Solar, Sole Owner and License Numbers on Vehicles

A little bit of ‘sole’ searching for a contractor whose business is booming! More advice for a contractor that should ‘register’ for many of you and we bring ‘light’ to the darkness that ‘eclipses’ some incorrect advice…

Q:  I have a license as a Sole Proprietorship.  I’ve never had an employee so I have “Exemption from Worker’s Comp” on file with the CSLB.  My business has really picked up and I’m going to need to hire one or two people to work for me.  Once I hire people, how do I go about notifying the CSLB?  Any information you can give me to provide to the insurance company would be helpful.

A:  Once you have an insurance policy and employees, you have 90 days to notify the CSLB.  The certificate must be written by an insurance company licensed through the CA Department of Insurance.  It must list the CSLB as the Certificate Holder.  You are required to have your exact business name as the “insured” and your license number must be listed on it.   

Q:  I recently had a customer ask why I didn’t have my license number on my truck.  It is my personal truck that I also use for business.  Am I required to have my license number on it?

A:  B&P Code section 7029.6 states that a licensed contractor with a vehicle used for his or her construction business, for which a commercial vehicleregistrationfee has been paid should have his or her business name and contractor’s license number in a  clearly visible location on the vehicle, in print type of at least 72-point font or three-quarters of an inch in height and width. 

Q:  I’m going to obtain a “C-10” (Electrical) license to do Solar work.  My friend who has his own Electrical license told me I couldn’t use the word “Solar” in my business name. Apparently, he tried to use Solar in his name a couple years ago and the CSLB denied him and had him change his business name.  Is this still true?  It seems strange that the CSLB allows “C-10” contractors to do Solar work, but then they don’t allow you to use that word in your business name?

A:  That is partially correct.  In order to use the word “Solar” in your business name if you are not a “C-46” Solar contractor, you must also use trade/classification “identifiers”, so a word that is directly associated with the classification you hold.  So, in your case, you could use “ABC Electrical Solar”, or “ABC Solar Electrical”. That should light up your life! 

Death & Waivers, RMO Ownership, Corporation to LLC Licensing and Work Comp Insurance Transfers

We take ‘exemption’ with our first contractor, outline RMO ‘ownership’ and help another family concerned with losing the business after unexpected loss…

Q:  As you know, you are helping me with obtaining a new Limited Liability Company (LLC) Contractor’s license in order to replace my existing Corporate license.  Currently, while in the application process, we only have one Member and several Officers, but no employees.  Can we file the Exemption from Worker’s Comp for the time being, and once the license is issued, have our Corporate insurance policy immediately transferred to the LLC?    

A:  As long as you currently have no California employees, you can file the Exemption from Worker’s Comp.  Once the license is issued, you can request that your insurance company transfer your policy to the new LLC, and you should notify the CSLB as soon as possible of the new insurance certificate.  The “insured” on the certificate should list your new LLC business name, and the Certificate holder should list the CSLB.

Q:  I’ve been reading your column/blog on your website, and it’s very helpful!  However, I’m confused about the ownership requirements for RMO’s.  I’m going to be buying a Contracting business where the seller will remain on the license as an RMO.  Is he required to have a certain percentage of ownership?  I’ve seen where you have implied that ownership is not a requirement, but also lots of mention of 20% of the shares of the corporation.

A:  RMO’s are not required to have any ownership.  The CSLB concerns themselves with an RMO’s ownership only with regards to: 1) whether a $12,500 Bond of Qualified Individual will be required, and 2) whether the RMO intends to act as the Qualifying Individual on more than one license at the same time.  If the RMO owns less than 10% of the company, a Bond of Qualified Individual is required.  If the RMO owns less than 20% of the company, they are only allowed to qualify one license at a time (except under rare occasions).

Q:  My brother passed away recently unexpectedly.  He has a Contractor’s license and I’ve worked for him for over 20 years.  I started out pushing a broom, and I’ve moved up the “ladder” and held several other positions from laborer to now senior estimator.  My Brother’s wife (my Sister-in-Law) wants nothing to do with the business, but the company has over 30 employees, and hundreds of thousands of dollars in contracts out there.  What are my options for taking over the business and ensuring the license doesn’t get cancelled, which would put all of us out of work?

A:  First of all, sorry to hear about your loss.  I looked up the license and it’s a corporation, so you have 90 days (from the date of his passing) to replace your brother as the qualifying individual.  If you’ve worked for the company for over five years in a supervisory capacity, you can request to waive the exams.  Please contact our office to discuss the process further and we would be happy to assist you. 

