‘S’ Corp Licensing, CA Financial Info Requirement and Foreign Corporations

As the contractor’s licensing expert, I get all kinds of questions. Many are simple, straightforward issues with easy to understand answers. Some are complex, multi-layered ‘regulation’ cakes that require answers one slice at a time! Let’s cut to the chase…

Q:  I am a Sole Owner of a CA General Building “B” License.  I established a ‘S’ Corp last year to operate contracts under my license but have not yet signed a contract using the Corp, nor have I put the license under the Corporation’s name.   At this time, I’d like to bring on a 50-50 partner under the ‘S’ Corp and enter into contracts using my license.  At the same time, I’d like to also have the freedom to enter into my own contracts outside the partnership, also using my license.  My first question is, how can I bring my Sole Owner license to the Corporation and bring on a partner?  Second question, can I use the same license and enter in to separate contracts with a different fictitious name than the one used for the corporation?

A:  You cannot operate under two different entities with one license number.  You would need two separate license numbers to operate under both the Sole Proprietorship and the Corporation, so here would be your expert options: A)  Apply for a new license for the Corporation to be issued a new contractor’s license number, while keeping your current Sole Proprietor license active or; B)  If you want your current Sole Owner license number to belong to the Corporation, you can apply for a license for the Corporation and ask that your Sole Owner license number be re-issued to the Corporation, and once that’s done, you can apply for a new Sole Proprietor number for yourself.  Either option will allow you to operate both as the ‘S’-Corp and as Sole Proprietor. No matter how you slice it, it would really just be about which entity you want to have the higher/lower license number.

Q:  I am currently a licensed contractor in Nevada and I will be moving to California soon.  I want to start the process of obtaining my CA License.  Nevada requires financial information to get a license, and I was required to submit financial information when I renewed as well.  Is there a requirement to file a financial statement annually as part of the renewal process in California?  I’m just curious because I don’t know how much work I will get in my first year of business.

A: No, the CSLB does not require financial information in order to renew your license.

Q: Our company has had several personnel changes since we originally obtained our license.  I know we need to update the CSLB, but I’m wondering how many Officers we are required to show on our license.  Several of our Officers are not really involved in the day-to-day operation of the company.

A:  After doing some research, I see that your home state is Delaware.  Foreign corporations are only required to document their President with the CSLB.  You have the option to list more if you’d like, but at the minimum they want you to document the President.  You should Disassociate the personnel you have listed on the license who are no longer with your company.

 

Joint Ventures, Matching Business Names and Who Signs Renewals

One for all and all for one, these contractors get served a ‘split’. Another venture gets a short answer on a ‘joint’ license bid, and a ‘hyper’ contractor gets to chill on his worries!…

Q:  We have a Joint Venture (JV) license made up of three entities.  One of the entities is no longer a part of the JV, so we are going to be filing a Disassociation for that entity.  Will we (meaning the remaining two entities) be able to keep the same license number?  I ask because we are in the middle of a large job.

A:  You will not be able to keep the same license number.  Joint Ventures are viewed as “partnerships” and once you make a change to the structure of a partnership license, the license is cancelled.  You will need to apply for a new license, however you can request a continuance for the existing license in order to complete work currently in process.

Q:  We have a Joint Venture license between two companies.  We will be bidding on a project which has a requirement of the contractor to hold a valid “A” (General Engineering) and “B” (General Building) license.  If one entity holds a “B” license and the other holds the “A” and a “B”, I assume that would be acceptable to bid on the project as long as the portion of the work related to the “A” classification is only performed by the entity with the General Engineering license?

A:  Yes that is acceptable.

Q:  We received our Bond and fee letter from the CSLB.  It states the business name on the Bonds should match exactly what is on the application.  On the CSLB’s pending application query, our entity is listed in all capital letters with no comma.  Our business name as filed with the Secretary of State is not in all caps and it contains a comma, which is how the Bonds were issued.  I know this a hyper-technical question, but I remember a couple of years ago the Board gave us a hard time with our Worker’s Comp certificate because our broker had put a comma in our business name.  Should I request the Bonds be re-issued?

