Assisting contractors is what we do. While many questions have a simple and direct answer to provide a solution that’s not always the case. It’s one of the reasons this column is a resource and a place to start unraveling the complex rules and regulations contractors work in daily. When multiple entities want to work together these days it has become even more complicated…
Q: We currently have two licensed corporations in California. We are going to open a third entity, which will operate as a Limited Liability Company (LLC), and we need to form a Joint Venture between the new LLC and one of the currently licensed corporations. My question is two parts. First, can we apply for a Joint Venture license with only one entity being actively licensed, or do we need to obtain a license for the LLC prior to applying for the JV License?
The two existing corporate licenses share the same RMO (Responsible Managing Officer). He is 50% owner of each company, including the new LLC to be formed. In the case that the LLC needs a license prior to applying for the JV and we use the same RMO, would we need to find a new Qualifying Individual for the Joint Venture license since our RMO will be at his limit of 3 licenses?
A: To answer the first part of your questions, a Joint Venture license in California is made up of two licensed contractors, so the new LLC will need to obtain its own license prior to applying for a JV license.
In regards to your second question, Joint Venture licenses don’t count in the “up to 3 licenses at the same time” rule. All Qualifying Individuals from each entity of a JV must be listed on and sign the application.
Q: Our company is licensed in Arizona and we have an opportunity to do a fairly large job in Southern California, but it’s very short term. Does California have any sort of temporary contractor’s license that we can register for since we only plan to do one project?
A: No, California does not have a temporary Contractor’s License.
Q: We are a 30 year-old ‘S’ Corp with a “C-10”, “C-20” and “C-7” license. We plan to form a LLC with the existing ‘S’ Corp as 100% owner of the LLC, with the intent that all future contracting will be done by the LLC. The ownership of the ‘S’ Corp is not changing. I see where I can apply for the LLC license and keep our existing license number. Its under 600,000 and we want to keep a low number. During the transition where we finish existing contracts in the ‘S’ Corp and bidding new work in the LLC, can I use the same license to do both or do I need to get a separate license for the ‘S’ Corp to finish out existing work for contracts I cannot transfer to the LLC?
A: Okay. An LLC and a corporation, or any two separate entities for that matter, cannot use the same license number at the same time. So in order to continue doing business under the corporation, it would need to obtain its own license.
Additionally, just FYI, if you want to transfer the corporate license number to the LLC, the following conditions are required: 1) The corporate license is in good standing immediately before its cancellation in connection with the application for an LLC license; 2) The LLC was formed by a corporation to continue the business of the corporation subsequent to the cancellation of the corporate entity’s license; and 3) The personnel listed for each entity are the same. Contact our office if you’d like assistance with this process.