The construction industry is no stranger to labor shortages, and it’s not uncommon for contractors to cross state lines in search of steady work. But each state has its own unique set of laws that govern how contractors should conduct their businesses. A contractor working out-of-state may face heavy fines if they aren’t being careful. In this two-part series, a Nashville construction lawyer at Cotney Construction Law will be discussing what many contractors fail to consider when working out-of-state.
Depending on the state you’re contracting in and the size of your business, you may be required to report your earnings. You may also be required to obtain tax permits if you plan on operating out of your new state for some time.
In addition to income and payroll taxes, out-of-state contractors must also take sales tax into account. You may end up paying much more for materials if your state does not levy taxes on local materials. For example, in the State of Tennessee, contractors are responsible for paying a sales tax on all building materials purchased regardless of their origin. To ensure that you are compliant with your state’s tax laws, consult with our team of Nashville construction lawyers.
Most states require contractors to obtain a license prior to commencing work on certain projects. Your state may also require you to obtain insurance, undergo an examination, or prove financial solvency. While some states allow contractors to operate unlicensed on small projects, contractors are typically required to register with state offices.
In the State of Tennessee, contractors are required to be licensed before bidding, engaging, or negotiating on projects valued at $25,000 or more. Out-of-state contractors in Tennessee are still bound to these licensing requirements regardless of any reciprocal agreements between states.
Don’t Cut Corners
The application fee for a Tennessee contractor’s license is a mere $250. By contrast, contracting without a license in the State of Tennessee is a Class A misdemeanor, and violators may be subject to a civil penalty of up to $5,000. If you’ve been accused of operating without a license, consult with a Nashville construction attorney at Cotney Construction Law.
For more information on contractors working out-of-state, read part two.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.