Help With New Corporation...

 
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Old 12-15-2017, 05:59 PM   #1
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Help With New Corporation...


Hi all,

I need some help here please...This is for the State of CA if that matters. My uncle has an active Gen B License and listed as a sole proprietorship on the CSLB.

I will be forming a company with a partner and we will "use" my uncle's license to conduct business. Of course he will be helping and involved etc, but won't own the company. The formation of the corporation will just have myself and my partner as owners. Does this make him an RMO in a sense and aside from filing for a corporation with the state, do we need to do anything in regards to the CSLB to have the sole proprietor changed to a corporation for this license? Any help at all would be so appreciated.

Thanks
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Old 12-15-2017, 06:53 PM   #2
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Re: Help With New Corporation...


Quote:
Originally Posted by mkb View Post
Hi all,

I need some help here please...This is for the State of CA if that matters. My uncle has an active Gen B License and listed as a sole proprietorship on the CSLB.

I will be forming a company with a partner and we will "use" my uncle's license to conduct business. Of course he will be helping and involved etc, but won't own the company. The formation of the corporation will just have myself and my partner as owners. Does this make him an RMO in a sense and aside from filing for a corporation with the state, do we need to do anything in regards to the CSLB to have the sole proprietor changed to a corporation for this license? Any help at all would be so appreciated.

Thanks
I did this. You have to refile as a corporation from a sole prop. They have forms for this and you pay for the "new" company under a new license. It would be the same if you had a partnership and then wanted to be a sole prop.....same thing. However, in this case, you can keep your old license number, rather than getting a new one.

Luckily you don't have to take the tests all over again. To keep things simply, your uncle will have to do this with his sole prop license. Then you guys can be officers on the board, even CEO if it comes to that.

I would also contact the license guru on his separate blog within CT and see what he says. I did it, but under my own name, with my own license.

Right now, I don't see a problem with your uncle as the RMO if that is what he wants to do. However, that may complicate things.

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Old 12-15-2017, 07:15 PM   #3
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Re: Help With New Corporation...


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Originally Posted by cwatbay View Post
I did this. You have to refile as a corporation from a sole prop. They have forms for this and you pay for the "new" company under a new license. It would be the same if you had a partnership and then wanted to be a sole prop.....same thing. However, in this case, you can keep your old license number, rather than getting a new one.

Luckily you don't have to take the tests all over again. To keep things simply, your uncle will have to do this with his sole prop license. Then you guys can be officers on the board, even CEO if it comes to that.

I would also contact the license guru on his separate blog within CT and see what he says. I did it, but under my own name, with my own license.

Right now, I don't see a problem with your uncle as the RMO if that is what he wants to do. However, that may complicate things.
Curious. Can someone be RMO for more than one company? If I remember correctly, in the licensed trades in Tx, only way you can be RMO of more than one company is if you own at least 51% of each. Wondering if CA is the same.
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Old 12-15-2017, 10:34 PM   #4
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Re: Help With New Corporation...


Here is some CSLB CA RMO Info:
http://www.cslb.ca.gov/Newsletter/20.../qualifier.asp

http://www.cslb.ca.gov/Newsletter/20...waiverapps.asp

A RMO must hold at least 10% interest in the company to be considered an RMO. You can still have your own company with it's own license. A RME cannot work under his/her own license while an RME.
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Old 12-16-2017, 09:34 AM   #5
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Re: Help With New Corporation...


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Originally Posted by cwatbay View Post
Here is some CSLB CA RMO Info:
http://www.cslb.ca.gov/Newsletter/20.../qualifier.asp

http://www.cslb.ca.gov/Newsletter/20...waiverapps.asp

A RMO must hold at least 10% interest in the company to be considered an RMO. You can still have your own company with it's own license. A RME cannot work under his/her own license while an RME.

Thanks so much for the help. I have contacted the License Guru and he's helping me and has been a huge help thus far. He has told me I can list the qualifying officer (RMO) as 0% ownership. Where I get confused is the steps I need to take to make this work.

So firstly, My partner and I will file for a new S-Corp with the Sec of State and get our new EIN and papers once approved etc..

