Licensing and Registrations: A Guide to Becoming a California Contractor

Operations, Construction Law
Joey Randazzo
October 26, 2021
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You’re ready to become a California contractor and wondering if there are state-specific guidelines you should know.

The requirements and laws can vary from state to state.

This guide shares what you need to know about a California contractor’s requirements and path to licensing.

Flexbase: Streamlining Billing Is One Part of Cash Flow Management for California Contractors

For someone just becoming a California contractor, it’s important to understand what you’re getting into.

For most projects, a general contractor is a person in charge of the day-to-day. While you may do some hands-on work, you’re in charge of coordinating different aspects of the job, managing loads of paperwork, and billing subcontractors.

In other words, you’re responsible for bringing together the big picture as well as the small details.

It’s a demanding job that takes:

  • Professional skills
  • Broad knowledge
  • The ability to communicate with all types of people

Flexbase works to auto-generate invoices and improve cash flow for different construction businesses. Our progress billing and system integration of project management and accounting software are great for contractors — but they are perfect for California contractors just starting out.

Flexbase provides services for California contractors such as:

  • Integrating with multiple project management software programs
  • Requesting payments
  • Automating payments and paperwork
  • Sending invoices and reminders

Is a License Required to Become a California Contractor?

A license is required for some California contractors. It depends on the price and value of the job.

In California, any business or person who constructs or alters a …

  • Building
  • Highway
  • Road
  • Parking facility
  • Railroad
  • Excavation; or
  • Other structure

… must be licensed by the California Contractors State License Board (CSLB) if the total cost of a contract on the project is $500 or more.

With your California contractor’s license, you’ll:

  • Show you’ve been approved by the state.
  • Be seen as more knowledgeable.
  • Have more credibility than someone without one.
  • Be licensed, bonded, and insured in case something goes wrong.

Remember to always check the CSLB website for the most up-to-date information.

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How Do You Get a California Contractor’s License?

Ready to get your California state contractor’s license?

If you perform a California contractor license search online, you can find a lot of contradicting (and often overwhelming) advice.

We’ve simplified this information for you.

To begin, there are basic requirements before you can apply for a California contractor’s license:

  • You must be at least 18 years old.
  • You’ll need a valid Social Security number or Individual taxpayer identification (ITIN).
  • You’ll have to show at least four years of industry experience.
  • This must be within 10 years.
  • Military and school experience can count as well.

The next steps for a California Contractor’s license include:

  1. Choosing a specific license class
  2. Submitting your application and fees
  3. Taking your exams; and
  4. Submitting final license fees and other required documents

Which California Contractor’s License Class Should You Apply For?

There are three classes of California contractor’s licenses you can apply for:

  • Class A: General Engineering Contractor
  • Someone who has specialized engineering knowledge and skill
  • Class B: General Building Contractor
  • Someone who most closely resembles the standard definition of a general contractor
  • Class C: Specialty Contractor
  • There are 42 separate “C” license classifications.
  • Someone whose construction work requires special skill

What Are Application Fees for a California Contractor’s License?

If you’re ready to submit your California contractor’s license application, you can do so by mail or online with the CSLB.

The current application fee is $330 and can be paid by:

  • Check
  • Money order
  • Credit card
  • Cash (in the Sacramento, CA, office)

Always check on the CSLB website for the most updated information about applications and fees.

Do I Have to Take an Exam to Become a Licensed California Contractor?

Yes, an exam is required to have a California contractor’s license.

Once you submit your license application and fees, you’ll be sent a “Notice to Appear for Examination” in the mail. It will contain two important numbers: an application fee number and a 4-digit PIN. You can use these numbers to check on the status of your application.

You’ll be provided with all the information you need on where to go, and you’ll usually have about three weeks to prepare for the test.

Exams can vary depending on specific trades, but the first one you’ll have is the California Business and Law exam. It will include questions about on-the-job safety, finance and budget, and contract requirements.

The CSLB website has a study guide and more information on specific exams.

Where Do I Take the California Contractor’s Exam?

The CSLB office will use your zip code to determine where you will go for your California contractor’s license exams.

