade business
North Carolina's big number is $40,000. Below it you don't need a general contractor license, but the trade boards still apply at any size. The other surprise is sales tax: a repair job here is taxed on the whole bill, labor included, while a remodel is not.
The $40,000 line and the trade boards
You need a license from the State Licensing Board for General Contractors once the cost of the undertaking hits $40,000. That covers building, grading, and any improvement or structure. Under that number, the general contractor law doesn't reach you. Chapter 87 has no separate handyman license, but ask the board before you count on that.
The trade laws have no such floor. Electrical work needs a license from the State Board of Examiners of Electrical Contractors. Plumbing and heating have their own board, and refrigeration has another. A handyman who wires a circuit for $200 can still be doing electrical contracting.
The general license comes in three sizes: limited (single projects up to $750,000), intermediate (up to $1.5 million) and unlimited. Contracting or bidding at $40,000 or more without a license is a Class 2 misdemeanor. An owner building on his own land, solely for his own occupancy, is exempt only under the statute's conditions. At that size the permit office checks your license and your comp.
In your contract, giving up your lien rights as the price of getting the job can't be enforced, and a clause making you cover the other side's own negligence is void. A construction attorney can tell you how a split job gets counted.
Source: N.C.G.S. Chapter 87, Article 1 (General Contractors) · N.C.G.S. Chapter 87 (trade licensing articles) · N.C.G.S. 87-1, general contractor defined and owner exemption · N.C.G.S. 87-13, unlicensed contracting or bidding · N.C.G.S. 87-14, permits · N.C.G.S. 44A-12, lien waivers · N.C.G.S. 22B-1, indemnity clauses
Who to call: an attorney near you
Three employees, but your subs can pull you in early
Workers' comp kicks in at three or more employees regularly employed in the business. That sounds like room for a small crew. It often isn't, because of how subs are treated.
If you sublet work without getting a certificate showing your sub carries comp, you're liable for that sub's injured worker, even if the sub has fewer than three employees. Get the certificate before the sub starts. The law also clears you if the sub actually had a policy in force on the date of injury.
Corporate executive officers count as employees, but the policy can exclude them. A sole proprietor, partner or LLC member isn't included, but may elect in if actively engaged in the business and the insurer is told. Skipping required comp can cost $1 per employee per day, with a $20 daily minimum and $100 maximum. Willfully failing to carry it is a Class H felony. An insurance agent who writes contractors can walk you through the headcount.
Source: N.C.G.S. Chapter 97 (Workers' Compensation Act), 97-2, 97-19, 97-94 · N.C.G.S. 97-2, definitions and owner election · N.C.G.S. 97-94, penalties · N.C.G.S. 97-19, subcontractors
Who to call: an insurance agent near you
Getting paid: 120 days to file, 180 to sue
Both clocks run from the last day you furnished labor or materials at the site:
- Contract with the owner: serve the owner and file your claim of lien with the clerk of superior court within 120 days.
- Subs: you don't file on the property directly. First, second and third tier subs have a lien on the money owed to whoever hired them, perfected by written notice to that person. Payments made before your notice are protected, so send it early. They can also step into the contractor's lien on the property.
- Sue to enforce within 180 days. So you only get 60 days after a last-minute filing. Property in another county? File a lis pendens there within the same 180 days.
The trap is the lien agent. On improvements costing $40,000 or more, the owner has to name one, and you get a Notice to Lien Agent to them within 15 days of first furnishing. Late notice still works against a buyer if it arrives before the deed is recorded, but a mortgage recorded first can beat you. Agent not posted? Ask the owner in writing. The owner has 7 days to answer, and no answer excuses you.
No lien agent is required for improvements to an existing single-family home the owner lives in, or an accessory structure there. New homes aren't exempt. Bonded public jobs run on bond rules instead: sue after 90 days unpaid, notice within 120 days, 1 year to sue. A construction attorney can set up your forms once.
Source: N.C.G.S. Chapter 44A, 44A-11.1, 44A-11.2, 44A-12, 44A-13 · N.C.G.S. 44A-8, claim of lien on real property · N.C.G.S. 44A-18, lien on funds · N.C.G.S. 44A-23, contractor's lien · N.C.G.S. 44A-11.1, lien agent · N.C.G.S. 44A-11.2, notice to lien agent · N.C.G.S. 44A-13, suit and lis pendens · N.C.G.S. 44A-27, public job bond claims · N.C.G.S. 44A-28, public job suit deadline
Who to call: an attorney near you
Remodel or repair: the tax flips
North Carolina splits your work into two buckets, and the bucket decides everything:
- Real property contract (capital improvement): new construction, reconstruction, remodeling, painting and wallpapering, and work that requires a building permit, with some exceptions for swapping out individual items. You're the consumer. You pay tax on materials when you buy them, and you can't list tax on the customer's invoice.
- Repair, maintenance and installation: you charge sales tax on the gross receipts, not only the parts. Installing windows, doors, cabinets, countertops and flooring lands here unless it's part of remodeling.
The law treats work on real property as the taxable kind unless your records or a signed affidavit of capital improvement show otherwise. A contract mixing both is taxed as a real property contract if the repair share is 25% or less of the price. Over that, the repair share is taxed. A CPA who works with contractors can sort your common jobs into the right bucket.
Source: N.C.G.S. 105-164.4H (Real property contract) · N.C.G.S. 105-164.3 (definitions) · N.C.G.S. 105-164.4 (tax imposed)
Who to call: a CPA or tax pro near you
A $125 LLC with a $200 yearly bill
Forming an LLC with the Secretary of State costs $125. The part people forget is the annual report: $200 (plus a small online fee), due April 15 every year. Miss it by more than 60 days and the state can dissolve the company. Ask the Secretary of State what a late report costs. Watch for vendors offering "priority" or "early" filing. The Secretary of State warns they charge on top of the required fee.
Profit that passes through to you is taxed at North Carolina's flat individual rate, 3.99% for tax years after 2025. The statute's revenue trigger can lower it for 2027 and later. When an S-corp election starts saving you money is a numbers question. Bring your numbers to a CPA who works with contractors and ask them to run it.
Source: N.C. Secretary of State, Business Registration · NCDOR, Tax Rate Schedules · N.C.G.S. 57D-1-22, LLC filing fees · N.C.G.S. 57D-2-24, annual report · N.C.G.S. 57D-6-06, administrative dissolution · N.C.G.S. 105-153.7, individual income tax rate
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 North Carolina before you rely on it. Last updated November 2026.