A:  No, they will be fine.  The CSLB always uses all caps for business names, and they do not use punctuation (commas and periods) regardless of how you are registered with the Secretary of State.

Q: We just received our renewal notice in the mail.  We have two Qualifiers listed on the application and three Officers.  Do all individuals listed need to sign?

A:  No.  Both Qualifiers will need to sign as well as one Officer, unless one of the Qualifiers is an Officer, in which case only the Qualifiers will be required to sign.

 

 

“C-10” and Low Voltage Waiver, Adding Classes and Replacement Qualifiers

What’s better than getting a new driver’s license you can renew by mail? How about getting a waiver on testing to add new opportunity to your contractor license! These contractors learned that sometimes you can, and sometimes you can’t…

Q:  We currently have a “C-10” (Electrical) license.  I am aware that we can do low voltage work with our current license, however some of our customer’s request that we have a “C-7” (Low Voltage) license in order to do telecommunications work.  How difficult would it be to add that classification to our license?  Would I have to take the test?

A:  B&P Code section 7065.3 allows for Contractors to request a Waiver of the Trade Exam for some additional classifications – if the classification is closely related to your current license and is a significant portion of the work you perform.  These Waiver requests are reviewed on a case-by-case basis and is dependent on your work experience and project background, but I believe you would have a pretty good chance of being approved to Waive the exam based on your “C-10” experience.  Waiver requests need to be done in writing.

Q:  I currently have an “A” (General Engineering) license in CA.  While I know I can do concrete work with my “A” license, sometimes in order to do a foundation or a sidewalk, people want to see that we have the “C-8” (Concrete) classification on our license.  How do I go about sitting for the exam and adding it to our license?

A:  You will need to complete and submit the Application for Additional Classification.  You will be required to show at least four years of full time work experience doing concrete work specifically.  With regards to the exam, B&P Code Section 7065.3 allows the CSLB to consider a Waiver of the Trade exam for someone holding a closely related classification, if you can prove that concrete is a significant portion of your General Engineering work. Sweet!  Waiver requests however are reviewed on a case-by-case basis and there is no assurance the CSLB will approve the request.

Q:  In 2014 you helped one of our Officers replace the former owner of the company when he retired and he was able to Waive the exam based on his years of experience with the company.  Now he wants to obtain his own license and so I have been designated to be the new Responsible Managing Officer (RMO).  I have been with my company for over 15 years with various positions; Foreman, Supervisor, Project Manager, Estimator, and now hold the title of Vice President.  Can you assist me with process of replacing the current RMO and asking for a Waiver of the Exams like you did for the current Qualifier a couple of years ago?

A:  Yes and no. Let me clarify. We would be happy to assist you with the process of replacing your current Qualifier.  It sounds like you have the requisite experience.  Your current RMO requested a Waiver based on B&P Code Section 7065.1c, which allows for a Waiver of the Exam if you have worked for the company in a supervisory capacity for five out of the last seven years.  Unfortunately, you will not qualify for the same Waiver of the Exams because 7065.1c further states that a company cannot make this request if they have requested a Waiver under that subdivision within the past five years.

 

Stock or Asset Sales, Qualifier Qualifying and Sharing Contractor’s Bonds

Not only sure, I am ‘surety’ about this answer that corrects a contractor’s mistaken ‘impression.’ Another contractor will have to ‘divide’ his experience in his request to ‘subtract’ a Qualifier and ‘add’ another, and I give a ‘concrete’ example of why your ‘state’ of mind matters in answering questions from across the West!…

Q:  We are currently converting our contracting company from a Corporation to an LLC.  The CSLB is requesting a $15,000 Contractors Bond and a $100,000 LLC Bond.  We were under the impression that we could just add the LLC to the Corporation’s bond and thus wouldn’t have to get a separate Contractor’s Bond for the LLC.  However, the surety company is telling us the State doesn’t allow two bonds holders on the same bond, even if one is a parent company to the other.  Is this true and thus do we have to get a separate bond for the LLC?

A:  Yes, the surety company is correct.  You cannot have two entities share the same bond.  Bonds are not transferrable from one entity to another either, so in addition to the $100,000 LLC/Worker bond, you will need to obtain a new $15,000 Contractor’s Bond.

