Category Archives: Contractor Business

New Laws for California Contractors in 2023

We’re always hearing stories from former clients and current contractors that they’re seeing frequent violations of new contractor laws that just came into effect this year, in 2023.

There are a ton of new laws that are – to be frank – absolutely critical to know as a contractor, no matter your classification, location, or size. Any violation of these new laws carries serious penalties – including time in jail for repeat offenders.

Arm yourself with the knowledge and take the steps necessary to protect your business by becoming familiar with the following pieces of new legislation.

Senate Bill 216 (Dodd)

If you’re a concrete, HVAC, Asbestos or Tree Service contractor in California – listen up!

Senate Bill 216 (SB216), which amends the Business and Professions Code (BPC) Section 7125, is a piece of legislation that requires 5 Class “C” contractors to carry workers’ compensation insurance, even without employees.

This mandate means that contractors with a C-8 Concrete, C-20 Heating, Warm-Air Ventilating and Air-Conditioning, C-22 Asbestos Abatement, or D-49 Tree Service license must have valid workers’ compensation insurance by January 1, 2023.

And as a note to all contractors of all classifications: by January 1, 2026, all contractors must have valid workers’ compensation insurance, irrespective of whether or not they have employees.

The only exception to the new CSLB workers’ comp requirements is joint ventures without employees. Anyone with this structure of business is exempt from SB 216’s workers’ comp requirements.

Senate Bill 607 (Min)

In another insurance-related move, the California Senate passed Bill 607 (SB 607), which marks another important change in the requirements to hold a CSLB license. It updates numerous sections of the BPC – with one huge change in bond amounts.

SB 607 mandates that the CSLB qualifier, license, and minimum disciplinary bonds be raised from $12,500 and $15,000, respectively, to $25,000 for all three bonds as of January 1, 2023.

As a bonus for the families of military members looking to become licensed contractors, SB 216 also requires the Department of Consumer Affairs (DCA) boards and bureaus (including the CSLB) to waive application and license fees for military family members.

What if I Don’t Have Workers’ Compensation Insurance Or My Bond Amount Is Insufficient?

If you are currently in one of the above classifications and you do not have workers’ comp or a sufficient bond amount…well, we’ve got bad news for you: your license is surely suspended.

Don’t panic – just stop doing work entirely if you are still doing it. This is critical as you can face serious legal consequences for working without a license.

Next, you should immediately begin the process of getting the necessary workers’ compensation insurance and/or increasing your bond amount. Once that is sorted out, you can re-apply for your license.

If you’re unsure or don’t remember if you have workers’ compensation insurance, you should immediately check your license status.

Senate Bill 1237 (Newman)

Huzzah for troops-turned-contractors – SB 1237 is here to waive any renewal fees!

Senate Bill 1237 (SB 1237) updates the current law that requires DCA boards, including the CSLB, to waive renewal fees for a licensee who is called to active duty as a member of the U.S. Armed Forces or California National Guard.

This applies if the licensee or registrant is stationed outside of California. The new law expands the definition of “called to active duty” and extends it to licensees on active duty during a “state of insurrection” or a “state of extreme emergency.”

Assembly Bill 2105 (Smith)

In another move that will have veteran contractors excited, Assembly Bill 2105 (AB 2105) mandates a 50% fee reduction for an initial license or registration fee for all veterans!

All you have to do is provide paperwork proving you are a veteran who has served as an active-duty member of the United States Armed Forces, including the National Guard or Reserve components and was not dishonorably discharged.

For HIS contractors, this still applies to you as well! This applies to all initial license fees for anyone acquiring a CSLB license.

Assembly Bill 1747 (Quirk)

Assembly Bill 1747 (AB 1747) increases the civil penalty from $8,000 to $30,000 for every violation of BPC Section 7110 (savvy legal contractors will know these are building code violations) and amends Section 7099.2 (how much in penalties violators will pay).

This bill expands BPC 7110 to include failure to comply with certain health and safety laws, water laws, safe excavation requirements, pest control requirements, illegal dumping, and other state laws related to building and insurance requirements.

Assembly Bill 2374 (Bauer-Kahan)

Bad news for litterbug contractors: your time is up.

Assembly Bill 2374 (AB 2374) amends Penal Code Section 374.3 and now requires courts to notify CSLB or other DCA boards or bureaus when a licensee is convicted of an illegal dumping crime. This is so the board can publish the conviction on their website.

The bill also increases the fines a court may impose for this crime, which is great for everyone everywhere. In a double-swoop of awesome for contractors who like to do the entire job right, it also requires the court to order a person convicted of dumping commercial quantities of waste to remove or pay for the removal of, the waste matter that was illegally dumped. Which, again, is an absolute win for everyone involved.

Assembly Bill 2916 (McCarty)

Assembly Bill 2916 (AB 2916) amends BPC Section 7124.6 and modifies the CSLB Letter of Admonishment (LOA) program to allow CSLB to determine whether it should be issued for one or two years, rather than the current one-year limitation.

In making that determination, CSLB is required to consider the gravity of the violation, the good faith of the licensee or applicant being charged, and the history of previous violations.

This is a pretty technical bill and to be honest, it remains to be seen how it will affect contractors. It seems to really only affect disciplinary actions, which affect only a small number of contractors. We’ll keep you posted on how it develops.

Stay Compliant…Or Else!

These new laws have serious consequences for any contractor that is non-compliant and remember: Ignorantia juris non excusat – ignorance of the law does not mean you are free from the consequences of violating it.

And in the CSLB’s case – the punishments are extremely severe for anyone violating contractor law in California. So don’t do it!

Save Money On Your Taxes As A California Contractor

As a licensed contractor, you’ve got enough on your plate with high-pressure deadlines and constantly shifting targets to hit. The last thing you need is to be buried under a mountain of tax paperwork, trying to make heads or tails of any of it!

With so many moving parts and costs, it can feel impossible to navigate the complicated labyrinth that is the US and California tax codes.

With these simple tips, however, you can easily and quickly make sure you’re maximizing your tax savings.

How Do You Structure Your Business?

Before diving into tax requirements, it’s crucial to understand how your business structure influences your tax obligations.

You probably already know this information, but it’s important to restate it here so that we have a good starting point.

