Contractor License Questions: Licensing foreign corporations, restrictions on Limited Liability Corporations and Partnerships

For more than 25 years I have carried the “ball” for contractors when they must “rush” the bureaucracy. In almost every circumstance, coming to Sacramento to file your paperwork is going to be faster. However, how many contractors can spend the time and money away from the job to do so? A reminder of why one form of business structure won’t work for contractors in California and another contractor learns that time is still money. . .

Q. We are a small AZ contractor seeking help in obtaining a CA contractor’s license. We filed the original application last year (ourselves) but to our chagrin had not registered our company as a Foreign Corp. with the Sec. of State in CA; hence we were rejected. We have a qualifying party, the applicable bonds, and Worker’s Comp coverage but need help getting registered. We would like to expedite this process. Can this be done faster in person rather than mailing something to Sacramento?

A. Thank you for your email. Whether a domestic or foreign corporation, filing documents with the CA Secretary of State is almost always faster if done in person. For instance mailing articles of incorporation to Sacramento typically takes from 4-7 weeks to process. With a personal delivery service, it will likely take about 6-7 workdays. If you must have this registration quickly, the Secretary of State has a 24-hour “expedite” service costing $350.00 (but only if done in person). If you were to personally come to Sacramento it is possible these documents could be filed and processed the same day.

Q. I want to apply for a General Engineering Contractor License for a LLP. What is the process and cost to the State?

A. The Contractors Board will NOT license a Limited Liability Partnership (LLP) or Limited Liability Company (LLC). I would suggest speaking with your tax specialist or attorney to determine what type of business structure is best for your situation. The CSLB will issue a license to a Limited Partnership, General Partnership, Sole Owner or Corporation. The CSLB fee is $400.00 regardless of which type of license you apply for.

Q. I have an existing corporation that was suspended by the Secretary of State in 2002 (due to non payment of taxes). This company has a license but it cannot be renewed until the corporation is in good standing. I have never done any work with this company but now have an opportunity for a job. Would it be faster to fix the current problem and renew the license or simply apply for a new one? If applying for a new corporation license, can the license number be transferred?

A. Timing is everything. Now that the State’s tax amnesty program is over, it will cost you considerably more to reinstate your existing corporation. As we discussed, the State requires a minimum annual tax of $800.00 even if no work is done or the company has a net loss. In your situation, the tax, penalties, interest, etc. will exceed $6000. However, this process can likely be accomplished faster (about 4 weeks) than applying for a new corporate license (estimated at 8 weeks). If timing is more important than money, pay the tax and renew the license. Conversely, if you have a few months, form a new company and apply for a new contractor’s license. The prior license number cannot be transferred.

Knowledge is power and knowing where to go for the answers is half the battle.

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