How to Start an HVAC Business in Michigan

Starting an HVAC business in Michigan means navigating state licensing, federal tax registration, insurance requirements, and local permitting — in the right order. Get the sequence wrong and you waste money on steps you'll have to redo, or worse, start operating before you're legally authorized.

Step 1: Verify Your Experience Eligibility

Before spending anything, confirm you meet LARA's experience threshold. The standard mechanical contractor classifications require three years (6,000 hours) of documented experience under a licensed contractor. Classifications G and H instead use active-licensure or equivalent-experience pathways. The documentation standard is high — notarized affidavits from your employers describing specific equipment types, BTU ratings, fuel classes, and system configurations.

If you have an approved HVAC technical degree or completed a U.S. Department of Labor apprenticeship, up to 2,000 hours can be substituted. Military veterans get full credit for documented active-duty mechanical work.

This is the step where you discover whether you can move forward now or need more time accumulating hours. Don't skip it.

Step 2: Apply for Your Mechanical Contractor License

Submit your application through LARA's MiPLUS portal with all experience documentation and pay the $300 non-refundable state fee. Choose the classifications that match the work you plan to perform — most residential contractors start with Classifications B (HVAC Equipment) and C (Ductwork).

LARA's review typically takes four to eight weeks during peak construction season. The 365-day exam window begins on the eligibility approval date; after LARA transmits your eligibility, you'll receive an Authorization to Test and must pass your classification exams through PSI Services within that window.

Step 3: Pass Your PSI Exams

The HVAC Equipment exam (Classification B) runs 150 questions in three hours at $100. Other classification exams are 55 questions in one hour at $50 each. All exams are open-book — bring bound reference copies of the Michigan Mechanical Code, International Fuel Gas Code, and relevant ACCA/SMACNA standards.

Don't take the exam without adequate preparation. While it's open-book, the questions test your ability to locate and apply code provisions under time pressure. Tab your reference books before test day.

Step 4: Form Your Business Entity

File your Articles of Organization with the Michigan Department of Licensing and Regulatory Affairs, Corporations Division. The standard LLC filing fee is $50. An LLC separates your personal assets from business liability — critical in a trade where installation errors can cause property damage or injury.

Your business entity needs a Qualifying Officer — a person who holds the individual master-level credentials and exam results. In most small operations, that's you.

Step 5: Register for Taxes

Three registrations, all of which you can handle online:

• Federal EIN: Free from the IRS online portal. You need this for your bank account, tax filings, and local permit applications
• Michigan Treasury Online (MTO): Register for state sales tax, use tax, and income tax withholding
• Unemployment Insurance Agency (UIA): Register through MiWAM if you plan to employ anyone

Step 6: Bind Insurance

Two policies are functionally mandatory:

Commercial general liability insurance protects against claims from property damage or bodily injury caused by your work. Most local building departments require at least $500,000 in coverage before they'll let you register and pull permits. Industry standard is $500,000 to $1,000,000.

Workers' compensation insurance may be required if you employ technicians. Michigan's employer triggers determine when coverage is mandatory, so confirm they apply before hiring.

Get specialized quotes from a commercial insurance agent who works with construction trades. Standard policies often exclude underground gas piping leaks, high-pressure boiler work, and professional design errors. Make sure your policy actually covers the work your classifications authorize.

Step 7: Register Locally

State law caps local mechanical contractor registration fees at $15 per municipality (MCL 339.5817). Register in every jurisdiction where you plan to pull permits. Each municipality has its own portal and documentation requirements — Detroit uses BSEED's Accela system, Grand Rapids uses Citizen Access, and smaller jurisdictions often handle registration at the building department counter.

You'll typically need your state license certificate, proof of insurance, workers' comp carrier details where applicable, and your Federal EIN.

Step 8: Pull Your First Permits

With your state license active and local registration complete, you can pull mechanical permits for your first jobs. Permit fees vary by municipality — Detroit charges a flat $203 for residential mechanical replacements, Grand Rapids charges base fees plus $30 per equipment type, and Lansing's example is $60–$200 based on equipment types.

The Michigan HVAC License Guide maps this entire eight-step sequence with all the forms, portals, and fee schedules organized in the order you'll encounter them.

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