General Licenses, Disassociation & LLC Filing

We will get down to business by the ‘numbers’ as a contractor discovers he may “B” off the mark in getting that general license. What happens to the contractor’s license when a business is ‘dead’? Does the license ‘live on’ to cause problems in the future? Not knowing may be an expensive lesson to learn…

Q: I either want to add a “B” classification to my existing license or create a new corporation with a “B” license. I have been active in business continuously for 15 years with several classifications “C-2” (Insulation), “C-9” (Drywall), “C-33” (Painting) and “C-35” (Lathing/Plaster). Do I qualify for a “B” class and do I need to take the exam. Which scenario would be easier?

A: To qualify for a “B” license the CSLB requires that you show 4 years experience (within the past 10) in the building trades. By their evaluation standards this usually includes two or three of the following PLUS STRUCTURAL FRAMING OR CARPENTRY: concrete, roofing, electrical, plumbing, HVAC. Simply showing a background in insulation, drywall, etc. will not be enough to qualify. If you do qualify, the trade test WILL be required. Adding the new class to an existing license is likely the easier scenario.

Q: I am a long time fan of your column. I am the Responsible Managing Officer (RMO) for a recently issued license number 9xxxxx. This is my new company and my only current business focus.

I also have a couple of other licenses. One of which is number 8xxxxx, a sole owner license that is expired. In the near future I will probably bring this license to current and active status and just keep it there in case I ever need it. This seems to me to be a prudent idea just in case anything happens to our new corporation.

My real concern is license number 7xxxxx, an expired license of which I am also the RMO. My old partner and I are no longer conducting any business. He disassociated from this license and now I would like to also, but I’m not sure of the ramifications since there would be no Qualifier left.

Can you give me an idea as to whether or not there would be any negative impact to my new license or in keeping my sole owner license alive? Thank you in advance for your help and keep up the good work.

A: Thank you for your kind words and for reading the column. If this old corporate license is never going to be used again, I would recommend filing a “License Cancellation Request Form” with the CSLB. In most instances this would require the signature of two officers; however, as the only remaining officer, your signature should be sufficient. As an alternative, I do not see any problem disassociating from the license; however, you would not be able to make any changes or adjustments should you change your mind.

If you have not already done so, I suggest filing final dissolution documents with the Secretary of State so the corporation does not continue accruing taxes and penalties (at least $800 per year).

Canceling or disassociating from the license should have no impact on your remaining two licenses. Please contact me if you have further questions.

Heads Up Alert: I have received several calls recently from contractors who have used an internet-based firm to help them draft and file documents for a California Limited Liability Company (LLC). The problem is this company apparently does not realize that a LLC cannot obtain a CA contractor’s license. Period. The callers typically end our conversation with either: “Why didn’t they tell me” or “I just wasted hundreds of dollars”. ‘Caveat Emptor’, or buyers beware.

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