Q:  Your Company is helping me with replacing my Qualifying Individual on our license with a request to Waive the trade exams.  I’ve been the President of the company since 1986. We hold the “A” (General Engineering) and a “C-51” (Structural Steel) classifications.  I noticed you sent me two Certification of Work Experience pages to have completed.  Would the State view my application as stronger/better to add more certification pages?  I have many contractors and clients who can vouch for my experience. Would it be acceptable for the current Qualifier who I’m replacing to complete one of the pages for me?

A:  Since you have worked for the same company for over four years, it is not necessary to have more than two Certification pages completed. We sent you two certification pages because one should be specific to your General Engineering work, and one should be specific to your Structural Steel background.  The certification pages can be completed by anyone who has direct knowledge of your background in each trade, and in fact can be completed by the same person.  Your current Qualifier would be a perfect person to certify your work history since he has also been on the license since it was issued in 1986.

Q:  If a person wants to come in and buy an existing contracting business and make the seller who holds the license an RME for the new business, can the buyer continue to operate with the seller’s license, or will they have to get a new license number?

A:  It depends.  If the transaction is a stock sale, the buyer can keep the existing license number and make necessary changes to it (personnel, business name, etc).  If the transaction is an asset, a new Contractors license is required.

CLARIFICATION: In the Q&A article published on 1/22/18, we referred a “C-8” classification as a “glazing” license without specifying what State the contractor was referencing.  A reader pointed out a “C-8” contractor in California is a Concrete contractor and “C-17” contractors are Glazers.  What the article should have included is a “C-8” contractor in Nevada is in fact a Glazing contractor. Nice catch thanks for reading!

 

Out of State Qualifiers, Reviving Expired Licenses and Certified License History

Fresh, new and original. Same old rules with new booming economic opportunity adding players to the contractor ranks of the Golden State. As some find talent outside the state others are coming back to the ‘game’ in CA. Another question isn’t fresh, new or all that original, unfortunately…

Q:  I will be setting up a new corporation next week and I found a guy who has the relevant experience to qualify for the “C-36” (Plumbing) license.  He will need to take the exams. He currently lives in Idaho and that’s where he gained his experience.  Is that going to be a problem?  Also, so we can anticipate travel plans, once we submit the application, does the CSLB give him a certain time frame to pass the exams?

A:   The CSLB accepts work experience gained outside of California and it is not necessary for your Qualifying Individual to be a resident of California, as long as they are actively engaged in the running of the business.  Once you submit the application, the Qualifier is given a period of 18 months to take and pass the exams. The application will go void if all requirements, including testing, are not completed within the time frame.

Q:  You may remember us, we are a Texas corporation and you helped us get our California license years ago.  We only had a couple projects in CA and we let the license expire in 2015.  We are now ready to come back to California and do some work.  How do we go about getting our license again?  Do we need to start from scratch?

A:  Of course we do, we are always ready to help new faces and old friends. No, you do not need to start over!  Since it has been less than five years since your license expired, you can still renew it.  You are required to submit a Renewal Application, pay the delinquent (Active) fee of $600, and provide a new Bond and proof of Worker’s Compensation Insurance (if you still have employees).  The renewal application is not available on the CSLB’s website, so you can either order one which can take about two weeks, or with a permission letter we can pick one up for you in person.

Q:  I am currently in arbitration with my client who is a Construction contractor.  The opposing side is asking for verification of his license (the license is very new and has only been in existence for a year) and we provided him with the online printout, the pocket card, and the wall certificate.  The opposing attorney is not happy with just that and want something official from the CSLB.  Is there a way you can obtain something more official and how long would that take given we are currently in arbitration?

A:  We can order a Certified License History which is an official document from the CSLB.  The verified certificate contains the business name and address, trade classifications held, license issuance date, license personnel, bond information (upon request), any enforcement actions taken against the license, and the license status during the time period you request.  Currently, the CSLB is taking about six weeks to process these requests, however if you have documentation from the court showing that you are currently in arbitration, they can expedite the request.

