What To Know About Contractor License Classes In Los Angeles

By Andrea Pedigo

Contractor licenses are important because they allow individuals and entities to provide services and products to customers without breaking the law. Licenses are usually obtained as Sole proprietors, corporations, partnerships, or LLCs. Usually, they are issued in the name of the person who owns the business and whose name appears on the financial statements. That means that all business bids must be placed in the exact name that appear on the license. This is worth knowing regarding Contractors State License Center.

The law requires that a licensing test must be taken and passed by all new applicants of licenses. These tests are administered by relevant government bodies. Licenses are classified according to various criteria, but some of the common ones are Mechanical, Electrical, and Building. Several subcategories fall under the various classes of licenses. There is a fee that all people who place applications must pay to gain the permit. Location may play a role in how much one has to pay.

In the licensing process, the person who sits for and passes the licensing exam is referred to as the qualifying agent. Qualifying agent may be the owner of the license or an officer or full time owner of the business. It is important to note that the license does not belong to the qualifying agent, unless the qualifying agent is also the owner of the business in whose name the license was issued. That would mean that the name of the qualifying agent must also appear on the financial statements provided during the application of the permit.

Every permit issued in the US is normally assigned a classification. The classes include MU, CE, BC, HRA, HC, LMC, CMC, Specialties and Environmental among many others. Class HC stands for heavy construction, HRA deals with highway, railroad, and airport, BC for building, CE deals with electrical, MU for Municipal Utility while LMC deals with masonry.

It is a requirement by the law to only bid on projects lie within a certain license class by over 60 percent. However, one may only neglect this rule if the project is a commercial one. Even with that, portions of such commercial projects that fall outside the license one holds must be sub-contracted to another entity that is properly licensed.

There is also an exception to the law stated above. The exception is that one can only sub-contract if the amount they are paid to do work in which they are not licensed exceeds 25000 dollars. All licenses issued in the United States usually have monetary limits. That means that one cannot take contracts that exceed the limit specified in the contract. Doing that amount to breaking the law and attracts a penalty.

The financial limit placed on licenses is usually dependent on the financial statement submitted during the application process. Such financial statements must be prepared by a certified public accountant. Besides that, applicants must provide proof of insurance. Worker compensation and general liability are the two insurance policies needed.

When the application is being placed, applicants are required by the law to list all owners of the license. Also, full disclosure is required as well as experience that the individual has in the field they intend to work. Approval or rejection of the application typically takes up to 6 weeks, which involves reviewing of the application placed by a board. It is considered illegal to offer, contract, or bid before receiving the approval of the permit.

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