  1. Sole Proprietorship: As a sole proprietor, you’ll report business income on your personal tax return. Keep track of expenses and income throughout the year so you can report them when tax day comes. Many, if not most contractors, are sole proprietors.
  2. Partnership: Income and losses are passed through to individual partners. Partners report their share on personal tax returns. Rarely are contractors partnerships, but in cases where it is a family business, you may see it.
  3. LLC: Limited liability companies offer flexibility, allowing owners to choose their tax classification (e.g., sole proprietorship, partnership, or corporation). The second-most common form of business structure for contractors.
  4. Corporation: Let’s be honest, if you’re a big enough construction company that you need corporation status to maximize your tax benefits, you either already know how to best file your taxes, or you have an accountant who handles your voluminous balance sheet.

Choose a structure that best suits your business needs and tax goals. Most construction professionals, as previously mentioned, will find sole proprietorships to be more than enough to fulfill their tax needs and will find the most savings there. But the more you grow, the more you’ll need the protection of LLCs and partnerships or corporations.

Know Your Taxes: Federal, State, and Local

Federal Taxes

There’s no escaping Uncle Sam. Always pay your taxes in full – you do not want the IRS sniffing around your business, causing trouble, when you could just take care of it ahead of time by educating yourself and planning effectively.

  • Income Tax: All businesses must file an annual income tax return. Tax rates and filing requirements depend on your business structure.
  • Self-Employment Tax: Self-employed contractors who operate as sole proprietors have to pay self-employment tax, which covers Social Security and Medicare taxes.
  • Estimated Tax: Again, if you are a sole proprietor (working as a 1099 employee), you may need to make quarterly estimated tax payments if you expect to owe tax of $1,000 or more when filing your return.
      • You don’t have to make these payments, but they will lower your tax burden at the end of the year.

State Taxes

It’s no mistake – California has high taxes. Make sure you’re keeping enough cash on hand to pay when April comes around; or, if you’ve got the right tax plan, get ready to get a rebate.

Either way, you can prepare yourself to file your state taxes as a California contractor by checking out the Franchise Tax Board’s website.

  • State Income Tax: If you’re doing business in California, you have to pay an income tax. You can find how much you expect to pay based on your revenue. Here is the Franchise Tax Board’s tax bracket.
  • Sales Tax: California has a sales tax, so you’ll be paying tax on things like materials and payments to any subcontractors or yourself.
  • Employment Taxes: If you have employees, you may need to withhold state income tax and pay state unemployment tax.

Local Taxes

Local tax requirements depend on where in California you’re operating. These local taxes can come in many forms, like business licenses or filing fees. Be prepared to pay local taxes when starting a new construction.

Employment Taxes: A Responsibility You Can’t Ignore

If you have employees, you must withhold and pay employment taxes. These include:

  • Federal Income Tax Withholding: Based on the employee’s Form W-4 and their earnings. This will fluctuate based on the number and types of employees you have. You are exempt from paying taxes for contract workers who file Form 1099.
  • Social Security and Medicare Taxes: Employers and employees share responsibility for Social Security and Medicare taxes.
  • Federal Unemployment (FUTA) Tax: Every employer must pay FUTA tax, which provides unemployment compensation to workers who lose their jobs.
  • State Unemployment Tax: You must also pay into California’s unemployment fund if you have full-time employees. This will also be a variable cost for your business as you grow.

Tax Deductions: Your Best Friend

If you’re a contractor, you probably can save tons of money by taking advantage of various tax deductions that are favorable to construction professionals – people who are constantly spending money on their business in order to survive.

We recommend researching these common deductions for a full scoop, but hiring a tax pro who has the expertise to successfully navigate the various deductions you qualify for is even better.

Common Deductions for Contractors

  • Home Office Deduction: If you use part of your home exclusively for business purposes, you may qualify for the home office deduction.
  • Vehicle Expenses: Deduct business-related vehicle expenses such as mileage, fuel, maintenance, and insurance.
  • Tools and Equipment: Contractors can often deduct the cost of tools, equipment, and supplies used in the course of business.
  • Contract Labor: Payments made to subcontractors are generally tax-deductible if they meet specific criteria.
  • Insurance: Business insurance premiums, such as general liability or workers’ compensation, can be deductible.
  • Training and Education: Expenses related to improving your professional skills may be tax-deductible.
  • Advertising and Marketing: You can deduct advertising expenses, including website development, business cards, and online advertising.

Hire an Accountant For Your Contracting Business

As we have said multiple times in this article: Hire. An. Accountant.

If you’re doing business in California as a contractor, we can’t recommend hiring an accountant. Simply put, an accountant will save you tons of time, energy, and money when it comes to filing your taxes – as well as being more likely to keep you from being audited.

The reality is that American taxes can be extremely confusing, so employing the skill of a professional accountant can help big time when it comes to saving the most money (and saving you the energy of having to understand the un-understandable).

You can even hire an accountant who specializes in California contracting taxes – saving you more money than ever before.

Taxes Can Actually Save You Money

Everyone has to pay taxes (well, mostly everyone). But by understanding and executing an effective tax plan for your contracting business, you can actually find yourself with more money in your pocket come tax time next year.

One thing we definitely can’t emphasize enough as you continue to grow your contracting business – hiring a qualified accountant or tax professional service is a critical element of maximizing your tax deductions and saving money every year.

Do Home Improvement Salespeople Need a Contractor’s License in California? A Complete Guide


Looking to start selling home improvement contracts? You’re gonna need a CSLB license for that.

In this article, we’ll take a look at CSLB licenses for home improvement salespeople (or HIS): what they are, who needs them, and how you can get one right now.

What Is A Home Improvement Salesperson (HIS)?

So what is a home improvement salesperson or HIS? Well, quite simply, it’s a person who sells home improvement services on behalf of a contractor or contracting business.

According to the CSLB, a home improvement salesperson is a “professional who solicits, sells, negotiates, or executes home improvement contracts for a licensed contractor.” This includes any home improvement or remodeling job – even those that are under $500 in value!

