Capitol Connection Q&A for Contractors - Week of 7/8/2024

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By Shauna Krause, President, Capitol Services, Inc.

Sometimes knowing what course to take can be ‘taxing’ but I am the ‘north star’ for contractors in plotting the best route. Other times it’s just how to decide which ‘fork’ in the road is going to get you there… 

Q: I spoke with you last week about purchasing a contracting company. At the time, we were planning to do an Asset sale and you went over the licensing implications which requires that we apply for a new contractor’s license. We are considering doing a Stock purchase instead of the Asset purchase. The company we are acquiring is an S-Corp. Upon acquisition they will do an ‘F’ reorganization and become a C-Corp. I heard that this may impact the company’s contractor’s license as well. Is this true?

A: Changing from an S-Corp to a C-Corp does not have an impact on the contractor’s license because it does not require that you re-register as a new entity with the CA Secretary of State. Changing from S to C-Corp is a tax status election made with the IRS. You should also notify the CA Franchise Tax Board of the change in status.

The only way a reorg or restructuring impacts the contractor’s license is if the CA Secretary of State registration number changes, as in, if the result requires that you file as a new corporation with the SOS.  

It’s always a good idea to consult with a tax professional or attorney to ensure you follow all the procedures and filings properly!

Q: I am interested in obtaining my own “C-20” (HVAC) contractor’s license. I have worked for a company that is licensed with a General Building (“B”) license, but I’ve been on the company’s HVAC team when we do building projects. I’ve been told that it’s difficult to qualify for a “C-20” license unless you’ve specifically worked for a HVAC contractor. Is that true?

A: When reviewing new license applications, the CSLB will look up the contractor’s license of the company where the applicant gained their experience. An applicant certainly will be more likely to be approved if the company holds the same classification of license that the applicant is applying for. However, as long as the classifications are closely related it likely will not be an issue. “B” contractors are permitted to do HVAC work as part of their building projects and if you were the one performing and supervising that specific work, you should be fine. 

Where it would not be such an easy task is if you were applying for an “A”(General Engineering) license for example, while showing your work experience from a”B” (General Building) contractor. When the classifications aren’t closely related is when the CSLB starts to ask questions.


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, or write us at Capitol Services, Inc., 3609 Bradshaw Rd, Ste H, #343, Sacramento, CA 95827. Search past columns at