California Contractors License Application Service

Licenses for Limited Liability Companies (LLC)

The passage of Senate Bill 392 (Statutes of 2010, Chapter 698) authorizes CSLB to issue contractor licenses to limited liability companies (LLCs). The law says that CSLB shall begin processing LLC applications no later than January 1, 2012.

Do Not Apply for LLC Licenses Yet

CSLB is not issuing licenses to LLCs at this time.

CSLB staff is currently developing new application procedures, creating applications, and putting in place important programming changes that are necessary for this new business entity. It is anticipated that CSLB will be ready to begin accepting applications from LLC applicants by the January 2012 deadline. Until the program is in place, CSLB cannot accept applications from LLCs, and no LLC licenses will be issued.

Below are some primary requirements for and components of LLC licenses that will apply once CSLB begins processing applications for LLC licenses.

$100,000 Surety Bond
A $100,000 surety bond (in addition to the $12,500 contractor bond) is required for the issuance, reissuance, reinstatement, reactivation, and renewal of an LLC license for the benefit of any employee or worker damaged by the LLC’s failure to pay wages, interest on wages, or fringe benefits, as well as other contributions (not required for inactive LLC licenses). (Business and Professions Code [BPC] Section 7071.6.5)

$1 Million Liability Insurance Minimum
Liability insurance with the aggregate limit of $1 million for licensees with five or fewer persons listed as members of the personnel of record is required; plus, an additional $100,000 is required for each additional member of the personnel of record; not to exceed $5 million total. (BPC 7071.19)

Personnel of Record
Every person who is an officer, member, responsible manager, or director must be listed as personnel of record on LLC applications. (BPC 7065)

Qualifying Individual
LLC licenses must be qualified by appearance of a responsible managing employee (RME), responsible managing officer (RMO), responsible managing manager, or responsible managing member. (BPC 7065)

$1 Million Personal Liability during Secretary of State Suspension
If an LLC license is suspended for failing to be registered and in good standing with the Secretary of State, each person within the LLC may be held personally liable up to $1 million each during the time the LLC is suspended. (BPC 7076.2)

Liability Insurance Information on Contracts
Specific general liability insurance information is required to be included on the LLC’s home improvement and service and repair contracts. (BPC 7159 and 7159.10)

License Number Reissuance
Sole owner and corporate license numbers may be reissued to LLCs under certain circumstances. (BPC 7075.1)

Joint Venture Licenses
An LLC may be listed as an entity on a joint venture license. (BPC 7029)

Partnership Licenses
LLCs may serve as a general partner on a partnership license provided the LLC meets the above requirements relating to the additional surety bond and liability insurance. An LLC serving as a limited partner on a partnership license is not required to meet the additional surety bond and liability insurance requirements.

Business Name Styles
According to the Secretary of State’s office, LLC business names have specific requirements and restrictions. Interested parties should contact the Secretary of State’s office directly (www.sos.ca.gov) for full information about LLC business name issues. Briefly, LLC business names must comply with the following:

• The name of an LLC must end with the phrase "Limited Liability Company” or the abbreviation "LLC" or "L.L.C." The words “Limited” and “Company” may be abbreviated to “Ltd.” and “Co.,” respectively. (California Corporations Code [CCC] Section 17052 (a))

• The name of an LLC may not include the words "bank," "trust," "trustee," "incorporated," "inc.," "corporation," or "corp." (CCC 17052(d))

• The name of an LLC may not include the words "insurer" or "insurance company" or any words suggesting that it is in the business of issuing policies of insurance and assuming insurance risks. (CCC 17052(d))

• If the name of a foreign (out-of-state or out-of-country) LLC does not conform to the requirements of CCC 17052, the foreign LLC must agree to transact intrastate business under an assumed name that does meet the requirements of CCC 17052 in order to register with the Secretary of State. (CCC 17452)

Other Requirements
Most other requirements and provisions that apply to corporate licenses will also apply to LLC licenses.

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