Original Application, Business Names & LLC Licensing

While some things are ‘one size fits all’ a contractor’s license is ‘tailor made’ as one contractor will discover. It’s very frustrating when work comes to an end; however for some contractors this situation often signals a new ‘beginning’…

Q: I was part of a construction company that dissolved a few years ago. Unbelievably the company I joined at that time has now decided to close its doors. I want to start my own company and would like some advice regarding the name I would use, how best to apply, bonding requirements, fees, etc.

A: As Alexander Graham Bell once said, “Sometimes we stare so long at a door that is closing that we see too late the one that is open.” In your case, you appear ready to venture through that door.

As far as a business name, you should first begin by deciding how you want to conduct business. Most people in your position begin operating as a sole owner or corporation. I would suggest consulting with a CPA or construction attorney to determine which option is best for you. Articles of Incorporation must be filed with the Secretary of State while a Sole Proprietor will need to register his or her Fictitious Business Name (FBN) with local government.

The standard contractor bond is $12,500 and could cost as little as $79.00 depending on your credit. CSLB fees for a new license are $400 if you apply prior to July 1st (state fees go up after that date!). The initial fee to register as a corporation is $100.00 (more if you want over-the-counter expedited processing).

Q: We’re members of our local Builder’s Exchange and I was hoping to get a legal question answered. My husband has a Class “A” License and owns his own company, which is a Sole Proprietor. I have a related service company that requires no contractor’s license and is a Limited Liability Company (LLC). Recently my company hired an employee that can service and repair septic systems. How can my company use my husband’s class “A” license for this service? Can we put his license number on our invoices or would he have to be a member of the LLC? Thanks so much for your help on this matter and I look forward to hearing from you soon.

A: I cannot give you “legal” guidance since I am not an attorney. I can however give you sound contractor licensing advice.

An “A” can work on most any type of sanitation system, including septic or sewage. This being said, you cannot combine any construction business with a LLC. According to a recent Construction Industry meeting I attended at the State Capital, contractors will likely not be able to obtain a LLC license until January 2012.

You may want to consider having this employee work under your husband’s “A” license and apply for your own LLC license in January.

Q: I have held a sole owner “B” license for many years and I have “Construction” in my business name. I qualified for a “C-17” a few years ago and now almost exclusively handle new and replacement windows. I would like the business to reflect this. Would it be a problem to simply start contracting under an alternate name?

A: It would only be a problem if you use this alternate name without first filing a name change or new license application with the CSLB. You cannot do business under two names using one contractor’s license number.

If you have no interest in using your current license name, a name change is by far the easiest and quickest option. If you want to retain the “Construction” business, then apply for a second license, which reflects your specialty trade.