As the experts, we often have quick answers from more than 30 years of experience assisting contractors with licensing at Capitol Services, Inc. However, there is nothing quick or easy in some cases when dealing with contractor’s law which can include changes in form, interpretation and new legislation. This time it’s a complex issue that will require set-up in providing the background story as I answer this question. It’s also a caution for all contractors to proceed with caution in filling out and filing for a license!
Q: We have a somewhat complicated situation we have found ourselves in. When we originally applied for our license, we listed our business name as we are in our home State of Michigan, “ABC LLC”. In the section for business type, we marked “Partnership” and our Employer Identification Number. We received a Rejection letter from the CSLB stating that we were required to change our business name to “ABC, a Limited Partnership”. We thought it was odd as we are a Limited Liability Company, but since the CSLB said it was required, we made the correction and submitted it, figuring we would change it later. Finally, after a year of back and forth with the CSLB, our license was finally issued.
I contacted my attorney and explained our name situation, so he advised us to register our Michigan LLC with the CA Secretary of State, which we did, and then file a name change with the CSLB changing our name from “ABC, a Limited Partnership” to “ABC LLC” as we are now with the Secretary of State. You can imagine my frustration when I received another Rejection letter regarding our name change form stating we need to submit new license application for a new license number because we have formed a new entity…but we didn’t! It’s the same company with the same EIN! The CSLB is the one who said it was required for us to change our name to the Partnership name. When I spoke with someone at the CSLB regarding this issue, she said in the section for “business entity type”, we should have marked LLC instead of Partnership. I looked back at the application and there is no option for LLC…only Sole Proprietor, Partnership, or Corporation. This is so confusing to me so I’m hoping you can help.
A: Ahhh, I see where the confusion occurred. You applied for this license back in 2016. In 2016, they had one application specific to LLC’s, and another application for all other types of entities (Sole Proprietor, Partnership, and Corporation). As I’m sure you weren’t aware of the application specific to LLC’s, you marked the box most closely relevant to your business type, which was Partnership. The fact that you applied with the corporate ending of “LLC”, instead of sending you a Rejection letter stating you were required to change your business ending to “A Limited Partnership”, the CSLB should have noticed the discrepancy, and instead given you the option to either change your ending as they requested, OR submit the correct LLC application if that’s how you intended to do business. Unfortunately, you will be required to submit a new application for a new LLC license. I see the thought process on the CSLB’s end, but I also see how you were confused with their request and just did as suggested. If it doesn’t ‘feel’ right, that’s nature’s way of telling you something needs an expert opinion! The CSLB has since updated their application and all entity types use the same application now, so situations such as these should no longer occur!