 

Underground Cable, CSLB Active License Search and Multiple DBA’s

Some things in law don’t seem to make sense but it’s how the rules are ‘interpreted’ that really matter to our first contractor. I will ‘excel’ as expert in offering not one, but two solutions for a contractor, then ‘multiply’ for another before ‘adding’ up our last answer…

Q:  My company does a specialized type of work where we place hybrid fiber-coaxial (“HFC”) systems underground.    The underground placement will be 36” to 48” deep in the ground. We will not be connecting the HFC to the head end or central office so there is absolutely no low voltage electrical work involved by our company.  The connection of the HFC to head end/central office is completed by a different company.

A:  According to the CSLB, even though you are not electrifying the cabling, a “C-7” (Low Voltage) license would be needed to perform the work you described.

Q:  I am going to be purchasing a Landscaping company and I need someone with a “C-27” license to act as my Qualifier.  Is there a way to order a list of all Active (Landscaping) licenses in my area from the CSLB?  I’m hoping they have it in an Excel format.

A:  Yes, there are two ways to do this.  The CSLB has a new feature on their website which allows you to search all contractors with a particular classification in a specific area/zip code. With this feature, you put in the city or area code you are interested in as well as the classification of licensee you are inquiring about.  You will get a randomly generated list of contractors meeting your parameters.  You can then choose the entire list or pick and choose contractors to make a smaller list, and then download it on to an Excel spreadsheet.  The other option is to request the data from the CSLB with a Public Sales Custom Order form.  This allows you further parameters, such as if you want all of Southern CA (as opposed to just one city/zip code), or if you only want Sole Proprietors license information (as opposed to all business entities), etc.  The CSLB will generate the data in the form of a CD/DVD, which can then be formatted in to an Excel spreadsheet.  The downside to this second option is the CSLB charges a $245.00 fee.

Q:  We currently have a “C-8” (Glazing) contractor’s license in the name of our corporation with a ‘dba’ (doing business as) name attached.  We use this license for the installation of windows. Another side to our business manufactures and sells windows and doors, which doesn’t require a contractor license.  Can we operate under a different ‘dba’ name for the sales side of the business even though it’s the same corporation?

A:  Yes, a corporation can operate with multiple ‘dba’ names.  You should check with your county to inquire about what registrations are required.

Q:  I have a “C-7” (Low Voltage) license in CA and I need to obtain my NV Contractor’s license.  I found out electrical classifications are not reciprocal so I’m in the process of having my customers fill out the required references for me.  The problem is my jobs are very sporadic.  I haven’t had continuous work over the last ten years, sometimes with several months in between each job.  Is that going to be a problem?

A:  No, it all adds up. Nevada requires that you have at least four years of full time work experience within the last ten years.  Your experience does not have to be consecutive, but the dates on the references must cover a period of at least four years.

License Sharing, Failing to Show Up for Exams and RME Scope of Work

You can ‘share’ almost anything on social media, but contractor’s licenses are not one of those things. I remind a frazzled contractor why it’s important to keep your ‘snail-mail’ address up to ‘speed’ with the Contractor’s Board. And we wrap with how a ‘name’ gives direction, and just because others are jumping off the cliff doesn’t make it right…

Q:  My husband has a corporate contractor’s license in California.  He is the RMO/CEO and President.  My husband’s son (my Stepson) and I are Officers of the corporation.  My Stepson does some contracting on his own.  My Stepson also has his own corporation.  He believes he can do contracting work under his corporation because he is listed on my husband’s license. Is this true?

A:  No, that is not true. A corporate license number is issued exclusively to a specific corporation.  Your Stepson’s corporation is a separate entity, and would need it’s own contractor’s license in order to do contracting work over $500.  Being listed as an officer on a license does not permit an individual to contract under a different business entity.

Q:  I just received a letter from the CSLB stating that my pending application is going to go void soon.  When I look it up online it says I failed to appear for my exam.  I don’t recall ever receiving notice of an exam date.  Is there anything I can do at this point?