The current major exam cities are:

  • San Diego
  • San Bernardino
  • Norwalk
  • Oxnard
  • Oakland
  • Sacramento
  • San Jose
  • Fresno

What Happens If I Miss My Scheduled Exam?

If you miss your scheduled California contractor’s exam, you’ll have to pay a $60 rescheduling fee.

What Happens When I Pass My California Contractor Exam?

Once you pass the contractor’s exams, you’ll be given a bond and fee notification from the testing site. Additional requirements may be included.

About one week after your California contractor’s license is issued, you should receive your wall certificate and pocket card. The law requires that you display your wall certificate in your main office or chief place of business.

What Are the Licensing Fees for a California Contractor?

In addition to the application fee of $330, there are other fees to consider while preparing for your California Contractor’s license:

Understanding Registration and Permitting Requirements for California Contractors

In California, a variety of permits will need to be obtained based on wherever the proposed construction will take place.

These include:

As a California contractor, you can use the Governor’s Office of Business and Economic Development CALGold to assist in finding the correct permit information for your business and project.

What About California State Business Registration and Licensing Requirements?

Registering as a California contractor’s business is different than being a registered contractor.

Per the California Business Portal:

“All businesses that wish to conduct business in California need to register and form their legal entity with the California Secretary of State’s Office, file appropriate taxes, register as an employer, and obtain business licenses and other permits from appropriate cities or counties. Depending on your business type there may be additional permits, licenses or certifications that your business needs to acquire.”

California Tax Identification Numbers and Registration

As a California contractor, you may need to obtain an Employer Identification Number (EIN) if you’re growing a business.

An EIN (also called a Federal Employer Identification Number) is used by the IRS to identify your company for federal tax purposes.

It’s essentially your business’s Social Security Number.

If your business falls into one of the following categories, you will need to obtain an EIN:

  • You formed a California corporation or partnership.
  • You have employees.
  • You withhold taxes on income (other than wages) paid to a non-resident alien.
  • You are involved with a:
  • Trust
  • Estate
  • Real estate mortgage investment conduit
  • Non-profit
  • Farmers co-op
  • Plan administrator

If you plan to open a business bank account as a California contractor, note that most banks will require an EIN.

California Workers’ Compensation Insurance Requirements

All California businesses that have employees (or even only one employee) are required to have workers’ compensation insurance.

Estimated employer rates for workers’ compensation in California are $1.83 per $100 in covered payroll.

Your cost is based on factors such as:

  • Number of employees
  • Payroll
  • Location
  • Industry and risk factors
  • Coverage limits
  • Claims history

How to Renew Your California Contractor’s License

There are two important things to remember about your California contractor’s license:

  1. Active licenses expire every two years.
  2. Inactive licenses expire every four years.

The expiration date is located on your current pocket card.

Approximately 60 days before your contractor’s license expiration date, CSLB will send you a renewal application. You can also contact the Board if you don’t receive one or for any address changes.

Renewal fees depend on the situation:

  • Timely active renewal fee: $450
  • Timely inactive renewal fee: $225
  • Delinquent active renewal fee: $675
  • Delinquent inactive renewal fee: $337.50

Again, check the CSLB website for updated renewal and fee information.

What Happens if You Fail to Renew Your License?

According to the CSLB, if you fail to renew your California contractor’s license or if your renewal is received after the expiration date, the following will occur:

  • The renewal will be considered delinquent.
  • You will be required to pay the delinquent renewal fee.
  • There will be a break in licensing time.
  • The license will only be renewed from the date an acceptable renewal application is received through the remainder of the current renewal period.

In addition:

“Any work performed while the license is expired is considered to be unlicensed, and disciplinary action can be taken against you.”

Be aware that an expired license can be renewed any time within five years.

How Flexbase Is Solving Cash Flow Problems For New and Experienced California Contractors

Whether you’re a new or experienced California contractor, you have a massive responsibility.

This is where Flexbase comes in.

Flexbase gives you access to tools, including:

  • Payment notices
  • Automatic payment reminders
  • Legal notices
  • Automated paperwork and compliance

Get paid faster with Flexbase while you focus on your projects as a California contractor.

Schedule your free demo with Flexbase today and speak with one of our experts about how Flexbase can help your California construction business.

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