Really, any task or job that requires the construction contractor to have a B-2 Remodeling Contractor’s license is a service that a HIS can sell. Whether a homeowner is looking to, say, install a new bathtub or build a patio, the HIS is their pathway to finding someone to do the job. While home improvement salespeople can’t do any builds themselves, they do 99% of the work when it comes to booking jobs for home improvement contractors.

Many HIS are in-house employees of contractors, and many work freelance with different contractors. There’s no right way to operate – freelancers may bring in even more commission by expanding their client base, but they also expose themselves to long periods of financial insecurity.

So now that you know what an HIS is, let’s dig into the license!

HIS License Registration Requirements And Regulations

If you’re looking to become an HIS quickly – and start selling home improvement services in your neck of the woods – you’re in luck! Working as an HIS can be extremely lucrative in the incredibly wealthy state of California and getting started is remarkably easy – especially compared to other contractor-related professions. All you need to do is get your CSLB HIS license.

Every person who sells home improvement services – no matter when, where, how or why – must be registered with the CSLB and have a valid CSLB HIS license. There are no exceptions to this – unlike contracting jobs under $500 – so, too do home improvement salespeople.

The good news is getting your HIS license is extremely easy, especially by CSLB standards. You only need two things to get your CSLB HIS license, so you can start working with contractors to book them jobs (and collect your sweet, sweet commission). These are:

  1. Be at least 18 years old
  2. Submit an application to the CSLB for your license

That’s it! You only need to be a legal adult for you to get your HIS license and start knocking on doors.

Do I Need A Contractor’s License To Be A Home Improvement Salesperson?

No, you do not need a contractor’s license to sell home improvement services in California. As we’ve discussed – you only need a CSLB Home Improvement Salesperson’s license to be an HIS in California.

While many B-2 Home Improvement contractor’s license holders may want to get their HIS license in order to book their jobs directly, the reverse is rarely true – most home improvement salespeople do not acquire a contractor’s license.

Exceptions to the Rule

Although all people who sell home improvement services technically need a CSLB HIS license, there are some exceptions, as always with the CSLB.

Anyone who falls under the following situations is exempt from needing a CSLB license:

  1. An officer of record of a licensed corporation, or a manager, member, or officer of record of a licensed limited liability company
  2. A general partner listed on the license record of a partnership
  3. A qualifying person, as defined in BPC section 7025
  4. A salesperson whose sales are all made after negotiations between the parties if the negotiations are initiated by the prospective buyer at or with a general merchandise retail establishment that operates from a fixed location where goods or services are offered for sale
  5. A person who contacts the prospective buyer for the exclusive purpose of scheduling appointments for a registered home improvement salesperson.
  6. A bona fide service repairperson who is employed by a licensed contractor and whose repair or service call is limited to the service, repair, or emergency repair initially requested by the buyer of the service

4 Steps To Getting Your HIS License

The registration process for a home improvement salesperson has been streamlined thanks to the CSLB’s online interactive forms. The whole process takes place online now and it can all be done in a matter of minutes, provided you have the right information.

Here’s 4 Steps to getting your HIS license:

Step 1: Gather all the information and details you need to apply. This includes your driver’s license to prove your age and identity, and

Step 2: Apply for your HIS registration. Fill this out right – the CSLB rejects over HALF of HIS applications, adding weeks or months to the time it takes to get your license.

Step 3: Fingerprint/Live Scan/Background Check. If you have anything on your criminal record, it will come up here. You may be disqualified from a CSLB HIS license – it really is up to the CSLB.

Step 4: Receive your license! You did it! Now you can start selling home improvement services in California!

Learn more about the process of getting your HIS license on the CSLB website.

The Key Differences Between a HIS License and a Contractor’s License

Home improvement salespeople and contractors have a mutually beneficial relationship, but the differences in expertise, safety compliance, and general skillset between the two could not be bigger.

The HIS license is the easiest CSLB license to get, for the following reasons:

  • No experience requirement (4 years journeyman experience for contractors)
  • No insurance or bond requirement
  • No CSLB exam
  • Cheaper fees
  • Less severe penalties for non-compliant work


If you’re an HIS in California and you don’t have your HIS license – well, what are you waiting for?

The CSLB has made being a licensed HIS easier than passing your driver’s test, and the turnaround time for you to receive your license is even quicker and easier.

Quit wasting time and get your HIS license now!

Is My Contractor Licensed and Bonded?

Whether you’re a homeowner looking to refresh the tile in your bathroom or you’re the CEO of a Fortune 500 company looking to expand your company’s data center assets, you need contractors to do the job.

But finding a good contractor to do the job is a tough thing to do. First, you have to identify the job you need done, then you need to actually find the person to do the job – which comes with its own set of responsibilities and problems for you.

The biggest issues when hiring a contractor are legality and expertise: there are millions of dudes out there with a hammer and some nails who could do a decent job on your project.

But how do you know that the project won’t fall apart immediately after they leave the job site? And how do you know you won’t be in big trouble after the fact, both financially and legally?

The easiest and most direct way to know if you’ve got a contractor worth their salt is if they’re licensed and bonded. This single characteristic immediately makes your search for the right contractor that much easier.

Let’s find out why.

Why Hiring Licensed and Bonded Contractors Matters

In California, the law stipulates that all contractors working on a project valued at $500 or more must be licensed by the Contractors State License Board (CSLB). This mandate ensures that contractors meet certain standards of professionalism and expertise.

So we’ve covered the licensing side of things – contractors are licensed by the CSLB – but what about being “bonded”?

Being “bonded” simply means the contractor has secured a surety bond – a type of insurance that protects the client if the contractor fails to complete the job, doesn’t pay for permits, or fails to meet other financial obligations.

This amount is a dollar amount that any homeowner is entitled to, should the contractor not fulfill their contract. The idea is that you at least get something for your troubles.

As of 2023, the CSLB requires licensed contractors to hold a contractor’s bond worth $25,000 – that means, in the event of a contract breach, customers are entitled to receive an amount of up to $25,000 to cover their losses. Note that you will not always receive this amount, but this is the amount that is available in this situation.

Probably the most important bit of anything bond-related is that every contractor in California is required to hold a surety bond. That’s right – anyone who has a valid CSLB license also has a surety bond, as per the CSLB’s laws.