A:  Don’t panic, I looked up your pending application and it doesn’t go void until February 15, two thousand nineteen (perhaps you thought it was next month).  When you fail to appear for an exam you are required to pay a $60 re-schedule fee and they will get you set up with a new date.  You should also be sure that the CSLB has the correct address on file to ensure you receive your exam notification.

Q:  I’m going to be purchasing a company which has a current/valid contractor’s license.  The seller who is currently the Qualifying Individual does not want to be associated with the license. While I don’t have the requisite experience to qualify and pass the exams, I have a guy who is willing to be the RME on the license (his personal license is currently Inactive and he no longer does contracting work).   My attorney is telling me that if my RME is not technically an employee of the entity, our contractor’s license will not be valid.  The thing is, I know of companies who are doing exactly that.  Was it allowed in the past and it’s just no longer permitted?

A:  An RME (Responsible Managing Employee) is required to a be a bona fide employee of the licensed entity.  CA Code of Regulations (T16CCR) section 823 states that the RME must be permanently employed by the applicant and actively engaged in the operation of the business for at least 32 hours per week or 80% of the total hours per week that the business in in operation. This rule has always been in effect.  While there may be companies out there who have an RME listed on their license who is not technically employed by the company, those companies are operating improperly and it is likely only a matter of time before the CSLB is made aware and possibly takes disciplinary action.

Expired, Revived & Transfers, “C-10” or “C-7” and Death of a Partner

Impossible no. You can do that, but it won’t be easy! Oh, say can you “C”? How about letting a buddy use your license? Answers are the reason you ask and we share them here so contractors learn from the issues of others…

Q:  I had a Sole Owner license that expired back in 2007.  Since then, I have been listed on my company’s license as an RME (Responsible Managing Employee).  I am leaving the company and I want to get my own license number back which starts with a ‘4’, but I’d like it to be Incorporated.  Is that possible?

A:  It is possible, but it will involve a few steps.  In order to transfer a Sole Owner license number to a Corporation, the Sole license must be Active and in good standing.  Therefore, you would be required to first apply for a Sole Owner contractor’s license, requesting that your old number be re-issued to you.  Next, you would apply for a Corporate contractor’s license, requesting the Sole Owner license number to be re-issued to the Corporation.  This is assuming you own at least 50% of the corporation which is required in order to make the transfer. You should also be aware that once transferred to the corporation you can’t get it back as a Sole Owner.

Q:  Our company specializes in network cabling and video surveillance.  We currently have a “C-10” (Electrical) contractor’s license.  We are now being told we also need to have a “C-7” (Low Voltage) classification on our license.  I thought we were permitted to do cabling and video surveillance with our “C-10”.  If we do need to add the Low Voltage classification, will there be additional testing needed?

A:  That is just wrong. The “C-10” classification covers both high and low voltage installations so you are not required to have the additional “C-7”.

Q:  My Partner recently passed away.  I have read that a Partnership license is cancelled upon the death or Disassociation of one of the General Partners.  I plan to apply for a new license but I know that takes some time.  We have quite a bit of work in progress.  Is it possible to request that the CSLB hold off on cancelling the license until we finish the work in progress?

A:  First of all, I’m sorry for your loss.  B&P Code Section 7076 allows for the remaining General Partner or Partners to request a continuance of the license to complete projects in progress and undertake new work for a reasonable amount of time, which will be determined by the CSLB.  This request must be made in writing within 90 days of his death.

Q:  A buddy of mine is in the process of obtaining his license but he hasn’t tested yet so it will be several weeks before he is issued a number.  Is it possible for he and I to form a Joint Venture so that he can use my license in the meantime?

A:  No you can’t.  Unless he is an employee of yours, he cannot work under your license number under any circumstances.  Both Partners which make up a Joint Venture must be licensed and in good standing.

Changing Business Structure, Names & Required Home Improvement Contracts

A new year brings new opportunity. Opportunity often brings changes in life and business. Like a rock thrown in water, change also has a ‘ripple effect’ that might affect your contractor licensing. Sometimes it takes an expert to know how far those changes go in changing the past, present and license futures…

Q:  My partner and I were discussing switching our contracting business from a Corporation to an LLC (Limited Liability Company) and we came across your website.  What are the repercussions (i.e. license number, bond, etc.)?

