Category Archives: Contractor Business

Business Structures 101 for California Contractors

You’ve put in the hard hours, you’ve done the hard work, and you’ve finally passed the notorious CSLB exam. Now’s the time to submit your bonds and insurance to the CSLB and get your contractor’s license.

Not so fast. There’s one thing that many contractors overlook – every contractor needs to establish a company for themselves, whether they’re a day jobber working on roofs in their neighborhood, or a multinational company beginning work in California for the first time.

But what kind of business should you establish for your contracting business? How do you even decide? In this article, we’ll cover some of the essentials when it comes to deciding what kind of business structure you should establish for your contracting company.

The California Secretary of State and the CSLB

The authority that regulates business in California is called the Secretary of State, but the CSLB – as always – is the one who requires all contractors to register as a business in the state.

It’s important to note that while technically speaking you do not need to have a business or to be registered with the California SoS, it’s all but necessary for contractors to have their own business. Without a proper business structure and registration, you expose yourself to financial risk, liability risk, to reputational risk in case anything goes wrong.

Registering a Business: A Prerequisite for CSLB Licensing

Before you can apply for a contractor’s license from the CSLB, you must first register your business with the state of California. This is a critical step in the licensing process. The type of business structure you choose will determine the specific registration process you must follow – more on that later.

Once your business is registered, you can then proceed to apply for a contractor’s license from the CSLB. The application process involves demonstrating your qualifying experience, passing an examination, and getting fingerprinted for a criminal background check.

Remember, operating a contracting business without a valid license from the CSLB is illegal in California and can result in hefty penalties. Therefore, it’s crucial to ensure your business is properly registered and licensed before you start offering contracting services.

Sole Proprietorship: Simplicity with Personal Liability

For 99% of contractors, you’ll want to set up as a sole proprietorship.

In its simplest form, this means you are the only operator and only employee in the business. As you can imagine, this is the structure that independent construction specialists (those with Class C licenses) like plumbers, HVAC techs, and welders use, as they’re often one-man bands.

In California, contractors operating as sole proprietors must register their business with the county clerk’s office in the county where the business is located. They must also obtain an Employer Identification Number (EIN) from the IRS, even if they don’t have employees, as an EIN is required for certain federal tax filings.

Partnership: Shared Ownership and Responsibilities

A partnership is a business structure where two or more individuals share ownership. Partnerships can be general or limited in liability – which essentially defines what you’re liable for in case of losses.

In a general partnership, all partners share in the business’s profits and losses, and each partner is personally liable for business debts. In a limited partnership, one or more general partners have unlimited liability, while the limited partners have liability only up to the amount of their investment.

This setup is a good situation for family businesses or situations where you and some of your friends, family, or local community are all banding together to work together. This way, the people involved in your company’s success are liable for losses as well as profits.

When setting up a partnership, documentation is key. Partnerships require a written agreement detailing the division of profits, roles and responsibilities, and procedures for resolving disputes. Partnerships in California must register with the Secretary of State and obtain an EIN from the IRS.

Corporation: Maximum Protection with Increased Complexity

“Corporation” might be a dirty word nowadays, but for contractors, it can be a very useful business structure. A corporation is a legal entity separate from its owners, providing the most protection from personal liability, but the tradeoff is it takes tons of resources to begin – and even more to maintain.

Corporations have the most complex business structure and require more time and money to maintain. Corporations are required to hold regular board meetings, maintain corporate records, and file corporate income tax returns – all of which are extremely complicated and difficult, especially for corporations.

In addition to filing a formation of business with the California SOS, corporations must also adopt bylaws, issue shares of stock, and file an annual report. Corporations are taxed at the corporate rate and may face double taxation if profits are distributed to shareholders as dividends.

Limited Liability Company (LLC)

An LLC combines the liability protection of a corporation with the tax benefits and simplicity of a partnership. This, in addition to Sole proprietorship, are rather common in the construction world, as it blends both the liability protection of corporations with the freedom and flexibility of a sole proprietorship or partnership.

Owners of an LLC, known as members, are not personally liable for the company’s debts and liabilities. There can be as many members as you want to name. We have to recommend an LLC structure for your contracting business, it’s a nice balance of all the other various structures.

The Role of Qualifying Individuals in Business Structures

In California, every contractor license requires a qualifying individual, or “qualifier,” who has demonstrated their knowledge and experience through the application process and holds one or more license classifications. If you’re a contractor, you either are a QI or work for a QI.

A qualifier may be a Sole Owner, Qualifying Partner, Responsible Managing Employee (RME), Responsible Managing Officer (RMO), Responsible Managing Manager, or Responsible Managing Member.