That’s it for a quick-and-dirty overview of bonds and licenses. If you’re interested in the nitty-gritty of bonds, the CSLB has all the information available on their website.

How To Verify a Contractor’s License and Bond in California

So, how can you confirm if your contractor is licensed and bonded in California? Here’s how to check a license in three easy steps.

  1. Ask for the contractor’s license number: Any contractor worth talking to will have their CSLB license number easily available – either on their business card or company website. If they’re reluctant to provide it, that’s a red flag.
  2. Verify the license number: Use the CSLB’s online License Check tool to check the validity of the license. This tool will not only immediately tell you if a contractor is licensed (and bonded), but it also shows if there are any disciplinary actions against the contractor.
  3. Check their bond: while no contractor can obtain a CSLB license without proof of a $25,000 surety bond, it is still possible for a contractor to cancel their bond after getting their license. You can check on the validity of their bond by asking the contractor directly for their bond information and cross-referencing it with their bond company.

What Happens If I Hire An Unlicensed Contractor?

If you’re tempted to skip the whole “is my contractor licensed and bonded?” question, pump the brakes first. The consequences of hiring an unlicensed contractor can be severe in many ways.

From the start, there’s a reason someone is operating as a contractor without a license – they probably lack the skill to get a license. An unlicensed contractor may lack the necessary skills and standards to do the job of a professional.

While you may be stoked about the cost savings of an unlicensed contractor (funny how they can always offer to do a job for cheaper, huh?), the ultimate cost of hiring an unlicensed contractor outweighs the nominal cost savings.

Many unlicensed contractors simply lack the skill and expertise of a licensed contractor who has been through the grueling CSLB process. The effects on your expensive construction project can be catastrophic and can cause your project’s cost to double, triple, quadruple, and so on.

And that’s even if they finish the project! In many cases, unlicensed contractors simply take your money and run – and since they’re unlicensed, you have no recourse. You are stuck with the bill, the unfinished project, and the need to hire a licensed contractor to fix their problem. Sounds like you should have just hired a licensed contractor in the beginning (that’s the whole idea here!).

And even if you get your job done right, you could still be in massive trouble for getting an unlicensed contractor to do the work. California’s Business and Professions Code 7118 states that the punishments for employing an unlicensed contractor for work costing $500 or more can include a fine of up to $5,000 and/or six months in jail.

Imagine that – jail, just to save a few pennies for a subpar job.

All of the consequences of hiring an unlicensed contractor is why we cannot stress this enough: hire a licensed contractor for Pete’s (and your) sake!

What Are Contractor General Conditions?

If you’re in the construction industry, at some point, you’ve heard the phrase “contractor general conditions”, and probably not really understood what it meant.

When we first heard it 200 million years ago (it feels like that now), we had no idea either. We thought maybe we should call our doctor, put the phone down, and decided to find out for ourselves.

Now that we’ve been in the industry for a long time, we’ve come to know and understand general conditions on a deep level. In this guide, we’ll cover everything you need to know about contractor general conditions – and how to make the best use of them for your business’ success.

So, What Are Contractor General Conditions?

“General conditions” is one of those fancy industry jargon terms that people use to sound smart – and to exclude normal, everyday workers from the conversation.

In reality, “general conditions” is simply a term that describes the cost of managing a construction project – excluding labor and materials. In other words, construction general conditions refers to the costs of everything that isn’t involved in the physical construction of the building.

These costs are your administrative teams, the cost of your job site trailers, the fees for equipment rentals, the city, county, municipal, and federal permits you must acquire – all of this falls under contractor general conditions.

Categories of General Conditions for Contractors

As we’ve just established, general conditions are the costs of everything that’s not the actual building of the building. As you might imagine, that means that there are almost a million different things that could fall under general conditions.

Here are the main categories of general conditions for contractors:

  • Site Management: This involves the cost of managing the construction site, including site security, temporary utilities, and, um, port-a-potties. Site management can (and should) account for a significant portion of the projects. According to a report by the California Building Industry Association, site work costs can account for as much as 11.8% of the total construction cost for a single-family home.
  • Project Management: This covers the cost of the project manager and other administrative staff, along with any office expenses. This is where significant efficiencies can be created with clever work. The Project Management Institute estimates that poor project management can lead to a 9.9% waste in every dollar, highlighting the importance of investing in effective project management.
  • Insurance and Bonds: These are unavoidable costs as every contractor in California must have insurance and bonds to become licensed. On top of the essentials like Workers’ Comp and surety bonds, almost every project requires additional insurance and bonding to do specialty work or to meet county and city standards.
  • Permits and Fees: These are the costs associated with obtaining necessary permits and paying the required fees for the project. Again, these are completely unavoidable and vary based on the project. According to a report by the California Department of Housing and Community Development, the average cost of a building permit in California can range wildly – from $406 to $2,222.
  • Equipment Rental: This includes the cost of renting equipment that isn’t owned by the contractor, but is necessary for the project. The California Rental Association reports that equipment rental revenue in California beat an eye-watering $59 BILLION in their last report in 2021, reflecting the significant costs associated with equipment rental.

Why General Conditions Matter

Understanding contractor general conditions is vital for both clients and contractors. For clients, these costs form a significant part of the project’s budget. They need to be factored in from the outset to prevent unexpected expenses later on.

For contractors, accurately estimating these costs is key to bidding successfully on projects – but more importantly than winning business, successfully managing your general conditions means building a reputation as a contractor who can be trusted.

Balancing your general conditions is key. Underestimating these costs can lead to big financial losses (and worse – unhappy clients), while overestimating your general conditions can mean you’ll not even be able to get your foot in the door.

In either case, the key is finding the sweet spot. A study by the Construction Management Association of America found that accurate cost estimating can improve project success rates by up to 20%. It’s easier now more than ever to estimate correctly with the incredible wealth of data and digital tools available, so there’s no excuse for going over- or under-budgeting these days.

Moreover, a deep understanding of these costs can help contractors identify areas where they can save money without compromising the quality of the project. For example, efficient site management can reduce waste and improve productivity, leading to cost savings. Similarly, effective project management can prevent costly delays and rework that will just add more weight to the project’s budget.

