Basic CA License, SOS, FTB, CSLB

If we had a ‘Way Back’ machine like the old ‘Rocky and Bullwinkle Show,’ we could revisit those days when government kept what it knows about you and your business on file cards. As one contractor has discovered that isn’t the case in our ‘information sharing’ society. Another aspiring contractor takes us back to some ‘basic’ training…

Q: I went to renew my CA contractor’s license but the CSLB rejected the application because the Secretary of State suspended my company. Why should this matter? Is there anything you can do to help me with this problem?

A: The CSLB has a long-standing policy that prevents it from issuing or renewing a corporate contractors license if the company is suspended, forfeited or withdrawn with the Secretary of State (SOS). In your case my initial research shows that your company has some sort of tax issue with the Franchise Tax Board (FTB). Government departments routinely share these developments on the information ‘highway’ letting related enforcement agencies update their files.

Based on past experience, I would guess you either owe the FTB back taxes and/or failed to file one or more tax returns. After you straighten this out with the FTB, they will notify the SOS. In turn, the SOS should lift the suspension thereby allowing the CSLB to renew your license. Being that this is “tax season” (as my father referred to it), it may take you considerable time to resolve this issue over the phone or by mail. Personal contact with the FTB directly or through your representative usually works best and should result in a much faster resolution.

Q: My understanding is that in order to get a contractor’s license I need to pass a test, post a bond, and prove I have liability insurance coverage. Is this correct?

A: Well two-out-of-three isn’t bad. Once your application for an original contractor’s license is accepted, you’ll be scheduled for the law and trade exams. After passing the test, the CSLB will require a $12,500 contractors bond and proof of Worker’s Compensation coverage – IF YOU HIRE EMPLOYEES. While it is a very smart idea to carry General liability insurance, this is not required by the Contractors Board to secure or maintain a license.

Q: With the economy the way it is I will be winding up my corporation next month and canceling the license. I intend operating only as a sole owner from here on out. If the corporate license were to be hit with a judgment in the future, could this impact my individual license? What about if I declared bankruptcy?

A: Yes, this could impact your Sole Owner license. As long as you are listed as an officer of record with the CSLB, they can go after any associated license you’re listed on. This would include an Individual; Partnership or Corporate license whether active, suspended, expired or even CANCELLED. Declaring bankruptcy (BK) in most cases will overturn the judgment; however, there are some exceptions. If you pursue a BK, I would strongly recommend contacting an attorney and/or tax professional that specializes in this field.

Q: At what point would a pool maintenance person be required to have a contractors’ license?

A: There is a “C-61”/”D-35” license category called Pool and Spa Maintenance. This covers the install, repair and replacement of pool motors, pumps, filters, pool lights, solar systems that heat pools, electrical switches, etc. If the maintenance is basically ensuring a clean, clear swimming pool then I do not believe a license would be necessary. This might include maintaining or adjusting the chemical balance of the water, removing dirt and leaves from the spa or pool, adding pool chemicals, etc.

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