Being a qualifier on a license can be a significant risk and liability. Under Business and Professions (B&P) Code section 7122.5, if the performance of an act or omission by the license constitutes a cause for disciplinary action, it also is a cause for disciplinary action against the qualifier, regardless of their knowledge and participation.

Conclusion

Choosing the right business structure for your contracting business in California is a critical decision to both your business’s success and your personal liability. It’s essential to consider your business’s nature, your personal risk tolerance, and your long-term business goals when making this decision, as this decision is extremely subjective and equally important.

When opening your business, it’s definitely worth the time to meet with someone who can help you make the right decision. Someone with experience in California law knows the tax codes, and has the general financial know-how that can provide individualized advice – these are definitely worth the money when opening your business.

Additional Reading

“Starting a Business Checklist.” California Secretary of State
“Employer ID Numbers.” Internal Revenue Service
“Partnerships.” Internal Revenue Service
“Corporations.” California Secretary of State
“Corporation Tax Rates.” Franchise Tax Board
“Contractors State License Board.” State of California
“Absentee Qualifiers.” Contractors State License Board

Do You Really Need to Join A Union To Become A Master Electrician?

If you’re an electrician or thinking about becoming one, you’re probably thinking about joining the union – whether that’s the national unions like the IBEW and NECA, or your local union like the CSAEW. If you’re even vaguely aware of electricians, what they do, and what the career entails, then surely you’ve at least heard of these.

These unions are the collective bargaining groups in the electrician’s field, and beyond the basic benefits of unions like arguing for wage and safety standards, the union serves as a psychological standard for electricians.

That is to say, being a union electrician carries a certain amount of prestige for electricians – it legitimizes many of them in the eye of the public. Likewise the title “Master Electrician” – it’s a title that everyone has heard from and it carries with it an air of trustworthiness and quality.

The thought that comes into one’s mind when one hears “master” versus “journeyman” or “apprentice” is that of a professional versus an amateur. Anyone who aims to be an electrician wants to be a master electrician.

What is a Master Electrician? And do you have to be in a union to become one? In this article, we’ll examine what a master electrician is, how to become one, and how the IBEW fits into this whole thing. Let’s take a look.

What Is A Master Electrician?

At the pinnacle of the electrical profession stands the master electrician—a title that signifies not just expertise but years of dedication, training, and hands-on experience. But what does it mean? What is a Master Electrician?

To be honest, it’s a little nebulous and frankly, ill-defined. A master electrician is actually not a specific title, like a journeyman or an apprentice. Rather, it’s a general signifier that suggests an electrician who has gone as far as they can go in their field.

What that means is typically a few things. A master electrician is a title that exists for electricians who have completed the apprenticeship and journeyman stages of their careers. They are people who have passed all the exams, gotten all the certifications, have worked the hours, and have overseen journeyman and apprentice electricians.

The specific requirements for becoming a master electrician vary by state, but generally speaking, it’s a title that only exists by necessity; it describes electricians who have surpassed journeyman status.

It’s also a term that seems to be dying out as the electrical profession continues to become more standardized. For example, California doesn’t create a distinction between these. You’ve satisfied the requirements to become a licensed C-10 electrical contractor, in which case, you get your license. Or you’re not. There’s no in-between.

In other states, like Arkansas or Colorado, there are distinctions between different types of electricians (some even getting as granular as apprentice journeyman electricians), so be aware of what the requirements are in your state. You may have to apply for a new license every single time you reach a new designation.

The long and short of it is what a master electrician actually is is vague at best, and meaningless at worst. There are some states where it doesn’t even exist.

Do I Have To Join The Union To Be A Master Electrician?

So now that you know that a master electrician simply means, well, being a good electrician for a long time, you can finally start moving in that direction. In some states, it’s a meaningless title or one that doesn’t exist. In others, becoming a master electrician is a quantifiable boost to your career.

Either way, the question remains: do you have to join the union to become a master electrician? In most cases, the answer is: technically no, but realistically yes.

Why do we say that? Well, because even though you are technically not required to be a part of any trade organization to become a master electrician in any state, the benefits of electrician’s unions are powerful. They provide invaluable resources that make getting any electrician’s license easier – they can definitely point you in the right direction to your master’s status.

You don’t need a union for anything as an electrician, really, but they do provide strong support for new electricians especially. However, you can still gain the same skills from non-union apprenticeships or non-union trade associations.