Considering how expensive materials and labor have gotten in the 2023 cost of living crisis, there’s no question effective general conditions management is one way that contractors can find BIG savings – just by streamlining their operations.
No Size Fits All

On the flip side, there really is almost no advice that anyone can give you when it comes to your own personal general conditions.

While we can generally categorize the general conditions into a general condition of general categorization, the reality is that every single project, every single contractor, and every single nail is different. A contractor working in LA on skyscrapers is going to have drastically different general conditions than a handyman in Bakersfield.

That said, it’s all relative. Whether you’re a multinational conglomerate or a brother-sister pair of carpenters, there’s always a way to streamline your general conditions. Look for places where you can save a buck or two – without hampering things down the line.

Maybe you have subscriptions to a piece of software you needed for a project months ago – but you don’t use it anymore. Or maybe you bought a piece of equipment but no longer need it. Selling it would not only drive down your general conditions, but also get you a little bit of cash.

While contractor general conditions may seem straightforward on the surface, they’re a complex web of interconnected contracting data points.

For any contractor, big or small, it’s well worth your time to investigate your own general conditions, understand them, and use data and computing to find opportunities where you can streamline. With all the tools available, there’s really no excuse anymore!

Common Problems Facing New General Contractors

Just got your CSLB Class B License and are ready to strike out on your own as a general contractor?

First off, congratulations! Becoming a CSLB-certified general contractor is no joke, and you’ve worked hard to get to this point. Now you’re ready to start taking on jobs – a process that can be both exhilarating and terrifying at the same time.

By now, you’ve got enough experience working on jobs as a journeyman or contractor, so you know what to expect when it comes to handling the on-site responsibilities of a general contractor – but what about the rest of being a general contractor?

Yes, once you become a general contractor, your days of drilling or digging are over. Now you’re the boss, and you’ve got different things to worry about – and these are the types of things nobody teaches you.

Here are some of the most common problems that new general contractors run into – so you can be prepared when they show up.

Juggling Multiple Tasks And Projects 

One of the very first issues for general contractors is managing all the multiple areas of general contracting at once. You’ve got to handle both on-site and off-site duties all at the same time, from dealing with materials vendors to overseeing a weld, to talking to your client, to paying your taxes on time.

As a general contractor, one of the first things you need to learn is how to juggle all these various tasks and demands at once. When you’ve got a project going on, people will be asking you things, all day, every day, from the moment you wake up, to the moment you go to sleep.

Be ready for an eternal onslaught of information when you start working as a general contractor, both coming in to you and out of you. You need to be a prism to everyone involved in the project – you should be the one harnessing the whole project and then channeling out the energy.

The complexity of managing multiple projects is further compounded by the need to coordinate with various stakeholders, including clients, subcontractors, suppliers, and regulatory authorities. Each stakeholder has different expectations and requirements, adding another layer of complexity to project management.

Mismanagement can lead to project delays, cost overruns, and damaged reputations, especially if they happen more than once, but the reality is that you’ll never be able to handle every task perfectly, every time. In fact, a study by McKinsey & Company found that 98% of large-scale construction projects incur cost overruns or delays.

In this situation, it’s important – as always – to first remain calm, and then, assess the situation. Once you’ve taken a moment to consider what to do, then you can take action and – again, calmly – begin fixing the problem with your team.

Always maintain calmness and clear-mindedness when dealing with a problem on a job site. You are the prism. You set the tone for the job, and it’s important you maintain an aura of calmness. 

Unpredictable Weather

More pertinent than ever now for general contractors just coming onto the scene is to always stay aware and flexible when it comes to weather. 

For example, July was the hottest month in human history, and in California in particular, we felt it. In that situation, you need to be aware of the extreme heat and take caution, like adding more shade to your job site or enforcing mandatory water breaks.

It’s important to not only prepare for the worst when it comes to weather as a general contractor, but it’s also important to budget for it. According to the National Oceanic and Atmospheric Administration (NOAA), weather-related delays cost the construction industry over $4 billion annually.

While weather forecasting tools can provide some guidance, their accuracy is not always guaranteed, making weather-related disruptions a constant concern for contractors. You must always have contingencies for any weather issues.

Unpredictable Material Costs

The cost of construction materials is another common problem for general contractors, especially these days. Prices can fluctuate wildly due to factors such as supply chain disruptions, changes in demand, or geopolitical events. 

These fluctuations are often sudden and random and put a ton of strain on the already tight budgets of general contractors. And costs have only increased recently – a report by Turner & Townsend revealed that construction costs increased by 5% in 2022 due to rising material prices. And considering the, let’s say, shaky ground that the economy is on as of writing this, it’s important to constantly stay ahead of any cost issues. 

In addition to the direct impact on projects themselves, extending the lengths of projects, and more. Most importantly, it can make it difficult for contractors to accurately estimate project costs, which obviously affects your bottom line both in terms of captured profit and in terms of missed opportunities due to overbidding.

Skilled Labor

The construction industry is currently grappling with a shortage of skilled labor. 

The problem is further exacerbated by an aging workforce and a lack of interest among younger generations in pursuing careers in construction. According to the U.S. Bureau of Labor Statistics, the construction industry will need to hire 430,000 more workers in 2023 to meet demand – a number that seems unlikely to be met.

As a general contractor, this presents a massive problem.  The labor shortage is not just a numbers game. It also involves the quality of the workforce. 

The construction industry requires a wide range of skills, from manual labor to technical expertise, and fewer workers means fewer subcontractors you can trust. Trust is a key factor of building a quality team that can complete the jobs you worked so hard to earn – so this skilled labor shortage is a real issue.

We honestly don’t have much advice here – this is a deep issue that no single gen con can fix. The only thing we can say is if you find a good sub that delivers good work, HOLD ONTO THEM!

Regulatory Compliance Issues

General contractors must navigate a complex web of regulations and standards that are constantly changing – from building codes and safety regulations to environmental guidelines. While it’s difficult, it’s no excuse.

Non-compliance can result in hefty fines, project delays, and even legal action in many cases.  A study by the National Association of Home Builders found that regulatory costs account for 24.3% of the final price of a new single-family home.

