Starting a Corporation as a Contractor in California
Do you want to start a construction company in the state of California? If so, you may be wondering which business structure you should use.
Many general contractors in California opt to organize as an LLC (limited liability company). Then generally do so because LLCs have a reputation as being easy to set up and maintain.
However, though LLCs may be a superb option for some other industries, they aren’t always the appropriate choice for general contractors. That’s because the state of California requires a $100,000 surety bond to issue, reissue, renew, reinstate, or reactivate an LLC license.
The California Contractors State License Board also requires businesses in the construction sector to hold a $15,000 contractor’s bond. The bond is filed for the benefit of consumers who suffer damages and employees who do not receive their wages on time.
These bonds can cost thousands of dollars – money that would be better spent on other areas of your new business.
A Better Option: Contractor Corporations in California
If you would like to significantly reduce the cost of starting a construction company in the Golden State, you might want to organize as a corporation instead of an LLC.
As a corporation, you will still need to have a contractor’s bond. However, you won’t need to purchase a $100,000 LLC surety bond. The absence of this requirement will save you a substantial amount of money.
Of course, if you want to create a contractor corporation, you will need to fulfill certain requirements, such as:
Generally speaking, contractor corporations in the state of California may not use a company name that indicates the business is qualified to carry out work in contractor classifications other than those listed on its CSLB license. It also cannot conduct business under more than one name for each CSLB license.
To learn more about contractor corporation naming requirements, you can contact the CSLB, the Secretary of State, or a skilled business attorney in San Diego.
When founding a contractor corporation in California, you should create a set of bylaws that outline how the company will operate. Your bylaws should include a list of your directors and their duties as well as the frequency of shareholder meetings.
If you do not wish to write your bylaws yourself, you can have a skilled California business lawyer do so on your behalf.
In the state of California, all contractor corporation licenses must be qualified by a responsible managing officer or a responsible managing employee. If you do not have a qualifying individual on your team, you will not be able to create your corporation.
Your Knowledgeable Business Attorney in San Diego
Are you starting a corporation as a contractor in California? Do you need assistance? If so, please do not hesitate to get in touch with the team at the Semanchik Law Group. We have been assisting San Diego residents with this process for years – so we know what it takes to get the job done right.
To set up a consultation with one of our legal professionals, all you need to do is give us a call at (619) 535-1811 or contact us online.