And the next step is to complete a form from the CSLB to have the Contractor's License changed from a sole prop to be under our new corp so when people look up the license #, it will be under the corporation. Is this correct? And we have to pay a fee(not sure how much) to have all this changed with the CSLB?
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Old 12-16-2017, 09:36 AM   #6
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Re: Help With New Corporation...


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Originally Posted by mkb View Post
Thanks so much for the help. I have contacted the License Guru and he's helping me and has been a huge help thus far. He has told me I can list the qualifying officer (RMO) as 0% ownership. Where I get confused is the steps I need to take to make this work.

So firstly, My partner and I will file for a new S-Corp with the Sec of State and get our new EIN and papers once approved etc..

And the next step is to complete a form from the CSLB to have the Contractor's License changed from a sole prop to be under our new corp so when people look up the license #, it will be under the corporation. Is this correct? And we have to pay a fee(not sure how much) to have all this changed with the CSLB?
The answer is yes to all your questions. The only thing the CSLB is concerned about is about having the license reflect who the ownership is and who is the responsible person. Whoever passed all the tests of law and trade needs to be running the company --- at least contracting operations. Someone can be CEO who has never been in the trade and know nothing about whatever trade you are doing, but the person overseeing all the trade work, needs to be that responsible person.

Last edited by cwatbay; 12-16-2017 at 09:40 AM.
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Old 12-16-2017, 09:38 AM   #7
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Re: Help With New Corporation...


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The answer is yes to all your questions.
Thank you sir! That certainly was a quick response. Hope the process goes as simple as you make it seem.
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Old 12-16-2017, 09:47 AM   #8
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Re: Help With New Corporation...


Here is what the CSLB says about changing from a Sole Proprietor to a Corporation, using the same license:

A sole owner license may be reassigned to a corporation, if all of the following conditions exist.

The corporation was formed by the licensed individual.

The licensed individual maintains ownership of at least 51 percent of the corporation.

A Licensed Sole Owner Applying for Corporate License form (13A-1h) must be submitted along with an Original Application for Contractor License and the required fees.

Once a sole owner license number is reassigned to a corporation, it cannot be changed back to a sole owner license at a later date. Once reassigned, the number will belong exclusively to the corporation.

If this is NOT what you want to do, ie: keep the same license number, then you can hire your uncle as a RMO. True, he can have 0% ownership of the company, but can still be an officer of the corporation.

You will still have get a new license, pay for it. Along with all the corporate registration.
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Old 12-16-2017, 09:54 AM   #9
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Re: Help With New Corporation...


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Originally Posted by cwatbay View Post
Here is what the CSLB says about changing from a Sole Proprietor to a Corporation, using the same license:

A sole owner license may be reassigned to a corporation, if all of the following conditions exist.

The corporation was formed by the licensed individual.

The licensed individual maintains ownership of at least 51 percent of the corporation.

A Licensed Sole Owner Applying for Corporate License form (13A-1h) must be submitted along with an Original Application for Contractor License and the required fees.

Once a sole owner license number is reassigned to a corporation, it cannot be changed back to a sole owner license at a later date. Once reassigned, the number will belong exclusively to the corporation.

If this is NOT what you want to do, ie: keep the same license number, then you can hire your uncle as a RMO. True, he can have 0% ownership of the company, but can still be an officer of the corporation.

You will still have get a new license, pay for it. Along with all the corporate registration.
I will be filing for our S-corporation with th state through Legal Zoom this week. Do we need to list our uncle who owns the license anywhere on the state filing forms? Or we can just put him down as the RMO qualifier (0% ownership) on the separate papers we will file with the CSLB?
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Old 12-16-2017, 10:01 AM   #10
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Re: Help With New Corporation...


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Originally Posted by mkb View Post
I will be filing for our S-corporation with th state through Legal Zoom this week. Do we need to list our uncle who owns the license anywhere on the state filing forms? Or we can just put him down as the RMO qualifier (0% ownership) on the separate papers we will file with the CSLB?
Here is the link for a NEW license under a new name:
http://www.cslb.ca.gov/Resources/For...orsLicense.pdf

You will need to read every page and understand it. Your uncle must be listed as an officer in the corporation with your corporate filling.

