How To Become a Contractor
1. Determine the type of license you require.
Make sure you're applying for the correct license before you submit your application. In California, contractor licenses come in three different main categories. Which license you require depends on the type of work you undertake.
License for Class A General Engineering Contractor
Any contractor "whose major contracting activity is in connection with fixed works requiring specialized technical knowledge and competence" must hold a Class A General Engineering License, according to the CSLB. This comprises paving, cement and concrete work, earthmoving, excavation, trenching, and land leveling.
Overpasses, underpasses, bridges, airports, power plants, pipelines, railroads, and highways are examples of projects that often need Class A permits.
These are substantial initiatives resembling public works. These initiatives will gain traction under one or more engineering licenses, typically held by a large engineering or construction firm.
General Building Contractor Class B Licence
The CSLB requires a Class B General Building License for any contractor "whose principal contracting business is in connection with any structure built, being built, or to be built, for the support, shelter, and enclosure of persons, animals, chattels, or movable property of any kind, requiring in its construction the use of at least two unrelated building trades or crafts, or to do or superintendent the whole or any part thereof."
The short version is that general contractors in California must hold a Class B license. A Class B license is required if you are accepting prime contracts and submitting bids for them. General has a Class B license.
Contractors can take the framing contract on a project, but the project must also contain two unrelated trades as well.
Class C Speciality Contractor License
Contractors with a Class C Specialty Contractor License are required by the CSLB if they specialize in a particular trade. Electrical, plumbing, and HVAC subcontractors, to mention a few, are covered by this license.
Over 40 different categories of Class C licenses are designated by CSLB. They consist of:
C-5 Framing and Rough Carpentry C-9 Drywall C-10 Electrical C-10 Electrical Electrical C-27 Landscaping C-29 Masonry C-33 Painting and Decorating C-36 Plumbing
If you accept a prime contract for a project that does not involve the use of two or more unrelated professions, you can get by with a Class C license as long as you have the appropriate license.
Become familiar with the CSLB and its operation.
2. Fulfill the minimal conditions for license
California has fairly simple criteria for general licensing. In order to obtain a license in California, you need to:
18 years of age or older
possess the expertise and abilities required to oversee the day-to-day operations of a construction company, including field supervision (or have representation with the necessary skills and experience to serve as your qualifying individual)
possess four years of proven experience in the position you're seeking for, whether it be as a journey person, foreman, supervisor, or contractor.
Establish a $15,000 bond to shield customers from subpar workmanship and employees from unpaid work. If a qualified person is being used, their bond amount is limited to $12,500.
All contractors in California are required to have a license. bond. Two more bonds might be needed:
If the qualifying individual owns less than 10% of the shares OR is a responsible management member, manager, or owner, a bond of qualifying individual is required.
When the business entity is authorized as an LLC, an employee/worker bond
Contractor License Bonds: All the Information You Need
There aren't any further money needs. This is done to safeguard customers from contractors who try to avoid detection by claiming they don't make enough money to warrant a license.
Contractor training and credits
Other than what is needed to reach the journey level in your trade, there are no further educational requirements.
However, the CSLB may grant credit for up to three years of vocational training in the form of work experience.
Find a community college with a building program near you
Consult the California Bureau for Private Post-Secondary Education to learn more about private institutions (BPPE). Look for accredited institutions.
Find information about licenses in the surrounding states
Arizona contractor licensing
Nevada contractor licensing
3. Complete the application for a license.
Identifying your eligibility is the first step in obtaining a license in California. If you don't meet the conditions before applying, you risk losing the $450 non-refundable application fee.
If you are eligible for license, you must obtain a paper application, complete an Easy-Fill or PDF application, or both.