In this situation, it’s often good to delegate your compliance issues to a legal advisor or a lawyer. Anyone who is an expert in compliance can make a huge difference to a general contractor, and like many subcontractors you’ll hire, they’re well worth the money.

Slipping Safety Standards

Maintaining high safety standards is a critical but challenging task for general contractors. Construction sites are inherently hazardous, and accidents can lead to injuries, fatalities, and legal liabilities – which is why OSHA reported that one in five worker deaths in 2022 were in construction. 

Contractors must implement rigorous safety protocols and ensure that all workers adhere to them to minimize risks, and considering the thousands of little things that general contractors have to pay attention to on a job site, safety standards can often be lacking.

You can help ease the burden of safety standards by…well, setting a standard. If you establish a standard of strict safety on your job sites from day 1 of any project, your team will follow them. Remember, you’re the prism – the rest of the job follows your beam of light.

Any good general contractor knows that a culture of safety where all workers are aware of the risks and take proactive measures to mitigate them not only results in a safe workplace, it means less stress. 

Stay Calm And Fix The Problem

The one thing you can always, always, always do as a general contractor is stay calm and focus on solving the problem.

It doesn’t matter where the problem came from or who was involved or any of that – as a general contractor, you are there to put out fires first and foremost. And again, remember, you set the tone for your entire job site – so by keeping calm and focusing on solutions, you encourage the entire team to respond in kind.

Further Reading

The State of the Construction Industry – Construction Industry Federation

Weather Impact on Construction – National Weather Service

Global Construction Material Cost Index – World Bank

The Construction Labor Shortage: A Global Perspective – International Labor Organization

Construction Regulations and Compliance – Occupational Safety and Health Administration

Safety Standards in the Construction Industry – National Safety Council

Reinventing construction: A route to higher productivity – McKinsey & Company

Billion-Dollar Weather and Climate Disasters: Overview – National Centers for Environmental Information (NCEI)

International Construction Market Survey 2022 – Turner & Townsend

Job Openings and Labor Turnover – January 2023 – U.S. Bureau of Labor Statistics

The Impact of Regulations on the Cost of Construction – National Association of Home Builders

Commonly Used Statistics – Occupational Safety and Health Administration

What Is A Journeyman And How Is It Related To My CSLB License?

Just moved to California as a contractor and need your CSLB license – as any contractor does – to start doing construction work in the State?

Or maybe you’re a fresh-faced 18-year-old, who sees a career in construction in the future, and you are looking for the path to making that a reality.

In any case, no matter what type of construction work you want to do in California, you need a CSLB license – and in order to get a CSLB license, you need to first become a journeyman.

But what is a journeyman? And how does it play into getting your CSLB contractor’s license? In this article, we’ll walk you through everything and anything related to being a construction journeyman.

Journeymen and Journey-level Experience

The CSLB defines a journeyman as anyone who has “journey-level experience”, which is anyone who “has completed an apprenticeship program or is an experienced worker, not a trainee, and is fully qualified and able to perform a specific trade without supervision.”

Unlike a novice or a trainee, a journeyman is fully qualified and capable of performing their trade without supervision. They are experienced, skilled construction workers who have specialty expertise in their area of operation – whether it’s a hands-on trade like plumbing or the more general practice of general contracting.

Despite the ability of a journeyman to essentially perform all of the jobs of a licensed contractor, a journeyman cannot do contracting work on their own – only under the supervision of a general contractor. That means that even if you have all the skills to perform construction work on jobs over $500, you still cannot do it. 

If journeymen are found doing contracting work, they are treated just like any other unlicensed contractor in the eyes of the law – facing all the same penalties, despite their skill and experience.

Do not do work on your own as a journeyman – wait until you’re a licensed contractor. You’re already on the path to becoming a licensed contractor, so why ruin it by breaking the law?

The Journeyman’s Experience Requirement

One of the essential requirements to obtain a CSLB contractor’s license is the journey-level experience requirement. This requirement means that you must have at least four (4) years of journey-level experience in your area of expertise. 

You must have four years’ journey-level experience in your trade. If you’re a plumber applying for a C-36 Plumbing license, you need four years’ journeyman experience as a plumber. You can’t, for example, do 4 years of general contracting work, and then expect to get an HVAC contractor’s license.

Exceptions From The CSLB Journey-level Experience Requirement

As always with the CSLB, there’s always exceptions to the rule. There are many situations where one may be exempt from the classical definition of “journey-level experience”.

Some situations where you can apply for an exception from the journey-level experience requirement include:

    • Education/Apprenticeship
      • The CSLB does allow anyone to apply for an exemption to the journeyman requirement by substituting four (4) years of technical training or apprenticeship training
      • Note – you must have at least one (1) year of practical experience.
    • Builder-Owner
      • In some situations, you can be exempt from the journey-level experience requirement if you built your own home. This is taken by the CSLB on a case-by-case basis.
  • Reciprocity
    • The CSLB has reciprocity agreements with a number of states – and if you’re a licensed contractor in these states, you can be exempt from having to start over again as a journeyman.

The Path To Becoming A Journeyman

Don’t have your journey-level experience but need some to get your contractor’s license? How do you even get your journeyman experience in the first place? 

An easy way to do it is to reach out to local contractors in your area and see if they’ll offer you an apprenticeship or work experience program in the area you’re interested in. You may not be making a ton of money, if you’re making money at all, but think of it long term – you are building your knowledge base and your abilities so that you can start bringing in the big bucks for the rest of your life.

By working under a licensed contractor, you can not only learn the ropes but also perform the work you will ultimately be doing in your area of expertise. Look at it this way – most people go to university for four years only to leave with a diploma, hundreds of thousands of dollars of debt, and a degree in something that probably won’t be relevant in a few years anyway.

What’s a few years of learning the skills that will suit you for life – and being paid for it? Anyone with a bit of determination and an attitude of open-mindedness and learning can get their CSLB license – all it takes is a few years of hard work.

Additional Reading

Can a Contractor Work Under Someone Else’s License in California?

Are you an experienced contractor who has just moved to California and wants to start working right away? Or maybe you’re just starting out in the construction industry and you need to get work experience? 

In either case, the thought has probably crossed your mind – do you really need to get your own California Contractors State Licensing Board (CSLB) contractor license? Why not just borrow a friend or family member’s contractor license?