Union apprenticeships are known for their competitiveness and rigorous standards that will set you up in the professional for life, as well as induct you into the union, a big benefit to many just starting out. Union apprenticeships come with added prerequisites but offer better pay and benefits. Such apprenticeships are coordinated through partnerships, notably the International Brotherhood of Electrical Workers (IBEW) and the National Electrical Contractors Association (NECA).

Non-union apprenticeships offer more flexibility and are often preferred by those who wish to avoid union dues and seek a less structured work environment. local contractors or non-union trade organizations, such as the Independent Electrical Contractors (IECI) or the Associated Builders and Contractors (ABC) offer these apprenticeship programs and can be a good start for people who lack the money for union dues.

The reality is both pathways are equally viable. Electrical work is pure science that anyone can learn – even from a library – but both come with pros and cons that may fit your lifestyle better than the other.

The Transition From Apprentice to Master

The journey from an apprentice to a master electrician is filled with milestones and largely dependent on where you live. In some states, there are specific requirements that delineate between apprentices, journeymen, and master electricians. As we said before, in some states, the master electrician title does not exist at all!

In general, though, you’ll often see an hourly or yearly work requirement. That is to say, in order to be certified as a master electrician in certain states, you have to either work a number of hours or work for a number of years in a certain position.

For example, in Georgia, you can either do four years’ on-the-job training or four years’ apprenticeship and that’s it – you can get your license. In Arkansas, you need to complete 8,000 hours of work experience, AND 2,000 hours in the classroom, AND you have to pass an exam!

This underlines all the different definitions and standards for what makes a master electrician. In reality, what makes a master electrician depends on your local jurisdiction, on both a state and municipal level. If you’re reading this, you probably already know your area’s regulatory requirements. If you don’t – you need to get into gear!

Licensing and Regulations

Master electrician licensing is a complex tapestry of requirements that vary across states, and they become increasingly complex as you get more local – with town, municipal, and county regulations coming into play with state regulations as well. In some places, you’ll be up to your neck in licenses and regulations before you’re even a journeyman!

While the National Fire Protection Association’s National Electrical Code (NEC) serves as a foundational standard for many states, local jurisdictions often have their own specific requirements, modifications, and examinations, and as we covered in the last section, they can be radically different state-by-state.

In most cases; however, it’s a simple case of doing on-the-job training, in the form of apprenticeship, and then journeymanship. Only after completing these two steps can you reach the next level of becoming a master electrician.

Circling back to our central question: Do you have to be in a union to be a master electrician? The answer is no – with a ton of caveats.

While unions offer a myriad of benefits and can significantly influence an electrician’s career, they are not a mandatory or exclusive pathway to mastery. You don’t ever have to join a union to get your contractor’s license or to become a certified master electrician. And in many areas – like the 40 million people in California – master electricians don’t even exist!

That said, the electrician’s union is giant and popular amongst electricians for a reason – they do provide quite a bit of value to electricians just starting out and those at the end of their careers. If you’re just starting out, we recommend checking out an introductory meeting at your local chapter of the IBEW.

Does a Contractor Have to Pull Permits?

Introduction

“Does a contractor have to pull permits?” is a question that every contractor runs into at some point early on in their careers. Given the legal ramifications of running afoul of local codes and regulations, it’s no wonder this is a question that gives many a new contractor cause for pause.

So – are contractors the ones who are responsible for pulling permits for the job? Or is it the construction manager, project manager, or maybe even the foreman on the job site? Does the responsibility change depending on whether you’re a general contractor or a Class C specialty contractor?

In this article, we’ll cover everything about permits: what they are, who is responsible for acquiring the right permit, the legal points surrounding permits, and so on. Let’s dig in.

What Does “Pulling Permits” Mean?

Pulling permits is a colloquial term used to describe the act of securing the necessary permits or authorizations from relevant governmental bodies. Usually, permits are given out by local governments like counties, cities, or townships.

These permits ensure that the construction or renovation work complies with local building codes, zoning laws, and other regulations. Actually “pulling” a permit requires a number of steps – involves submitting detailed plans of the proposed project for approval, and working with local government to make any changes until your plans meet the necessary code. After your project is approved, you’ll receive your permit – but whether or not you’re in violation of said permit may require inspections before, during, or after the construction.

The Legal Landscape

No matter where you do construction work, there’s a well-defined legal framework that mandates contractors to secure permits for particular types of work.

For example, the California Code of Regulations requires employers to obtain Project Permits and Annual Permits from Cal/OSHA before initiating specific construction activities. These regulations aim to ensure that all construction activities meet the safety and quality standards set by the state.

Who is Responsible for Pulling Permits?

As always with construction, the responsibility for pulling permits…depends on so many factors.

