3 Contracting License Mistakes to Avoid
Getting your contractor’s license is a smart business decision because it lets you take on jobs with real profit potential and gives your contracting business a professional image that customers can trust. In fact, in California, anyone who performs work on a project valued at $500 or more (including labor and materials) must hold or work under a valid contractor’s license from the state Contractor’s State License Board (CSLB).
If you want to get the most out of your contracting business, you absolutely need to have your license. However, as with any licensing agency, the process can be overwhelming and confusing. Here, we cover three common licensing mistakes you want to avoid.
Not Getting Your License
The biggest and most common mistake you need to avoid is doing work without a valid contractor license. If you take on jobs worth more than $500 without getting your contractor’s license, you can ruin your career. Individuals and companies that perform work without a license are unable to sue for unpaid work, and can even be forced to return any payments received for work finished.
Furthermore, individuals who work without the proper license may be forced to appear in court to face possible jail time and potential financial penalties of up to $20,000. It simply doesn’t pay to complete work without the proper licensing.
Playing the Name Game
One of the steps required in getting your contractor’s license is creating and filing a business name with the state of California. Choosing your business name is incredibly important because it lets your customers know who you are, helps to create your brand, and gives you recognition in your community. In fact, it’s the law. Once you’ve registered your business name with the CSLB, you must submit bids, enter into contracts, and complete work under the exact name you’ve registered with.
You also need to notify the CSLB within 90 days of any changes to your address, business name, or licensing. Using the wrong business name or failing to notify the CSLB of changes puts your company at risk of litigation or lost revenue.
The next contracting license mistake you want to avoid is improper licensing. When you are getting your contractor’s license in California, there are numerous license classifications available, so you need to ensure you conduct work using the proper licenses. You also need to decide if you’re going to license your business as a sole proprietor or if you’ll operate your business as a corporation. Both allow you to conduct work, but require different licensing procedures.
Getting your contractor’s license is a great decision for your business and your future. It allows you to take on bigger and better jobs and build the career you want. The licensing process can be confusing and a little daunting. The best way to avoid mistakes and set yourself up for success is to work with a professional. At Contractors License Resource Group, we have more than 35 years of experience helping contractors just like you navigate the complex licensing process. Call us today to avoid licensing mistakes and get your career started right.