In this article, we’ll cover everything you need to know about whether you can work under someone else’s contractor license in California.

Do I Need A Contractor’s License?

If you’re an experienced contractor with all the skills required to build, renovate, and repair, you might think, “Why don’t I just do the work without a license? I know how to do it.”

The answer is much like driving a car without a suspended license – it’s against the law, and if you do so, you could face serious criminal penalties, including jail time. (Now that we think about it, almost everything about CSLB licenses is like driver’s licenses!)

The CSLB – the legal authority here – requires ALL contractors to hold a valid CSLB contractor’s license in their specific classification, whenever performing work over $500.

So, Can A Contractor Work Under Someone Else’s License?

Strictly speaking, the answer is no – you cannot perform construction work on jobs with a value over $500, including materials, without a valid CSLB contractor’s license.

Here’s why:

  • A Contractor’s license is not transferable: A contractor license issued by the CSLB is strictly in the name of the license holder and is non-transferable. This fact effectively rules out the possibility of ‘working under’ someone else’s license.
  • Responsibility and accountability issues: The license holder assumes complete responsibility for all operations, including the quality of work and financial obligations. Allowing another contractor to work under their license could expose the license holder to significant risk and liability.

Exceptions to the Rule: The RMO and RME

While the general rule is clear, there are a couple of exceptions – the Responsible Managing Officer (RMO) and Responsible Managing Employee (RME). In these scenarios, it might appear as if a contractor is working under another’s license, but the dynamics are a bit different.

  • Responsible Managing Officer (RMO): An RMO is an individual who is a bona fide officer of the company and may hold as little as 10% of the voting stock. They have direct control and supervision of the company’s operations and can be held personally liable for violations.
  • Responsible Managing Employee (RME): An RME is an individual who is employed by the licensed entity and actively involved in the day-to-day activities of the business. The RME cannot engage in any other business that could detract from their duties for the licensed entity.

In both these roles, the individual’s personal contractor license becomes associated with the company, effectively allowing ‘working under’ the company’s license. Oftentimes this exception is used to gain the necessary work experience for a would-be contractor.

Remember, the CSLB expects the RMO or RME to exercise direct supervision and control, thus ensuring quality and consumer protection. Any issues with the work will mean the RME or RMO will be held personally responsible.

A Quick Word On Reciprocity

Although this is technically NOT an exemption to the contractor’s license requirements set forth by the CSLB, it IS possible to fast-track your contractor’s license in California if you hold a valid contractor’s license in Arizona, Louisiana, Nevada, and Utah.

Check out our blog post on reciprocity agreements for more information.

The Final Word: “No.”

In a word, NO, you cannot work under someone else’s contractor license in California.

There are a couple of exceptions – RMEs and RMOs – and it is possible to get your license in California without going through the regular route to get your license.

The penalties for doing unlicensed contracting work in California can be severe – including fines and prison time. When in doubt, assume that if you’re doing any sort of contracting work in California – you need your own contractor’s license.

Put it this way: you wouldn’t use someone else’s driver’s license to be legally able to drive a car, so why would you be allowed to do the complicated engineering of building a home?

Additional Reading

The Pros and Cons of Having Contractors Licenses In Multiple States

If you’re a contractor somewhere in the U.S., you’ve probably thought about the potential for obtaining multiple contractors licenses, across multiple states. 

In theory, it sounds great: more licenses means the potential for more profit – but does reality match our initial thought process? Is it worth it to get multiple state contractors’ licenses?

Let’s find out.

The Pros of Having Multiple State Contractors Licenses

More Opportunity For Jobs

The most obvious pro of having multiple state licenses means you have more access to more construction processes, especially as the construction industry in America is expected to continue to grow by 9% every year.

This doesn’t mean that construction jobs will magically fall into your lap – if you’re operating in Oregon, you might struggle to build a reputation in Alabama – but if you have a way to find jobs in other states, holding multiple licenses will allow you to take advantage of these opportunities. 

This will also help you build resilience for your business – by increasing the geography where you can do construction, you insulate yourself from things like natural disasters in your state or regulatory issues that could make it more difficult to do your job in your home state.

Larger Revenues

More opportunities naturally lead to a larger stream of revenue. According to the Bureau of Labor Statistics, the median annual wage for construction managers was just shy of $100,000, so by expanding into other states, you can see that number rise quickly. 

Competitive Edge

In a crowded marketplace, holding multiple state contractor’s licenses can give you the edge over your rivals. It showcases your commitment, adaptability, and a willingness to go the extra mile – qualities that clients admire and seek in a contractor. 

It also allows you to work on projects that cross state lines – putting you at the top of the list when potential clients are evaluating bids on their RFPs.

The Cons of Having Multiple State Contractors Licenses

Administrative Headaches

More contractor’s licenses = more administrative work. 

Juggling all the red tape and bureaucracy of just a single license can be difficult – let alone navigating the byzantine labyrinth of renewal dates, regulations, and certifications and qualifications required by each state.

In addition, as you expand your business beyond your state of origin, you’ll inevitably have to hire more people to take advantage of the new opportunities that have opened up. Yes, you’ll be able to raise your revenue, but that brings with it the need to manage teams of people across state lines – and ensure quality across projects, so your reputation stays intact.

Rising Costs

Obtaining multiple state contractor’s licenses can weigh heavily on your wallet. Each state imposes its own set of licensing fees, and they can quickly add up. The National Association of State Contractors Licensing Agencies (NASCLA) states that license fees can range anywhere from $200 to $1,000 per state.

In addition to just the fees for obtaining your license, in many cases, expanding into other states requires you to hire additional employees or subcontractors to help you perform the work. As you grow your team, so will your costs – cutting into any additional profit you may gain from expanding into other markets.

Compliance Nightmares

As with the administrative load that comes with expanding into new states, simply keeping up with the constantly changing rules and regulations of multiple states can be a daunting task. 

A slip-up in one state could potentially jeopardize your licenses in others. Maintaining compliance across the varied political and ecological frameworks present across America is like walking a tightrope – a delicate balancing act that requires constant vigilance and just plain, hard work.

Should I Get Multiple Contractors’ Licenses?

