Kalb's Q&A for Contractors - Week of October 10, 2011

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By David Kalb, President of Capitol Services, Inc.
Like the State goals in procurement for our disabled veterans, some entrepreneurs are seeking special status to bid those contracts dedicated to other groups. Some innovators are looking to build their profits by adding new classifications to exapand their bid opportunities. They are using their years of experience as ‘concrete’ proof of their capabilities. Very soon, I expect a rush of new opportunities to grow from a change in contractor’s licensing law that has been years in the making. If you haven’t heard, LLC’s are coming…
Q: My husband has been a licensed contractor for almost 30 yrs. I just recently passed the California State exam to get my license.  We now want to form a company showing us as a "woman-owned" business to qualify for opportunities with the Federal Government, but would like to keep his license number to show the many years of experience.  What are the proper steps to take in order to accomplish this task?
A:  Having passed the license exam is a good start since this is virtually required to secure "woman-owned,” or Women Business Enterprise (WBE) status.
If your husband has a Sole Owner license, it can only be transferred to a new corporation if he owns 51% or more of the stock or equity. Unfortunately this would likely exclude you from declaring ownership as a "woman-owned" business because you’re required to own at least the same percentage of the corporation.
If your husband has a corporate license, you can replace him as the Responsible Managing Officer (RMO); however, there may be a problem with taking over an existing license of 30 years and suddenly declaring it to be "woman-owned".
I would recommend starting your own business with you as the only Officer and Qualifier as well as 100% owner.  This is probably your best chance of securing the WBE designation.  You’ll need to file an Original Contractors License – 7065 Waiver Application complete with a $12,500 Bond and proof of Worker’s Compensation coverage (or Exemption if you have no employees).  The State fee for a single classification is $480.00.  I hope this information helps.
Q: Hello Mr. Kalb.  I’ve been reading your columns for years but until now did not have a reason to write.  In this economy I have found it necessary to expand so I applied for an additional “A” license.  I presently have a “C-8” (Concrete) but the Board is investigating my application saying my work experience was too close to the “C-8” and not close enough to the General Engineering classification.  I believe I have the required qualifications and even passed the “A” test.  Could you take a look at my application and let me know what you think?
A: After reviewing your application it appears you’re in a gray area.  While you have experience in certain aspects of the “A”, much of this is, as you stated concrete related.  This being said, I see where you have done culverts, sidewalks, curb/gutters, site work and asphalt paving.  It also appears you have constructed underground utility vaults and portions of sanitation projects.   Based on everything we discussed as well as my review, I believe you meet the qualifications under B&P Code Section 7056.  Therefore, I think the case can be made that the Board should allow you to add the “A” classification.
It’s expected the Contractor’s Board will begin granting LLC licenses around January 1, 2012.  It also appears the CSLB will consider allowing a corporation to transfer its existing corporate license to the new LLC entity.  However, there are a few restrictions so not every company will be able to take advantage of this provision.  Any reader interested in receiving a periodic LLC update, should contact my office by phone, fax or email.
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 me at Capitol Services, Inc., 1225 8th St. Ste. 580, Sacramento, CA 95814. Research past columns at www.cutredtape.com.