This burden generally falls on the contractor overseeing the project, but that could be anyone from a general contractor to a homeowner installing a new window. In a typical construction company, however, the task of applying for, compiling, and maintaining permits is often assigned to a project manager, or in some cases, a designated permit expediter.

They are responsible for understanding the types of permits required, gathering the necessary documentation, and liaising with the relevant authorities.

However, in some cases, either the homeowner or a licensed contractor can secure the essential permits. This would be in situations where it’s you doing work on your own home, or where you’re an out-of-town GC who hires a local. In many cases, the local will know the permitting system in their local jurisdiction better than you would, so in that case, they may offer to take care of that (often for an additional fee).

How to Obtain a Permit

Obtaining a permit usually involves several steps, but they’re rather straightforward and follow simple common sense.

  • Identify The Type of Permit Needed: Different projects may require different types of permits, such as building, electrical, or plumbing permits.
  • Develop Plans: Create detailed plans for the project that comply with all local bylaws and regulations.
  • Submit Plans: Now take your plans and submit them to the relevant authority for review and approval.
  • Pay Fees: There are usually fees associated with permit applications. Most of the time they are paid upon submission, but you may also be waived the fee in the case of a permit rejection.
  • Await Approval: Once submitted, the application undergoes a review process, which may take anywhere from a few days to several weeks. Not much you can do in this step of the process but prepare your resources for deployment when you do get approved.
  • Receive Your Permit: If your permit is found to be compliant with the authority’s regulations, you will receive your permit! If not, you will usually get a chance to re-apply for a new permit.

What Requires a Building Permit in California?

While California is stringent about environmental regulations, each municipality interprets these regulations uniquely for their specific area.

Generally, projects that likely require a building permit in California include:

  • Demolition of an existing building
  • Roof replacement
  • Plumbing, electrical, and mechanical replacements
  • Adding an accessory dwelling unit (ADU) or a junior accessory dwelling unit (JADU)
  • Changing the layout of a house
  • The addition or removal of exterior walls
  • Stormwater
  • Grading
  • Mechanical Operation

It’s crucial to note that additional permits, such as stormwater, electrical, plumbing, grading, and mechanical permits, might be required based on the project’s scope.

Examples of Permits You Need For Construction In California

With one of the most complicated and comprehensive legal frameworks in the nation, California mandates contractors to obtain permits for almost any type of construction work.

The California Code of Regulations, for instance, requires employers to secure Project Permits and Annual Permits from Cal/OSHA for specific construction activities1.

You may also have to deal with permitting for the California Environmental Quality Act (CEQA). This usually involves an environmental review for projects that may have significant environmental impacts, ensuring sustainable development for projects that can affect the local ecology. These days, that’s most projects.

Here are some more types of permits you might run into in California, depending on your location, the nature of the job, and what role you have.

  • Annual Construction Permits: These permits are required for specific construction activities and are issued by the Division of Occupational Safety and Health (DOSH). More information on annual construction permits and the list of permit holders can be found on the DOSH Annual Construction Permit Holders page.
  • Construction Stormwater Permit: Construction projects in certain watersheds must apply for a Regional Water Board permit rather than a statewide permit. More details are available on the Construction Stormwater Program page.
  • Building Permits: These are required for various construction activities such as building garages, storage buildings, decks, carports, patio covers, and additions to single-family dwellings. More information can be found on the Building Department Documents page.
  • Energy Compliance Permits: Compliance with Title 24, State Energy Code, is mandatory for construction projects in California. More details are available on the Building Permit – Department of Planning and Development page.
  • Model Code Adherence Permits: Every three years, the State of California adopts new and/or updated model codes and adherence to these codes is mandatory. More information is available on the Building Permits and Inspection – Sacramento County page.

Do You Need To Pull A Permit As A Contractor?

Let’s answer the question once and for all: do you need to pull permits as a contractor in California?

And everyone’s favorite answer: most likely, but it depends!

California is a complex patchwork of legal standards, especially when it comes to construction. In addition to statewide regulations like sustainability standards, you have local codes and bylaws that are county, city, town, or even community-wide.

With that in mind, the reality is that you will most likely have to pull a permit as a contractor, at some point! The most important thing is you familiarize yourself with all the codes and regulations in the area you’ll be operating in.

It’s your responsibility to know the codes and adhere to them – or face the consequences, which can often be severe. Even if you’re not physically the one pulling the permits, you could face such penalties as a suspended or revoked CSLB license!

Additional Reading

California Department of Industrial Relations – Permit Requirements
Census.gov – Building Permit Survey
AvaTrade – What Are Building Permits?

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

Introduction

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

Conclusion

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