Everyone’s favorite answer: it depends.

While the prospect of expansion and increased revenue is tantalizing, it’s crucial to weigh these advantages against the cruel realities of expansion: growing your business across state lines is expensive, risky, and requires constant attention and expertise to maintain good standing.

We really can’t decide for you – only you know the health and future of your business – so weigh the pros and cons wisely!

What Contractor License Do I Need In California?

Are you a construction professional in California – or a construction professional in another state and looking to move to California for work?

Then you’ll need a California Contractors State Licensing Board (CSLB) contractor’s license to perform any job with a value over $500! 

But what kind of license do you need to legally perform your work in California? We’ve got you covered with this easy-to-understand article.

Overview of California Contractor License Classifications

California offers a wide range of contractor licenses, with over 40 classifications available to cover various trades. These licenses fall into three primary categories:

  1. Class A – General Engineering Contractor: This license is for contractors whose primary business involves fixed works requiring specialized engineering knowledge and skill.
  2. Class B – General Building Contractor: The B license is for contractors who build or remodel structures, including those intended for human habitation.
    1. Class B-2 – Remodeling Contractor
  3. Class C – Specialty Contractor: The C license covers various trades and crafts, with over 40 specific classifications under this category.

Each classification has unique requirements and authorizes the contractor to perform particular tasks. Let’s explore some of the most common C-Specialty Contractor classifications.

Popular C-Specialty Contractor Classifications in California

Below is a list of some common C-Specialty Contractor classifications, including their classification code and a brief description:

  • C-2 – Insulation and Acoustical: Installation of insulation and acoustical treatments.
  • C-4 – Boiler, Hot Water Heating, and Steam Fitting: Work with boilers, hot water heating systems, and steam fitting.
  • C-5 – Framing and Rough Carpentry: Construction and installation of rough and finish carpentry.
  • C-6 – Cabinet, Millwork, and Finish Carpentry: Creation and installation of cabinets, millwork, and finish carpentry.
  • C-7 – Low Voltage Systems: Work on low voltage systems, such as alarm systems and communication devices.
  • C-8 – Concrete: Concrete projects, including pouring, finishing, and reinforcement.
  • C-9 – Drywall: Installation of drywall and related materials.
  • C-10 – Electrical: Electrical system installation, maintenance, and repair.
  • C-11 – Elevator: Installation and repair of elevators and related equipment.
  • C-12 – Earthwork and Paving: Grading, excavation, and paving projects.
  • C-13 – Fencing: Construction and repair of fences and related structures.
  • C-15 – Flooring and Floor Covering: Installation and repair of various flooring types, including carpet, hardwood, and tile.
  • C-16 – Fire Protection: Installation and maintenance of fire protection systems, such as sprinklers and alarms.
  • C-17 – Glazing: Installation and repair of glass and glass-related products.
  • C-20 – Warm-Air Heating, Ventilating, and Air-Conditioning: Installation and repair of HVAC systems.
  • C-21 – Building Moving/Demolition: Building relocation and demolition projects.
  • C-22 – Asbestos Abatement: Removal and encapsulation of asbestos-containing materials.
  • C-23 – Ornamental Metal: Fabrication and installation of ornamental metal products.
  • C-27 – Landscaping: Construction, maintenance, and repair of landscape projects.
  • C-28 – Lock and Security Equipment: Installation and repair of locks, safes, and security systems.
  • C-29 – Masonry: Masonry work, including the construction and repair of brick, stone, and concrete structures.
  • C-31 – Construction Zone Traffic Control: Management of traffic flow within construction zones.
  • C-32 – Parking and Highway Improvement: Installation and repair of parking facilities, highways, and related improvements.
  • C-33 – Painting and Decorating: Painting, finishing, and decorating services for various surfaces and structures.
  • C-34 – Pipeline: Installation and repair of pipelines for water, gas, and other substances.
  • C-35 – Lathing and Plastering: Application and repair of lathing and plastering materials.
  • C-36 – Plumbing: Installation and repair of plumbing systems, including fixtures and appliances.
  • C-38 – Refrigeration: Installation and repair of refrigeration systems and equipment.
  • C-39 – Roofing: Installation and repair of various roofing materials and systems.
  • C-42 – Sanitation System: Covers the installation, maintenance, and repair of septic tanks and other sanitation systems.
  • C-43 – Sheet Metal: Fabrication and installation of sheet metal products.
  • C-45 – Sign: Authorizes the installation and repair of signs, including electrical and non-electrical signs.
  • C-46 – Solar: Installation and repair of solar energy systems.
  • C-47 – General Manufactured Housing: Construction, remodeling, and repair of manufactured housing units.
  • C-50 – Reinforcing Steel: Involves the installation of reinforcing steel in concrete structures.
  • C-51 – Structural Steel: Fabrication and erection of structural steel components.
  • C-53 – Swimming Pool: Covers the construction and repair of swimming pools, spas, and related equipment.
  • C-54 – Ceramic and Mosaic Tile: Authorizes the installation and repair of ceramic and mosaic tile work.
  • C-55 – Water Conditioning: Installation and repair of water conditioning systems and equipment.
  • C-57 – Well Drilling: Involves the drilling and installation of water wells.
  • C-60 – Welding: Covers welding projects, such as structural steel and pipe welding.
  • C-61 – Limited Specialty: A broad category for various limited specialties not covered by other classifications.
  • C-63 – Construction Clean-up: Cleaning and waste removal services for construction sites.

For a complete list of California contractor license classifications, visit the CSLB Licensing Classifications page!

Choosing the Right License for Your Trade

When determining “What contractor license do I need in California?”, consider the specific tasks and projects you’ll be undertaking. After looking at the list of CSLB classifications, you probably already know what kind of license you’ll need – but remember that you may need multiple licenses to perform some types of work.

For example, a landscaping contractor (a C-27 license holder) may also need a C-8 Concrete License if they frequently construct patios, walkways, or retaining walls. A general contractor may need an electrical license if he’s also installing outlets.

In Conclusion

Obtaining the appropriate contractor license is a critical step in establishing a successful and legally compliant business in California. By understanding the various classifications and their requirements, you can confidently select the right license for your trade and ensure your business operates within the state’s regulations.