Unfortunately, there is nothing that is "easy" with any of this. Get ready to spend money. You will probably need an attorney to do your corporate set up and file with the state. It is all very bureaucratic and all the forms must be filled out correctly. It will all take a lot more time than what you think. First comes all the corporate filings and approval, then comes filing for a new license with the CSLB.

Even when I did it, it took months for all the approvals and getting everything registered. After a couple thousand dollars and paperwork, it all came together. But mine was a "simple" change from Sole Prop to a Corporation with the same individual and same license #.

BTW: good luck with Legal Zoom. This is not something you want to do on a tight budget. I have written legal contracts and proceedings as a living before and after becoming a contractor. If you understand the intricacies of legal documentation and government forms, then you are a step ahead in this process.

Last edited by cwatbay; 12-16-2017 at 10:05 AM. Reason: added commentary
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Old 12-16-2017, 10:08 AM   #11
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Re: Help With New Corporation...


Thanks for all your help thus far. I will definitely look into this some more to make sure we get things done correctly.
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Old 12-16-2017, 05:40 PM   #12
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Re: Help With New Corporation...


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Originally Posted by cwatbay View Post
The answer is yes to all your questions. The only thing the CSLB is concerned about is about having the license reflect who the ownership is and who is the responsible person. Whoever passed all the tests of law and trade needs to be running the company --- at least contracting operations. Someone can be CEO who has never been in the trade and know nothing about whatever trade you are doing, but the person overseeing all the trade work, needs to be that responsible person.
I am not sure that the qualifier has to oversee the trade work. Not positive, but I believe that the qualifier is liable for the trade work, bills the company does not pay, violations of the laws, etc.'

Since a high percent of businesses fail, a high percent of business owners don't have what it takes and they can bail out and hold leave the qualifier to finish the jobs, litigate lawsuits and pay the bills that were not paid, it will be a cold day in h... before I qualify for some just starting a business.

And, I certainly would not qualify someone who has a partner.
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Old 12-17-2017, 02:14 PM   #13
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Re: Help With New Corporation...


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Originally Posted by cwatbay View Post
Here is the link for a NEW license under a new name:
http://www.cslb.ca.gov/Resources/For...orsLicense.pdf

You will need to read every page and understand it. Your uncle must be listed as an officer in the corporation with your corporate filling.

Unfortunately, there is nothing that is "easy" with any of this. Get ready to spend money. You will probably need an attorney to do your corporate set up and file with the state. It is all very bureaucratic and all the forms must be filled out correctly. It will all take a lot more time than what you think. First comes all the corporate filings and approval, then comes filing for a new license with the CSLB.

Even when I did it, it took months for all the approvals and getting everything registered. After a couple thousand dollars and paperwork, it all came together. But mine was a "simple" change from Sole Prop to a Corporation with the same individual and same license #.

BTW: good luck with Legal Zoom. This is not something you want to do on a tight budget. I have written legal contracts and proceedings as a living before and after becoming a contractor. If you understand the intricacies of legal documentation and government forms, then you are a step ahead in this process.
So we would essentially be re applying for a new License to be under the Corp/LLC with the Application for contractor's license form as opposed to filling out the re issuance of a License to a corporation form?
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Old 12-18-2017, 10:25 AM   #14
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Re: Help With New Corporation...


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So we would essentially be re applying for a new License to be under the Corp/LLC with the Application for contractor's license form as opposed to filling out the re issuance of a License to a corporation form?
It would be good for you to go to the CSLB site and see what they say. If your uncle is reapplying as a Corp, using his old license, then he needs to be owner of 51% of the new corp and the new corp license.

If you are forming a Corp with you uncle as the RMO, then you have to do all the corp filings first, then go to the CSLB for a Corp license.

You really need to understand and read the directions both by the CSLB and the Sec of State site for corporations. That is why I said you need to get an attorney that specializes in the this. Trying to do it yourself is going to be a nightmare based on your questions so far.

I am just repeating what the CSLB says. If you are having issues understanding the CSLB or the Corp filing process, you may want to rethink all of this......until you understand what you are getting into and what the actually cost is, I would wait.

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