Signing Authority and Handywork Experience Credits

Sorry to say, but sometimes the ‘parts’ don’t add up to the whole ‘experience’. Confused? No wonder its contractor license regulation we are talking about…

Q:  I would like to explain what my company does and see if you have any advice or an opinion.  I own a business that contracts with vacation home owners to come in after their rentals check out to inspect the place for any damage.  Usually these owners live out of town and their occupants “rent” the property for an extended period of time.  We will come in clean and make any minor repairs.  Some examples are repairing a hole in the wall, minor drywall and paint touch ups, we’ve done door replacements, minor plumbing (such as leaks in the sink), snow shoveling, minor tile repair, etc.  A large majority of what we do does not require a Contractor’s license, or the repairs fall under the $500 rule.  In the instances where we have been asked to perform work that would require a Contractor’s license, we have a circle of contractors that we refer to our clients and they work directly with them.  However, as this is coming up more often, I’m thinking my company should obtain a Contractor’s license so we can take on this work ourselves.  Based on what I’ve described (I’ve done all of this repair work for over 5 years), would I qualify for a Contractor’s license?

A:  As you may know, there are many types of licenses in CA, from General Building, to specialized classifications such as drywall.  In order to qualify for any license, you must document at least four years of full-time work experience in that particular trade. Since you are doing a variety of trades depending on the specific need, you would have a hard time showing four years of full-time experience in any one trade.   

Q:  I’m really confused about an application we have pending with the CSLB.  We are a sole member managed Limited Liability Company (LLC).  Our only Member is a Corporation. The CSLB sent us a form to complete called “Designated Signatory” form.  The form came with a letter stating an individual needed to sign on behalf of our Sole Member (the Corporation).  Does it matter what title this person should hold?  And will this individual have to do fingerprinting and the background check?

A:  The Designated Signatory can be any official Officer or Director of the corporation (Sole Member) that you intend on designating “signing authority” for the license.  The individual you designate does not need to be fingerprinted and go through a background check.  Only the individuals who are direct personnel of the applying entity (the LLC) need to be fingerprinted.

Partnership to LLC, Sole Proprietor or LLC, Criminal History, Experience Credit and Good Standing in NV

We bust a ‘move’ for our first contractor! Share an LLC fact to ‘re-member’ and end up in ‘good standing’ for a NV contractor but it won’t be without a cost…

Q:  I’m going to form a new Limited Liability Company (LLC) in California to obtain a Contractor’s license.  I haven’t moved there yet.  Does the LLC need to have a CA address?

A:  No, the LLC itself is not required to have a CA address.  LLC’s and corporations are required to have a Registered Agent with a California address. The purpose of the Agent is to accept court documents on your behalf if the LLC is ever served.

Q: I haven’t decided whether I want to get my license as a Sole Proprietor, or an LLC. Either way, it will just be me on the license.  Are LLC’s required to have more than one member or manager?

A:  No, LLC’s can be made up of a single Member, or they have can multiple Members or Managers.

Q:  When registering my Nevada corporation with the California Secretary of State, they are asking me to attach a Certificate of Good Standing from my Home State.  I logged in to my NV Secretary of State account, and that document is not part of our initial registration.  Do you know how I go about getting the Good Standing?

A:  The Good Standing certificate is something that you have to order and pay a fee for. You can request it on their website under “Online Services”.

Q:  Does my Certification of Work Experience page need to be completed by my direct Supervisor or can it be filled out by a co-worker?

A:  The Certification of Work Experience page needs to be completed by anyone who has first-hand knowledgeof your work background.

Q:  Over the course of my life, I have been arrested seven times.  However, only three of the incidents resulted in convictions. Should I attach an explanation of all seven arrests with my Contractor’s License application, or only those three that turned in to convictions?

A:  We always recommend that you include any and all arrests, regardless of the outcome. Better to disclose them than have a “falsified” application and have it rejected!

Q:  We are going to be shutting down our Partnership license and obtaining a new license for an LLC.  We are going to transfer our RME from the Partnership license to the new LLC license. It is my understanding that an RME can only be on one license at a time, which means we will need to disassociate him from the Partnership license.  Will the license be immediately revoked once we notify the CSLB of his Disassociation?

A:  No. The license will have 90 days to replace the Qualifying Individual.  If the Qualifier is not replaced within 90 days, the license will go “suspended” not “revoked”.  I may also be able to assist in keeping it from showing “suspended” should you need that help. 

