So—you’ve filled out all of the applications, studied for and passed the CSLB licensing exam, and finally obtained your contractors license in California. But what if something changes down the line? For example, you need a new classification for new work you’ll be doing. Or, you need to change your business entity. One difficult thing about owning and operating a business adapting to changes, and there’s no exceptions for contractors.
In order to make changes to a contractor license in California, there are specific guidelines and criteria that must be followed. This article will guide you through a step by step process of how to make changes to your contractor license.
One common change that contractors make is adding a classification to their license. To do this, they must:
Additionally, they must submit the Application for Additional Classification, along with the required $330 processing fee and file any required contractor license bonds, including bonds specific to the new classification they will be applying for.
Another change that may be necessary is a change in business entity. This could involve changing from a sole owner to a corporation, a sole owner to a partnership, a partnership to a corporation, or other similar changes in business structure.
It is important to note that licenses are associated with a specific business entity and are not transferable to another entity, even if the qualifying individual remains the same.
The CSLB issues licenses to five types of business entities, listed below:
In accordance with these business entities, there are 5 licenses issued:
A sole owner license is issued to a specific individual and cannot be sold or transferred to another individual. The license can be qualified by the Owner or an Responsible Managing Employee (RME).
A partnership license is a contractors license issued to a specific General Partnership or Limited Partnership structure. The license can be qualified by a Qualifying Partner or Responsible Managing Employee (RME). A Qualifying Partner must be a General Partner of the partnership structure. An RME is an employee of the company, and not considered a part of the partnership structure.
General Partnership Licenses
General Partnership license consists of two or more general partners.
Limited Partnership Licenses
Limited Partnership license consists of one or more general partners and one or more limited partners. A limited partner is responsible for a business only in proportion to his or her financial interest, and does not take part in the day-to-day operation of the business.
Corporate licenses are issued to specific corporate registration numbers assigned by the Secretary of State's Office. If there are any changes to the corporate registration number, a new contractor license will be required. It is important to notify the Contractors State License Board (CSLB) of any changes to a license within 90 days of the change, according to Business and Professions Code 7083..
A new license is required whenever the business entity changes (such as sole owner to corporation, sole owner to partnership, partnership to corporation, etc.) or when specific changes occur with the business structure. You will need to submit an Application for Original Contractor License or an Application for Original Contractor License (Exam Waived) in order to apply for a new license. You must pay all fees, post new bond(s), and provide proof of workers' compensation insurance or file a workers' compensation exemption form for the new business.
The Business and Professions Code section 7075.1 (c) provides for the reassignment of a license number under certain conditions.
If one of the following conditions exists and the new entity is being formed to continue the business of the formerly licensed corporation. (You must submit a written request for license reassignment, specifying which condition exists, along with an Original Application for Contractor License and the required fees.)
If there are changes to the business name or address, this must also be reported to the CSLB within 90 days. You must also complete the Application to Change Business Name or Address, which must be completed and signed by an owner, partner, or officer of the corporation.
According to the CSLB,
The CSLB also requires that:
To verify that your application was received and processed, check your license information online or call CSLB at (800) 321-CSLB (2752).
Processing times can vary significantly. You can check the current processing times online. If CSLB is processing name and address changes received after the date you submitted your application, you should check the status of your application by calling CSLB at (800) 321-CSLB (2752).
According to Business and Professions Code section 7083, any changes in personnel listed on a license must be reported within 90 days of the effective date. The specific requirements for personnel changes depend on the type of business entity.
For sole owners, if the owner passes away, the license must be cancelled. If the owner decides to close the business, they have the option to either cancel or deactivate the license. If the business is sold, the new owner must obtain their own license as sole owner license numbers are not transferable. Forms such as the License Cancellation Request Form and the Application to Inactivate Contractor's License can be used in this process.
In the case of a general partnership, the license cannot be altered. Any changes to the partnership structure require the cancellation of the license. General partners cannot be added to an existing partnership license. If a new partnership is formed, a new license is necessary. The California State License Board (CSLB) must be informed of any partner dissolutions within 90 days through the Disassociation Request Application.
For limited partnerships, licenses are specific to partnership structures containing general partners and limited partners. Limited partners can be added or removed from licenses without canceling and reissuing the license, as long as all general partners remain unchanged. The Application to Change Limited Partners of a Partnership is used for this purpose.
When a Responsible Managing Officer (RMO) leaves a company or is replaced, a Disassociation Request Application must be submitted to the CSLB within 90 days of the disassociation date. Failure to provide notice and replace the RMO within this time period can result in the removal or suspension of the license.
Unlike RMOs, corporate officers can be added or removed from a corporate license without affecting the license's status.
Overall, it is important to understand the guidelines and criteria for making changes to a contractor license in California, as proper notification and application submission is necessary. If there are any questions or concerns regarding licensing, contacting the Contractors State License Board at (800) 321-2752 is recommended.
