CA General, Corporate licensing & Business Names

There are several good lessons in these past questions about corporation licensing. Many contractors are making the leap into this new business structure during this recession to reduce their costs. Others are looking into opportunity farther from their traditional base…

Q: I incorporated a year ago as the downturn hit us but have continued to use my individual license. I just found out this may not be legal. What could happen?

A: Every contractor should operate exactly as they are registered with the CSLB. For instance, if you have a sole owner license under the name “PDQ Electric” this is the name you should use when advertising and signing contracts. Additionally, to make sure you are properly licensed you should have filed and published a Fictitious Business Name (FBN) with your city or county government. Since you’ve incorporated, the name you use should be as it was registered with the Secretary of State. For those who operate under a Fictitious Business Name, make sure that your filing is up-to-date.

To answer your most immediate question, if you do not operate properly, you may 1) not be allowed to go to court to collect on a lien; 2) sue to collect money owed; or 3) have a default judgment entered against you for failure to be properly licensed.

Q: Can I quality for a license in Nevada? We have been licensed in California for over 5 yrs, in good standing and are looking at conducting business in Nevada. Would I qualify?

A: There is a ‘limited’ reciprocity agreement between California and Nevada. Nevada will waiver some trade exams if the applicant has been licensed in good standing in CA for 5 of the previous 7 years”. This agreement also extends to Arizona and Utah.

Many but not all classifications come under this agreement. For instance, the Nevada Board will not waive the plumbing, electrical and drywall exams, nor will CA waive these for a NV contractor. Looking at Nevada specifically, the applicant must still provide financial, bank, reference, employment background and other personal information as part of their comprehensive 26-page license application package. The qualifying individual must still pass the business/management test and provide an “out of state” license verification from CSLB.

Q: I have been attempting to get a license for a new corporation. An employee has offered to be the qualifying employee but from my understanding cannot because he has been with the company less than five years in the last seven. Is this only for the RME or can the qualifying employee be listed as an officer. I have been having some confusion about this and would appreciate your help.

A: Your employee can become the RME or RMO for the corporation if he has at least 4 years experience (at a journeyman level or above) and can pass the required law and trade exams.

There is no requirement that your employee have “been with the company five of the last seven years”. This would only be an issue if you had an existing corporation and the employee hoped to get a waiver of the exam to replace the present qualifier.