By Shauna Krause, President, Capitol Services, Inc.
While written or read online the rules and how to interpret them is another story! Because, as our Nevada question illustrates, there is money at stake for a contractor in ‘miscalculation’. Another contractor showcases why you don’t ‘broker’ it unless it’s fixed? …
Q: Our company has been licensed in California for many years and we have jobs we’ve been invited to do in Nevada. We started the application process months ago, but because the NSCB requires a financial statement, our application has been on hold here waiting for our CPA to finish the audit for 2023. The jobs that we are looking at are over $250k so the audited financial statement is required. We are looking at requesting a bid limit of $500,000. Will the NSCB accept our application without the financial statement? It should be done mid-July.
A: It’s risky sending the application in without the financial statement because if the NSCB gets to it for review and the financial statement isn’t there and then they reject it, they will give you a deadline to provide the financial statement. If it’s not provided in time, the application gets kicked out and you lose your $300. I would suggest waiting until you have a completed application.
However! Nevada very recently updated the monetary limit amounts in relation to what type of financial statement is required. Previously, any monetary limit above $250,000 required a reviewed or audited statement, but now for limits of $250,000 - $500,000 you can provide a compiled financial statement prepared by a CPA dated within the last six months. For limits of $500,000 - $1 million, the compiled statement would need to have full disclosures. Only limits of $1 million or more require the reviewed or audited statement.
Compiled statements are much easier to prepare so contact your CPA and he/she may be able to provide it much sooner. Good luck!
Q: I am selling my contracting business which is licensed as a corporation. The buyer is planning to form a Limited Liability Company (LLC) to buy the business. We are working with a Business Broker who has told us that the license “transfer” process is as simple as changing the name with the CSLB, however when I called the CSLB, they said that we cannot just do a name change when the Company is changing from a Corp to an LLC. The CSLB also explained that the license is only “transferrable” under certain circumstances. When I relayed all of this to the Broker, he said the CSLB’s explanation didn’t sound right, they are making it too difficult, and changing the name should be satisfactory. That’s when I knew we needed to get you involved! How do we proceed?
A: The CSLB is correct. The Corporate license will either need to be re-issued to the LLC (if the situation meets the requirements) or the LLC will need to obtain a new license. A name change is not satisfactory! The buyer will need to have the LLC registered with the Secretary of State, obtain new bonds for the LLC, and provide proof of insurance. And of course, as always, we can help with the process so feel free to give me a call, or have the buyer call, to discuss!
***
While knowledge is power, knowing where to go for the answers is half the battle. Get expert assistance immediately when you call 866-443-0657, email info@cutredtape.com, or write us at Capitol Services, Inc., 3609 Bradshaw Rd, Ste H, #343, Sacramento, CA 95827. Search past columns at www.cutredtape.com