How to Start an Electrical Business in Michigan

Going from employed journeyman or master electrician to business owner in Michigan involves more regulatory steps than most trades. The state requires a separate contractor license, a qualifying Master of Record, verified insurance, and — if you work in Detroit or Grand Rapids — local registrations on top of the state requirements.

Here is the full sequence, in the order you should actually do it.

Step 1: Get Your Master Electrician License

You cannot operate an electrical contracting business without a qualifying Master Electrician. If you are the only electrician in the business, that master license needs to be yours. Requirements: 12,000 total supervised hours over at least six years, journeyman license held for at least two years, and a 75% passing score on the PSI master exam.

If you do not yet hold a master license, you can still start a business — but you will need to hire a full-time master electrician who resides in Michigan to serve as your Master of Record.

Step 2: Form Your Business Entity

Register your business with LARA's Corporations Division. Most electrical contractors choose an LLC or corporation for liability protection. You will need:

• A registered business name (checked against existing registrations)
• A registered agent with a Michigan address
• Articles of organization (LLC) or articles of incorporation (corporation)
• An EIN from the IRS for tax filings and employee payroll

File your entity registration before applying for the contractor license — LARA needs proof that the business exists.

Step 3: Secure Insurance

Michigan requires electrical contractors to carry:

General liability insurance — covers property damage and bodily injury claims arising from your work. The minimum coverage amount varies, but most contractors carry at least $500,000 to $1 million per occurrence to satisfy both state requirements and the expectations of general contractors who might hire you.

Workers' compensation insurance — mandatory if you employ three or more workers at any one time. Even if you are below that threshold, some municipal jurisdictions and general contractors require proof of workers' comp before allowing you on a jobsite.

Work with a commercial insurance broker who handles construction trades — generic business policies often exclude contractor-specific risks.

Step 4: Apply for the Electrical Contractor License

Submit your application to LARA with:

• Completed application form
• Proof of your qualifying Master Electrician (their license number and employment verification)
• Proof of business entity registration
• Proof of insurance
• $300 fee (covers a three-year licensing period)

As of 2025, LARA eliminated the separate contractor exam. The application is now purely administrative — no additional trade test beyond your master license.

The Master of Record must be a full-time employee of the business and a Michigan resident. A single master license cannot qualify more than one contractor license at a time.

Step 5: Register Locally

A state contractor license does not automatically authorize you to pull permits in every Michigan city. Detroit and Grand Rapids require separate local registration.

Detroit (BSEED): Register your state contractor license, provide local insurance documentation, obtain tax clearance, and pay the local registration fee. Detroit also maintains its own electrical contractor exam — even though the state eliminated theirs.

Grand Rapids: Register your state license with the Development Center. No separate local exam required.

Other municipalities with their own building departments may have additional registration requirements. Check with the local enforcing agency before starting work in any new jurisdiction.

Step 6: Set Up Operational Infrastructure

Before you pull your first permit:

• Open a business bank account (separate from personal)
• Set up a payroll system if you are hiring employees
• Establish a permit tracking system — municipalities track your permit history and inspection results
• Build a document retention system for employee licenses, insurance certificates, and inspection records

The Michigan Electrician License Guide covers the contractor licensing process in detail, including the municipal registration steps for Detroit and Grand Rapids that trip up first-time business owners.

See more Michigan guides →