Capitol Connection Q&A for Contractors - Week of June 20, 2022

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By Shauna Krause, President, Capitol Services, Inc. 

You must keep your ‘eyes on’ the work, but where you go home isn’t an issue. A corporate contractor learns you really can’t ‘go back to the future’ and the expert answer on the sometimes surprising ‘gray ‘areas in contractor regulations…  


Q: Does our Qualifying Party need to reside in California? I’m just wondering how strict the state law is about the Responsible Managing Employee (RME)/Responsible Managing Officer (RMO) being on-site. I’m assuming he will need to initially come to CA in-order-to obtain the license, correct?  


A: No, your qualifying party does not need to reside in California. The RME/RMO needs to be actively involved in overseeing the work being performed, but the CSLB does not have particular guidelines for what exactly that entails.   


Your RMO/RME will need to come to California to take the exams, and now that the exams are being administered by PSI, your Qualifier will be able to schedule their own exam, choose a location, etc. The only negative aspect to the change to PSI that we’ve noticed so far is now the Trade exam and the Law exam must be taken on separate days. You can no longer do them on the same day, one right after the other.   


Q: We have a corporate contractor’s license in CA but we haven’t done any business there for quite some time. I don’t want to let the license go completely, in-case we start working there again in the future, but I would like to avoid paying State taxes while we aren’t doing any business there. The CA Secretary of State told me I would need to cancel the Corporation in order to not be charged corporate taxes. Can I dissolve the Corporation and then keep the contractor’s license on an Inactive status to be able to activate it in the future?  


A: Once you cancel or dissolve your corporation at the Secretary of State level, your contractor’s license will be cancelled eventually as well because the corporation no longer exists. You would be required to re-apply for a new license in the future when you are ready to start working here again.  


Q: I am going to be applying for a new Contractor’s License for my Corporation. I have a “B” (General Building) license. I am contemplating bringing on a Business Partner who holds a “C-10” (Electrical) and an “A”(General Engineering) license for his own corporation which he still needs to maintain. With regards to the 20% ownership requirement for him to be able to maintain both licenses, what form of “proof” does the CSLB require? Is there a code section which describes exactly what the 20% ownership means? For example, 20% of the Company’s profits, or 20% of the Qualifying Party’s electrical/engineering work, etc.?  


A: The “proof” required by the CSLB is strictly a question on the license which asks what percentage of the business the Qualifier owns. In order to hold more than one Active license at the same time, the Qualifying party must fill in an amount of at least twenty percent. That is then signed under penalty of perjury. There is no code section which addresses exactly how the CSLB interprets “20% ownership of the business”. 



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