While contractors can ‘keyword’ search my website for some of the answers they need, you may need more personal assistance. That’s why we’re here. As contractors have learned from reading our Q&A over the years, the complexity and interpretation of licensing law can be confusing even in the simplest of situations. For instance, can you hold three licenses at one time? Can you bid for contracts without a license? Can a partnership and a corporation share the same license?
Q: I just saw your web site, cutredtape.com, and found there is a lot of great information. But, I hope I can get my questions answered here. Or maybe you can tell me where to find these answers?
My friend and I want to establish a company. This company will do the marketing and get job contracts from all sources. We don’t have a California contractor’s license, but we can find licensed contractors to work for the jobs we get. Do we need to register our company with the CSLB and have our own California contractor’s licenses to open this company? What type of company (LP, GP, JV, or others) should we register?
A: The answer to the first part of your question is YES, a license is required if you take a contract that involves any building, installation, repairs, additions, alteration, or improving property regardless of whether you self-perform or sub out the work. The second portion of your question regarding business structure may best be answered by consulting a tax professional. You may be licensed by the CSLB as a Limited Partnership (LP), General Partnership (GP), corporation or sole owner. A Joint Venture (JV) consists of two or more entities that are already licensed.
Q: Can we register three licenses (“A”, “C-10” & “B”) under one company name?
A: Yes, if you have one or more qualifiers that already hold these classifications you can apply using the Original 7065 (Waiver) application. On the other hand, if your qualifier(s) are required to sit for the appropriate exam, the CSLB will still allow this under one company name; but you can only apply for one classification at a time.
Q: I understand that a sole proprietor can get his license reassigned to a corporation (section 7065 waiver) if he owns at least 51%. Can a general partnership do the same if both partners jointly own at least 51% of the corporation?
A: Regarding your new entity, it must either be a general partnership (with partners) or a corporation (with officers) – it cannot be both. The Board will consider transferring an individual license to a corporation if the Responsible Managing Officer, or RMO, owns 51% or more of stock. Under no circumstances will the Board transfer this license to a partnership.
Q: I’m a California general contractor and recently met up with a friend of mine who has been in construction as long as I have. Things are really slow and I can’t afford to pay Workman’s Comp. If I made him a general partner of my sole proprietor, would I have to pay workman’s comp in order for us to work together on jobs?
A: You cannot make him a general partner on your sole owner license. You could however, form a partnership and apply for a new contractor’s license. If ONLY you and your partner will be handling the construction – and have NO employees — you could file an exemption from Worker’s Compensation with the CSLB.