Citation Suspension, Contractor Liability, Self-Employed Experience Credit and RME

Any test taken is always a bet you hope to win. Sometimes passing it is the only way to ‘win, place or show’ as our first contractor discovers. There are times when the label placed on something is almost ‘self-explanatory’, but not always as we learn in a ‘liability’ question followed by another on restoring a revoked license…

Q:  We have an employee who has many years of experience doing all aspects of General Building work.  We want him to be our Responsible Managing Employee (RME) for a new license, but he is not a “book” guy and is nervous about the exams, particularly the “law’ exam.  What is the purpose of the law exam, what does it consist of, and is it possible to have someone in the office take that portion of the exam?

A:  The main purpose is for the applicant to demonstrate they know how to run a contracting business.  It consists of questions related to this knowledge such as business finances, business organization, bonds, insurance, contracts, licensing, safety, and public works.  The same individual who is qualifying the trade portion of the license isrequiredto take the law portion of the exam.

Q:  I’ve been self-employed and doing construction work for family, friends, neighbors, etc. for over five years now.  I’m ready to get my own license so I can start advertising for the services I provide.  How will the CSLB verify my experience?  I read on your website that it’s difficult to qualify with self-employed experience.  I take pictures of all my work and can get my customers to sign statements.

A:  You are correct in believing that qualifying for a Contractor’s License is difficult with self-employed experience. That work can be difficult for the CSLB to assess.  They absolutely will not consider photos as valid proof of your work background.  You would need to provide some type of verifiable evidence that the work was done to code.  Permits you pulled, contracts, invoices, etc.    

Q:  I have a “B” license and I typically do small/average home improvement jobs.  I have been asked to do a fairly large remodel job and the customer is asking that I obtain General Liability coverage.  I am bonded and I don’t have any employees, although I do use subcontractors.  Is it required that I carry liability insurance?

A:  While it is a requirement, by law, for a home improvement contractor to notify the homeowner whether or not they carry General Liability coverage, it is not a requirement for contractors to have liability insurance.  Notifying the homeowner must be done in writing, and the information must accompany the bid.  The CSLB stronglyrecommends that contractors carry liability insurance. Without it you have everything to lose should something go very wrong. 

Q:  My license was revoked due to some citations I received last year.  How long do I have to wait before I can re-apply for a Contractor’s License?

A:  There is no specific time limit.  You will need to provide documentation demonstrating that all loss that resulted in the revocation have been fully satisfied and you have complied with all terms and conditions imposed by the revocation before you can apply for a new license.

RME, Corporate to LLC, Address of Record and Original License Waiver

How to change ‘horses’ in midstream and end up on the same ride. Ditto, this ‘inactive’ answer and a couple more complex contractor issues with expert assistance in discovering where ‘truth’ lies…

Q:  You were originally helping us with transferring one of our Officer’s Sole Owner license number to our newly formed Corporation.  The transaction would have involved issuing 51% ownership to the Qualifying Officer in order to retain his Sole Owner license number.  However, we are changing for the option to issue each of the three Officers 33% interest in the company.  Is the paperwork you sent us still the same, or does it require new/different paperwork?

A:  The paperwork would remain the same.  Either way it’s Original Contractor’s License (Examination Waiver) application.

Q:  We have an employee with an Inactive contractor license and we would like to utilize his qualification to be the RME (Responsible Managing Employee) on our license.  Would he be required to re-activate his license prior to applying for the company license?  We just don’t want to pay the additional fees if it’s not necessary.

A:  No, that is not required.  In fact, RME’s are only allowed to Qualify one Active license at a time, so even if you re-activated it, he would be required to Inactivate it again to be added to the company license.

Q: I was wondering if it is possible to move our current license number to a different company, the new one is an LLC. We want to close down the Corporation, but at the same time, we don’t want to lose our low license number.  Is this possible?

A: Thank you for contacting Capitol Services.  A corporation can transfer its license number to a newly formed LLC undercertaincircumstances:  1)  The existing Corporate license is in good standing immediately before it’s cancellation in connection with the new LLC; 2)  The LLC was formed by a Corporation to continue the business of the corporation; and3) The personnel listed for each entity are the same.

If you don’t meet all of these requirements, then the LLC will be issued a new license number.  

Q:  Our license is set to expire at the end of May.  I am trying to be proactive because we have had some issues in the past with getting it on time, but the license still going suspended for a period of time because of the CSLB’s processing time.  Do you have any suggestions?

A: First, I would make sure the address the CSLB has on record is current.  You can look up your license online to verify.  The CSLB will send you the renewal notice to the address of record about 60 days priorto your expiration.  Truthfully, they take several weeks to process them once you submit, so you’ll want to keep that in mind and get it submitted well before the expiration date. Be sure that you have all the correct signatures and fees to avoid rejection.  Let me know if we can be of any assistance here in Sacramento.