Operating Agreements, Qualifying Three Licenses, LLC Bonds and Name Rules

First, if you’re going to be an ‘operator’ you have to have ‘agreement’ on licensing.  While we have had this question before it’s a new area for CA contracting that likely needs reinforcing with stronger ‘bonds’ and wrap up with what’s in a ‘business’ name…

Q:  We are going to be forming a new Limited Liability Company (LLC) and we will need a Contractor’s License.  Our attorney is in the process of putting together the Operating Agreement and a couple of the Partners do not want their name associated with the Contractor’s License.  Will the Secretary of State or CSLB require that we furnish them with our agreement?

A:  No, the Operating Agreement does not need to be filed with either the Secretary of State or the CSLB.  The Operating Agreement should be maintained in the office where the company’s records are kept.  The documents the CSLB requires that you file with the Secretary of State are the Articles of Organization followed by a Statement of Information with the Secretary of State prior to issuing a Contractor’s License.

Q:  I have a Sole Owner license and I have two other entities that I would like to get licensed.  I have 70% ownership in one entity, and 45% ownership on the other.  Actually, ownership belongs to my Trust.  Will I be able to Qualify all three licenses?


A:  Unfortunately, this would not meet the specific requirement of direct ownership pursuant to BPC section 7068.1 (a) and (b). Here’s why. An Responsible Managing Officer (RMO) can Qualify up to three licenses at the same time as long as one of the following conditions exists: 1) The Qualifying Individual has at least 20% direct ownership in each business; 2) One entity owns at least 20% of the other (again, direct ownership); OR 3) The majority of the Officers/Members/Partners are the same.  Your scenario does not meet options 1 or 2, but perhaps if you meet the requirement of option number 3 you can achieve your goal. Call for further assistance.


Q:  We currently have a license for our LLC and our bonds are up for renewal.  Why is the premium for the LLC/Worker Bond so much higher than the others?  Who/what is this bond protecting?

A:  The premium on the LLC/Worker Bond is much higher because the bond amount itself is higher.  The LLC/Worker Bond amount is $100,000 compared to the Contractor’s Bond, which is $15,000.  The Bond of Qualified Individual amount is $12,500.

The LLC Worker Bond is for the benefit of any employee or worker damaged by the LLC’s failure to pay wages, interest on wages, or fringe benefits, as well as other contributions.

Q:  I have a Sole Proprietor plumbing license in my name and recently I started advertising and printed cards as “Dave’s Plumbing”.  I was told that as a Sole Proprietor I could do business under any name I choose.  I just want to make sure that’s correct.  Do you have any advice?

A:  Sole Proprietors can choose any business name they’d like, however you will need to advertise, bid, contract, etc. exactly as it appears in the CSLB’s records.  So before you do business as Dave’s Plumbing, you will need to file a name change with the CSLB.  Name style variations are not allowed!