Running the Business · Module 2
The entity is a one-way door: why you decide sole owner, LLC, or corporation before the license issues
A contractor license is issued to one specific legal person: you as an individual, or a corporation, or an LLC. It is never transferable. If you license as a sole owner and later form a company, the company needs its own application, its own bond in its own name, and, unless you keep more than half of it, its own license number, which means starting your license history over. This lesson explains what the law actually allows when you change entity, what the LLC and corporation add to the checklist, and why the entity decision belongs before the application, not after the first good year.
What the full lesson covers
- No contractor license is transferable to any other person or entity under any circumstances (B&P 7075.1(a)). A new entity means a new application, a new bond in the new name, and a new qualifier filing.
- The license number can follow you into a corporation or LLC only if you formed it and keep more than 50 percent of the voting power (B&P 7075.1(c)(5)). Sell down below that, or form the company with a partner who holds half, and the number cannot move.
- Going the other direction, from a company back to a sole owner, is not on the list; that is a new number.
- An LLC adds a $100,000 employee bond and a $1,000,000 liability policy to the license; a corporation adds neither, but may need a qualifier bond if the RMO owns under 10 percent.
- The entity does not change who is responsible to CSLB. The qualifier is, personally, whatever the entity is.
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More lessons in Setting Up the Business
- 1The entity is a one-way door: why you decide sole owner, LLC, or corporation before the license issuesYou are here
- 2Sole owner vs. LLC vs. S corporation for a plumbing contractor: liability, tax, cost, and the small claims limit
- 3EIN, the business bank account, and separating the money: the first bookkeeping setup that survives an audit and a lawsuit
- 4City business licenses: every city you work in, the Los Angeles business tax, and the seven-day rule
- 5The insurance stack: general liability, commercial auto, the bond, and workers' comp. What each covers, what each does not, and who will demand it