Having assisted contractors for many years I have found friends who return time and time again. Others might need a little ‘conversion’. Another contractor learns ‘timing’ is everything in comedy and contracting. I’m proud to help and offer every contractor an open door!

Q: I spoke to you earlier this year regarding the purchase of an existing contracting business. We had discussed forming a new Limited Liability Company (LLC) to buy the assets of the existing corporation and we went through the process of submitting a license application for the new LLC and such. We’ve changed course a bit and this will now be a conversion. So, we will be purchasing the stock of the corporation and then converting to an LLC. Given there isn’t a new LLC being created which we can start a license application for, does the CSLB give us some sort of grace period after the conversion is completed to transfer the license number? Is there a special application for a conversion situation such as this

A: There is no “special” application for a conversion, however I of course have a suggestion on how to handle this situation. First, the CSLB gives you 60 days from the time they discover the entity has converted to complete the process of obtaining a new license or transferring the corporate number to the LLC. To have the best chance of meeting the 60-day deadline, I suggest submitting an application immediately in the name of the resulting LLC entity ahead of time, even before the conversion has officially been filed with the Secretary of State. With the CSLB’s backlog, most likely by the time they get to your application for review, the conversion will have been done. Second, being that new bonds and insurance will be required and possibly fingerprinting, getting a head start on the license application is definitely a good idea.

Q: I have a Sole Proprietorship license currently and I have a company I’ve done work for as a subcontractor asking to use me as an Responsible Managing Employee (RME) so they can obtain a license for one of their sister companies who is not currently licensed. What are the responsibilities of an RME and what are the risks of loaning my license out?

A: No joke, an RME is required to work at least 32 hours per week or 80% of the Company’s operating time. He/she is responsible for exercising supervision and control of the Company’s construction operations. You are not really “loaning” your license out; your license can remain in place on Inactive status, during the time you are acting as RME for the Company license. 

Q: My uncle has a Sole Owner license, and he wants to help me eventually get my own license. He is moving out of California and wants me to take over his business, but he will still be “around” for consulting and such. He suggested that we add me to his license so that I can use it until I’m fully qualified and ready to get my own license. Is that the correct procedure?

A: Sole Proprietors cannot add people to their license, nor can you “use” his license. What the two of you may want to consider doing is forming an LLC or a Corporation, or even a Partnership where you both can be listed on the license with him acting as the qualifying individual. You can work under the company license and eventually take it over when you are ready. If you go this route and want to operate as such for at least five years, you can then apply to become the qualifier and ask to waive the exams.

Q: My Dad passed away about two years ago. My Mom received his renewal application in the snailmail and we realized his license is still Active which brought us to wonder whether I can take over the license. It is an older low number. I worked for him for many years prior to his passing and I’ve been working in the construction industry my whole life.

A: Unfortunately, it sounds like you waited too long. To request the Sole Owner license number be transferred, you would have had to ask for it within 90 days of your Dad’s passing away. I’m sorry for your loss, call if I can assist you in getting your own license.

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 [email protected].

By Shauna Krause, President, Capitol Services, Inc.- www.cutredtape.com