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Kalb's Q & A For California Contractors

One license can generate many opportunities, if you are a contractor who knows how to extend your 'reach.' We all learn how to extend the use of a corporate license beyond its usual limits. Readers know that public works bids are always an adventure, because some require license classifications that don't always fit the work.

January 19, 2009

One license can generate many opportunities, if you are a contractor who knows how to extend your 'reach.' We all learn how to extend the use of a corporate license beyond its usual limits. Readers know that public works bids are always an adventure, because some require license classifications that don't always fit the work. This contractor won't become the prime, but he has a chance to profit at the 'sub' level ...

Q: I've enjoyed your columns dealing with Contractor's License questions. Maybe you've addressed this but I have been unable to 'reach' a conclusion based on your 'keyword' search option online (cutredtape.com).

I own 100 percent of my 'S' corporation but would like to do business under a few different names. Since you can only have one 'dba' (doing business as) per license, what would be the best way to go about this?

For example, can I apply for another "C-36" license number as a sole proprietor and become a responsible managing officer (RMO) for my existing business; in essence, have the business hold two licenses? Or should I set up another corporation and apply for a new license? This would require additional expenses, which I would rather avoid. My main goal is to advertise and operate under several business names (not necessarily entities). Thank you for your time.

A: Thank you for your kind words. Your best option is to apply for another corporate license using a different 'dba'. In this way, you can legally do business under one corporation using two company names — each with a separate license number. Since there is no limit to the number of fictitious business names (dba) you can hold under one corporation, you could apply for a third or fourth license and therefore simultaneously "advertise and operate under several business names."

Using the above scenario, you would NOT need to apply for a sole owner license or incur the expense of forming a new corporation.

Note the CSLB has what I refer to as the "rule of three." This law states that an individual may only qualify up to three corporate or partnership licenses (plus a sole owner license) in a 12-month period. However, two or more licenses under a single corporate entity only counts as one (of those three).

Q: There is a public works project that requires an "A" General Engineering license; yet approximately half the project involves demolishing an existing building. I have a "C-21" (Demolition) and wonder why my license would not be acceptable? I may file a protest unless they let me bid.

A: I spoke with someone familiar with this project and while it's closely split between "A" and "C-21" work, the primary goal (plus a slim majority) of the project falls under the General Engineering, or "A" classification. In other words, if you were awarded the project as a "C-21" contractor, there would be no issue with the demo work. However, once the building is leveled, you would not have the proper license for the remainder of the job and could not argue that the work is "incidental and supplemental" as defined under Code Section 7059. On the other hand, since the only reason to demolish the building is to make room for the government's infrastructure needs, the "A" would be the best overall classification. Rather than fighting city hall, I suggest, contacting several of the prime contractors since I assume most will list a "C-21" sub.

I leave you with one last point that may give you some insight into the agency's thinking. B&P Section 7059(b) also states, "in public works contracts ... the awarding authority shall determine the license classification necessary to bid and perform the project. In no case shall the awarding authority award a prime contract to a specialty contractor whose classification constitutes less than a majority of the project."

Knowledge is power. Knowing where to go for the answers is half the battle.

Get expert assistance immediately when you call 916-443-0657, e-mail info@cutredtape.com , fax 916-443-1908, or write me at Capitol Services, Inc., 1225 8th St. Ste. 580, Sacramento, CA 95814.

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