The following details are needed for the application:
Complete company name
Information about an address, such as: Public mailing address
Physical place
numbers
Inbox address
Requested license type or class
Type of business entity, including
Surety bond for $100,000
liability insurance policy for $1,000,000
Information that can be used to identify any officer, accountable management, member, or director of the corporation (requires active California Secretary of State registration number)
Identification details for the Qualifying Person, such as name, address, birthdate, social security number, and license number
Numbers of current or prior CSLB licenses
The proportion of the company that the Qualified Person owns
Identifying data for employees, such as:
: Paraphrase:
birth dates
Personal identification numbers
Addresses
Numbers on driver's licenses
Position or title
Private telephone numbers
cheval
Send the application, along with the required payment, to:
CSLB's main office
Builders State License
Business fax and phone
Board
P.O. Box 26000
95826-0026 Sacramento, California
You'll get a fingerprinting package after the CSLB approves your application. The exam notice should arrive in three weeks, so handle it right away. Additional costs will be incurred if the exam needs to be rescheduled.
4. Conduct a background investigation
You will be required to submit fingerprints as part of the criminal background check when the CSLB accepts your application. The CSLB will get in touch with you to let you know how to take care of these issues, where to go, and how much it will cost in the end.
After fingerprinting, you can be asked to confirm your employment history as part of a random selection procedure. For this stage, you can work with an employer, a general contractor, a foreman or supervisor, and another journeyman.
They'll need to confirm that you have the background needed to manage a construction company.
Exclusions based on criminal history
You can still be eligible for a license even if you have a criminal conviction on your record. Any conviction that has a significant relationship to the obligations, capabilities, or qualifications of a contractor may result in the CSLB refusing to provide a license.
Having said that, the board might grant you a license if you've demonstrated enough rehabilitation.
You can book your CSLB exam once your qualifications, fingerprints, and verification have been confirmed.
5. Pass the California contractor licensing test
In addition to meeting the fundamental education and experience prerequisites, California contractors must also pass a licensure test. After the CSLB approves your application, you must register for an exam.
a location from the list below:
Fresno
Norwalk
Oakland
Oxnard\sSacramento
SABERNON, Calif.
San Jose and San Diego
Regardless of your license, you must pass a Law and Business part to demonstrate that you are knowledgeable about the rules and legislation that apply to construction. Actual trade knowledge will be tested in the second half of the exam (or trades, in the Class B case).
An additional trade-centric part can be necessary depending on the license type. This section will confirm that the applicant is knowledgeable about the standards, recommendations, and procedures applicable to the particular field of employment for which they have applied.
6. Submit insurance and bonding paperwork
You'll have to complete further paperwork if you pass the test. You have to present proof of your worker's compensation insurance, a bond, and liability coverage. An initial licensing fee is furthermore required of you.
Who in California requires a contractor's license?
If you're wondering whether you need a license in California, the likelihood is that you do.
A license is often required for the construction or modification of any of the following if the total cost (labor and materials included) exceeds $500.
building a parking garage on the road
combined with excavation
any other building worker's compensation insurance, a bond, and liability coverage. An initial licensing fee is furthermore required of you.
Who in California requires a contractor's license?
If you're wondering whether you need a license in California, the likelihood is that you do.
A license is often required for the construction or modification of any of the following if the total cost (labor and materials included) exceeds $500.
building a parking garage on the road
combined with excavation
any other building
The following rule states that before submitting bids, subcontractors and specialist contractors involved in house improvement must hold a contractor's license.
In essence, these rules apply to all contractors. Therefore, a license is required if you work as a general contractor. When you're
The following rule states that before submitting bids, subcontractors and specialist contractors involved in house improvement must hold a contractor's license.
In essence, these rules apply to all contractors. Therefore, a license is required if you work as a general contractor. When you’re a painter you need a license. Obtain a license if your company does siding and window installations. The CSLB is often fairly strict in this regard. The following are the exceptions:
Exceptions
A handyman service is not required to have a license if the total cost of the jobs they accomplish is less than $500 (including material costs). To get around this regulation, they cannot divide a huge job into multiple $500 jobs.
The CSLB presents this example: Suppose you are remodeling the kitchen for a total cost of $6,000. The flooring project, which costs only $300, is sublet. Given that the project's total cost exceeded $500, the flooring worker is not exempt from licensing requirements.
