By Shauna Krause, President, Capitol Services, Inc.
Big news for NV residential contractors at the end and adding your child to your CA license takes one firm or another. First, being ‘responsible’ to the buyer when you sell a contracting business…
Q: I sold my business and I’m going to become the Responsible Managing Officer (RMO) for the buyer for a period of time. I need to keep my Sole Proprietorship license Active though which I understand requires that I own at least 20% of his Company. The operating agreement his attorney drafted up conflicts with the 20% CSLB requirement so I’m going to have him get that corrected but we also need to draft up my employment agreement which should include my RMO duties. What are the minimum requirements for an RMO?
A: The CSLB requires that the RMO be responsible for exercising supervision and control of the company’s operations. The minimum requirement would be supervising construction duties, checking jobs for proper workmanship, and managing construction activities by making technical and administrative decisions.
Q: Is it possible to add my son to my Sole Owner license? I’ve seen your previous responses in relation to corporations only.
A: You cannot add people to your Sole Owner license. If you want to add your son, you can form a corporation or an LLC, and then if you own at least 51% of the corporation/LLC, you can request the license number to be transferred. From there, you can add as many Officers/Member/Managers as you’d like. For future planning, it is recommended that you take this step in order for another family member or employee to take over the business more seamlessly someday.
Important notice for Nevada residential contractors!
A new law becomes effective October 1, 2023 which will affect all residential contractors. The statute requires all contractors performing residential improvement work comply with one of the following: 1. A down payment or deposit amount cannot exceed $1000 or 10% of the aggregate contract price, whichever is less, of any initial down payment or deposit paid or promised to be paid to the residential contractor by the owner before the start of work, OR, 2. The provisions of item 1 do not apply if the residential contractor has filed a Bond solely for the protection of consumers in the amount of $100,000, or has been granted relief by the Board pursuant to subsection 5 of NRS 624.270.
Regardless of which option you choose, this new law will require that you update existing contracts to ensure compliance. The new language which must be included in all contracts for residential improvement on single-family residences must include can be found herehttp://nscb.nv.gov/residential_improvements.html.
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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.