Understanding the Types of

Contractor Licenses in California

Discover the different types of contractor licenses and entities in California. Learn whatโ€™s best for your business and how to get started.

types of contractors licenses california

Sole Ownership

๐Ÿ ž Description: A simple and common choice for independent contractors, often referred to as a personal license.

๐Ÿ ž Benefits: Easy setup and straightforward operations.

๐Ÿ ž Considerations: Personal assets are not protected, and only the owner and a Responsible Managing Employee (RME) can be listed on the license.

Corporation

๐Ÿ ž Description: A popular option for contractors seeking to protect their personal assets.

๐Ÿ ž Benefits: Allows personnel changes (add, remove, or replace officers) and provides liability protection.

๐Ÿ ž Requirements:

  • Active status with the Secretary of State

  • $15,000 contractor bond

  • Workersโ€™ Compensation insurance or exemption

types of contractors licenses in california

Limited Liability Company (LLC)

๐Ÿ ž Description: Offers the same protections as a corporation with additional requirements.

๐Ÿ ž Benefits: Liability protection and flexibility with personnel changes.

๐Ÿ ž Requirements:

  • $100,000 LLC surety bond

  • General liability insurance

  • Compliance with corporate standards

๐Ÿ ž Considerations: Higher costs due to required bonds and insurance.

types of contractors licenses in california

Partnership

๐Ÿ ž Description: A license for entities where two or more partners share ownership.

๐Ÿ ž Benefits: Simple structure for collaborative businesses.

๐Ÿ ž Considerations: Limited flexibilityโ€”any changes to personnel cancel the license. Protect your future by qualifying for a personal license before the partnership dissolves.

types of contractors licenses in california

Joint Venture

๐Ÿ ž Description: A temporary license issued between two existing licensed entities for specific projects.

๐Ÿ ž Benefits: Quick setup with no fingerprinting requirement.

๐Ÿ ž Considerations: No work experience credit is granted, making it suitable for short-term projects.

FAQs

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