Also, owner-builders – individuals building a facility on their own property — do not need a permit. Operators of security alarm companies, satellite installers, or any craftsperson selling or installing finished goods that do not become a part of the structure are all exempt from this rule.
As you can see, it's much simpler to list the professions and businesses in California that don't require a license than the reverse. The CSLB is very explicit on this subject. In California, there is a good probability that you will need to go through the contractor licensing process if you are working on projects that cost more than $500.
Why California requires a contractor's license
A general contractor license and any other licenses a subcontractor might need to have could seem like overkill. But it isn't the case at all. There are numerous genuine reasons why possessing a contractor license in California is vital for your business and the state's interest.
A California contractor's license enhances your credibility.
You must project a professional image if you want to be hired for high-paying positions. Giving your clients your license ID number gives them some assurance.
Simply put, having a license helps your business.
A license proves your competency.
Fly-by-night contractors are not permitted to work in building, whether it is for commercial or residential purposes. The state certifies your expertise by requiring you to pass the license exam.
It makes sure you are bonded and insured.
The government must also make sure that contractors have the appropriate insurance and bonding for whatever they are working on. The best method to do it is to make obtaining a license contingent upon proof of certain compliances.
Law requires it.
Most significantly, it is legally required in California to possess a general contractor license or another sort of contractor license.
In fact, the state mandates that all general contractors, subcontractors, and specialized contractors working on residential projects possess a license before ever submitting a bid. Unlicensed contractors may not have mechanics lien rights in addition to fines and other penalties (which we'll discuss later in the post).
How much does a contractor's license in California cost?
At a minimum, the entire fee for a California contractor's license is $699. That excludes any additional costs for further fingerprints or rescheduling a test.
The cost of the licensing application is $450.
The license itself costs $200 and is good for two years.
To make sure that the information about your criminal history is accurate, fingerprints must be taken. Typically, fingerprinting costs $49 per person. There may be charges for additional fingerprint rolling.
There is a $60 cost if you need to reschedule your exam for any reason.
Fees for renewal
After receiving your license, you must keep it current with the CSLB. Every two years, active licenses expire, and every four years, inactive licenses do too. A renewal application will be sent to you by the CSLB around 60 days before your license is set to expire. It must be filled out and sent together with the renewal cost.
Time is with your renewal, everything. An active renewal will cost $450 if your application is submitted on time, whereas inactive renewals will cost $225. Late costs increase to $675 for active applicants and $337 for inactive applicants.
If you don't get a renewal application within 45 days of your license's expiration date, the CSLB advises obtaining one online.
Transferring a license from another state through reciprocity
Arizona, Nevada, and Louisiana are the three states that California offers a reciprocal license with.
You must be applying for a license that is listed on California's State Reciprocal Classification List in order to be eligible for reciprocity. Having to had that license for the last five years in good standing.
The already-licensed entity must then complete and submit a Request for Verification of License on your behalf. The next step is an Original Contractor's License Application.
If the CSLB grants your request, you'll need to provide evidence of bonding, the required insurances, and payment for your license.
Timeline for licensing
In the end, even if you pass your test on the first try, it's difficult to give even a general timeframe to predict how long it will take you to receive your license from start to finish. You can look at the CSLB Processing Times to get a sense of where each CSLB testing location is at in the application process.
penalties for contractors who lack a license
California accepts an unauthorized deal working extremely hard. They strike you where it counts—in your wallet as well as with potential legal repercussions (more on that later).
penalty in money
You probably have no legal remedy for compensation if you are required to hold a license but don't.
Unless the contractor was properly licensed "at all times" while completing the task, California law states that an unlicensed contractor "may not file or maintain" any action for compensation for carrying out any act or contract for which a license is necessary.
Remember the word "at all times." The same consequences apply whether or not you had a license when you started a project if it is revoked or suspended for any reason.
