By Shauna Krause, President, Capitol Services, Inc.
Many contractors are taking advantage of California now allowing operations as a Limited Liability Company. However, keeping the license number you had for years might be an issue. But first, another contractor discovers a way to ‘waive’ the exam in qualifying a new corporate license…
Q: We are currently exploring the options to obtain a Class “B” contractor’s license. My father is currently serving as an Officer under a Corporate license (also a “B)” and has been since Jan. 2008. He currently does not have a license himself and is looking at his options to obtain one. Due to his limited English he has struggled with examination itself, and from my own understanding he potentially qualifies for an examination waiver.
Unfortunately that's where my confusion begins. It seems there are a variety of options, particularly replacing and becoming the new Responsible Managing Officer (RMO). But before I go further let me explain our intentions. We intend to incorporate a new business and run a separate company entirely once his license is obtained, as we no longer plan on working with the individuals that are part of the current Corporate contractor’s license, and we are all in agreement to dissolve the current corporation in the future.
So my question is what exactly are our options to make my father the RMO of the new corporation? What is the cost?
A: Since your father has been listed on the current license as an Officer for over five years he can apply to replace the Qualifier and request to waive the exams. I understand that your intentions are to apply for a new corporate license, however in order to waive the exams your father will need to first replace the Qualifier on the existing license. Once he is listed as the RMO, he can then go apply under a separate company as the qualifying individual without needing to take the exams since he will already be considered “Qualified”.
The State fee to replace the Qualifying Individual is $75.00. The State fee for the new corporate license is $480.00 for one classification. If you, or anyone else, needs help with this process just give us a call.
Q: We currently have a corporate contractor’s license that we want to change to a Limited Liability Company (LLC). Are we required to convert the corporation to an LLC with the Secretary of State in order to keep the same contractor’s license number, or can we form a new LLC while keeping the existing corporation in existence? We want to have the license number transferred from the corporation to the LLC, but we want to keep the corporation in existence with the Secretary of State in order to keep selling our product. The corporation will not be doing any installs.
A: The CSLB allows a corporate license number to be reissued to an LLC if the following conditions exist: 1) The corporate license is in good standing immediately before its cancellation in connection with the application for an LLC license; 2) The LLC was formed by a corporation to continue the business of the corporation subsequent to the cancellation of the corporate entity’s license, and; 3) The personnel listed for each entity are the same.
The law does not stipulate that it must be converted, so as long as you meet the three requirements above, you can keep your existing corporation in place to use for other purposes not related to performing construction work and transfer the corporation’s license number to the newly formed LLC.
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., 1225 8th St. Ste. 580, Sacramento, CA 95814. Research past columns at www.cutredtape.com.
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