A:  LLC’s have additional requirements which are not required of Corporations such as a $100,000 LLC/Worker bond and proof of at least $1 million in General Liability insurance.  Bonds are not transferrable from one entity to another.  With regards to the license number, you can transfer the license number from a Corporation to an LLC under certain circumstances. Please call my office to discuss this further.

Q:  What happens to my license if I want to change my business entity from a Sole proprietorship to a Corporation?

A:  You are required to apply for a new license when your business entity changes.  If you own at least 51% of the corporation, you have the choice to transfer your Sole Proprietor number to the Corporation, or you can obtain a new number.  If you transfer the number, please note that you cannot get it back as a Sole Proprietor, it will remain with the Corporation.

Q:  We filed a name change for our Corporation with the CSLB.  We submitted it over a month ago and have been checking every day and haven’t seen the change made yet.  Is there any way you can help?

A: I reviewed the copy of the name change form you sent me and I know what the issue is.  The CSLB cannot process the name change form until you first make the change with the CA Secretary of State.  Since you are a domestic California Corporation, you change your business name with the Secretary of State by filing a Certificate of Amendment of Articles of Incorporation.

Q: We recently met a Contractor who has been licensed for over 30 years.  He says that he never took a test of any kind.  He said back in the early 90’s he and his partner had a license, and his partner passed away so he took over the license. It seems strange to me that the State would give a license to someone just based on the person working in the field!  My brother-in-law is a licensed contractor and he had to take exams even though he’s been in construction his whole life.  Can you explain?

A:  There are a few scenarios in which an individual can request the CSLB toWaive the exams, so he likely fell in to one of the categories to qualify.  For example, if an individual can document they have worked for a licensed contractor in a supervisory capacity for five out of the last seven years. They can apply to replace the Qualifying Individual on the license and request to Waive the exams.

Q:  I hired a contractor to remodel my bathroom.  He stated he does not do written contracts unless someone requests it.  Is that normal?

A:  No, that’s not normal.  In California, a written contract is required for all home improvement projects over $500.00. As in all situations with your money, buyer beware. Find more on consumers and contracting at cslb.ca.gov.

 

Online Renewals, DBA’s, Selling or Installing and Adding Classes to General Building CA Licenses

While you can get many things on the web, some exceptions remain. With economic growth comes new opportunity for contractors. One new venture ‘flushes’ out an answer on the difference between selling and installing as a contractor, another discovers he can ‘do business as’ usual with a small addition to his license…

Q:  I currently have a Contractor’s license for my Corporation.  I want to start another separate company and obtain a second license.  Is it possible to add a “dba” to the existing license, and also use that same ‘doing business as’ name for the new company?

A:  Yes, the CSLB allows multiple companies to use the same “dba” name.

Q:  My license expires soon.  Is there a way to renew the license online?

A:  No, you cannot renew the license online.  You will need to physically send the renewal to the CSLB with the fee for them to process.  If you are in Sacramento, you may also bring it in to the CSLB’s headquarters.

Q:  I’m going to be purchasing a Company which sells countertops and bathroom fixtures.   The company currently has a Contractor’s License.  When I take over, will I be required to get my own Contractor’s license?

A:  If you are only selling the products and not installing anything you are not required to hold a contractor’s license.

Q:  The RME (Responsible Managing Employee) on our license is leaving the company due to us not having much work in California.  If we decide to Inactivate the license, can we go without a Qualifying Individual, or do we need to replace him regardless of the license status?

A: While your license is Inactive, you are not required to have a Qualifying Individual.  You will need to replace the Qualifier if/when you decide to reactivate the license in the future. And, remember you can’t bid any work without an Active CA contractor license.

Q:  I have a “B” General Building license.  I know I can do painting, electrical, and other trades under my license, but I sometimes have customers ask me to just do a paint job or just an electrical job.  I’d like to add these classifications to my license.  How do I go about accomplishing this?

A:  You will need to submit Applications for Additional Classification.  You will need to do one application at a time.  The CSLB requires that you document at least four years of full time work experience in each trade you are applying for.  Both classifications have a Trade exam you are required to take.