The introduction of Limited Liability Company, or LLC licensing in CA has opened a relative ‘floodgate’ as contractors explore this new way to organize their companies. However, like all things, unexpected consequences come with this new way of doing business. We also touch on judgments in bankruptcy, license reciprocity state-to-state and wrap up with an interesting twist on qualifying more than one license…
Q: We currently have a corporation in California and for the purposes of this inquiry I will call it ABC Inc. ABC Inc. has had a contractor’s license for many years, and in the meantime ABC Inc. has obtained several other licenses with dba names (i.e. ABC Inc. dba XYZ). We would like to convert the corporation to an LLC. When we transfer ABC Inc.’s license to the LLC, will the CSLB automatically change the dba licenses to the LLC since it’s the same entity?
A: No, the CSLB will not automatically convert those dba licenses to the LLC. You will need to re-apply for each dba license separately. Also, you mention “transferring” the corporation’s license to the LLC. Please be aware that there are certain requirements that must be met in order to keep the corporation’s license number. Please contact our office for further information if needed.
Q: I have an outstanding civil judgment on my license and I’ve been told that one of the ways that a judgment can be “cleared” is by filing bankruptcy, naming the creditor in the bankruptcy, and then providing proof of those bankruptcy documents to the CSLB. What if the creditor is the CSLB? Is that something that is forgiven by filing bankruptcy?
A: According to my research, you must pay any outstanding civil penalties owed to the CSLB as they are not dischargeable in bankruptcy.
Q: Your company helped me get my low voltage electrical license many years ago in California and I have since moved out of State, however I have continued to renew my contractor’s license and it has remained inactive since I moved. I would now like to apply for a license in Arizona and I am wondering if I still qualify for reciprocity even though my CA license has been on inactive status?
A: Yes, in most cases Arizona still allows you to request the reciprocity waiver (depending on the classification) whether your license is active or inactive.
Q: I currently have a Contractors License but I have started a non-profit company that will install energy efficient equipment for low-income housing. I need to keep my license for income purposes, but I’d also like to be the qualifier on the non-profit corporation’s license. I understand that in order to be on more than one license I need to have at least 20% ownership in each entity. Does the CSLB make an exception to this rule since non-profits do not have owner/shareholder equity?
A: Interesting question! Unfortunately they do not have any exclusion to the law that allows for individuals to be on more than one license providing that one is a non-profit corporation.