Changing Business Structure, Names & Required Home Improvement Contracts

A new year brings new opportunity. Opportunity often brings changes in life and business. Like a rock thrown in water, change also has a ‘ripple effect’ that might affect your contractor licensing. Sometimes it takes an expert to know how far those changes go in changing the past, present and license futures…

Q:  My partner and I were discussing switching our contracting business from a Corporation to an LLC (Limited Liability Company) and we came across your website.  What are the repercussions (i.e. license number, bond, etc.)?

A:  LLC’s have additional requirements which are not required of Corporations such as a $100,000 LLC/Worker bond and proof of at least $1 million in General Liability insurance.  Bonds are not transferrable from one entity to another.  With regards to the license number, you can transfer the license number from a Corporation to an LLC under certain circumstances. Please call my office to discuss this further.

Q:  What happens to my license if I want to change my business entity from a Sole proprietorship to a Corporation?

A:  You are required to apply for a new license when your business entity changes.  If you own at least 51% of the corporation, you have the choice to transfer your Sole Proprietor number to the Corporation, or you can obtain a new number.  If you transfer the number, please note that you cannot get it back as a Sole Proprietor, it will remain with the Corporation.

Q:  We filed a name change for our Corporation with the CSLB.  We submitted it over a month ago and have been checking every day and haven’t seen the change made yet.  Is there any way you can help?

A: I reviewed the copy of the name change form you sent me and I know what the issue is.  The CSLB cannot process the name change form until you first make the change with the CA Secretary of State.  Since you are a domestic California Corporation, you change your business name with the Secretary of State by filing a Certificate of Amendment of Articles of Incorporation.

Q: We recently met a Contractor who has been licensed for over 30 years.  He says that he never took a test of any kind.  He said back in the early 90’s he and his partner had a license, and his partner passed away so he took over the license. It seems strange to me that the State would give a license to someone just based on the person working in the field!  My brother-in-law is a licensed contractor and he had to take exams even though he’s been in construction his whole life.  Can you explain?

A:  There are a few scenarios in which an individual can request the CSLB toWaive the exams, so he likely fell in to one of the categories to qualify.  For example, if an individual can document they have worked for a licensed contractor in a supervisory capacity for five out of the last seven years. They can apply to replace the Qualifying Individual on the license and request to Waive the exams.

Q:  I hired a contractor to remodel my bathroom.  He stated he does not do written contracts unless someone requests it.  Is that normal?

A:  No, that’s not normal.  In California, a written contract is required for all home improvement projects over $500.00. As in all situations with your money, buyer beware. Find more on consumers and contracting at cslb.ca.gov.

 

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