More serious than that, perhaps, is the "disgorgement" idea. Although the word has an unpleasant ring, its essential meaning is to "pay back" illicit riches. Any prior compensation may need to be disgorged ("given back") by an unlicensed contractor.
Any money you put up as a down payment for supplies and labor is now lost. What's worse still? Taxes may need to be paid on the earnings as well.
Criminal consequences
Criminal punishments are up next. Unauthorized contractor work is a misdemeanor that carries a maximum penalty of six months in jail and/or a $5,000 fine for a first violation. Administrative penalties, which can vary from $200 to $15,000, are not included.
A second infraction carries a required 90-day prison sentence and a $5,000 fine, or 20% of the total contract cost, whichever is greater. Additionally, you could be charged with a felony. It is a criminal to use someone else's license without their permission or to pose as licensed. Additionally, performing unauthorized contract work while a declared emergency or disaster is (unless the rules have been relaxed by the appropriate governing bodies).
Board for Contractor State Licensing (CSLB)
The Contractor State Licensing Board is responsible for California's contractor licensing (CSLB). This regulatory agency was founded in 1929 with the main objective of safeguarding consumers from unscrupulous contractors and fly-by-night crews. The CSLB attempts to impose ethical standards for business conduct and commerce in the state.
The CSLB in California strives to prevent contractors from taking advantage of customers. The board establishes the criteria, benchmarks, and testing for licensing. With a few exceptions, the CSLB generally mandates that all contractors possess a license.
That's not all, though. Along with the CSLB, the Statewide Investigative Fraud Team (SWIFT) routinely conducts sweeps and sting operations at construction sites to look for potential infractions. We'll discuss the penalties, which can be severe, further down.
Contractor licensure is crucial in California
A license is more than just a simple piece of paper. It matters to both the client and the contractor.
It safeguards customers.
The CSLB's entire goal is to safeguard consumers from substandard work and inexperienced contractors. Make important to verify a contractor's license if you're thinking about hiring them. Don't forget that any project costing more than $500 requires a contractor to be licensed. Accept any reason as to why they don't have one.
Because they don't have to pay overhead costs like insurance or bonds, unlicensed contractors can frequently undercut a licensed business's bid. As a result, significantly cheaper project estimates may be a sign that a contractor is not properly licensed. Licensed contractors are required under CSLB requirements to maintain insurance and bonds. Without the necessary insurance, property owners could be liable for complications that occur on the job.
The unlicensed contractor can leave town without paying their subcontractors if the necessary bond is not provided. If these subs have licenses, they could potentially file a mechanical lien on your house for money you already paid to an unlicensed contractor.
These short connections are provided:
Check the license number of a contractor.
Find an authorized contractor
Present a grievance
It upholds the rights of contractors.
It's essential for contractors to have the right licenses on hand. An unlicensed contractor forfeits all legal claims to payment if they carry out work that needs a license.
They cannot file a California mechanics lien, bond claim, or any other claim in California for that matter. Additionally, not receiving payment isn't the end of the consequences: you might go to jail.
According to the CSLB, getting caught contracting without the required license is a misdemeanor. A first infraction carries a maximum penalty of six months in jail, a $5,000 fine, and administrative fees ranging from $200 to $15,000. A required 90-day prison term and a fine for a second violation Up to $5,000 in fines, or 20% of the contract.
California is also quite clear on payment issues involving contractors without licenses. There is no recourse for unpaid contractors who are not licensed. If you work as an unlicensed contractor on a project for $20,000 and the owner decides not to pay you, you have no legal recourse to get your money back. A mechanics lien cannot be filed, and it cannot be enforced in court.
Your payments are at risk if you perform work as an unlicensed subcontractor in California where a license is necessary. Make sure to obtain your license legally by through the proper channels because cunning GCs are aware of this and may exploit you if they so desire.
The conclusion on issuance
Unauthorized contractor labor is extremely serious in California. If you are a contractor or sub in California, it is wise to always have a current California contractors license on hand before beginning any work on a project. Without it, problems can arise.
