Foreign Company Licensing, ‘S’ Corps and Contractor Referral Companies

I assist contractors with licensing in CA, NV and AZ, including those with ‘foreign’ accents unfamiliar with the American way. And all it takes to provide contractors help on some questions is a little bit of ‘sole’…

Q:  We are an out-of-country contractor and we have a California ‘B’ (General Building) contractor’s license but we are unfamiliar with all of the rules or limitations the State has in place.  If certain Construction work, such as Roofing, is carried out, is it considered unauthorized and can be punished?

A: Oh yeah.  General Building contractors are required to perform at least two unrelated trades on any given job.  They cannot perform a project involved only one trade such as Roofing as you suggested.  And yes, they can get punished for doing so.  Specialty single-trade work must be performed by the appropriate C-class contractors.

Q:  We recently changed our status from a Sole Proprietorship to a ‘S’-Corp and need to make the necessary changes with the CSLB and other entities.  I was referred to you by my attorney and told that you are able to assist with this process.  My husband was the Sole Proprietor and has the CSLB license. Now, I am the majority shareholder (51%) and he is the minority shareholder (49%).  I’m not sure if the ownership even comes into play but I thought I would mention the change, in case it’s incidental to the process?

A:  Yes, we can help and would be happy to assist you!  With regards to the licensing perspective, the change in ownership will grant you a new license number. In this case your mentioning ‘ownership’ was important. In order to transfer a license number from a Sole Proprietor to a Corporation/LLC, the licensee (Sole Owner), needs to own at least 51% of the new entity.

Contractor’s Note:

While there has always been a marketplace for contractor referral companies, it seems there are now more than ever offering different services.  The CSLB has been addressing emerging issues regarding online marketplace and contractor referral websites. Basically, many referral websites charge a contractor for leads, and they link consumers to the appropriate contractor(s) in their database who match the consumer’s needs.

There is no doubt the contractor performing the home improvement work (over $500) is required to have a Contractor’s License, however there has been a question as to whether the online marketplace or referral website is also required to have a contractor’s license.

While contractor referral services are legal in California, contractors should beware of referral services who offer to solicit or negotiate contracts on behalf of the contractor.  Referral services may act as a facilitator for licensed contractors and provide consumers with contractors’ contact information, however the licensed contractor and consumer should enter into the contractor directlywith one another, and all payment made by the consumer should be made directly to the licensed contractor.