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So everyone agrees that an unlicensed contractor may not do work that exceeds $500 on a project. But how is this defined? Is this in a single day? A year? What if there is no contract per se, but just an odd job kind of thing? Someone pays you to do some work and you do a $450 dollar job. THen a week or two later you do a similar job for them. Is this still legal?
 

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So everyone agrees that an unlicensed contractor may not do work that exceeds $500 on a project. But how is this defined? Is this in a single day? A year? What if there is no contract per se, but just an odd job kind of thing? Someone pays you to do some work and you do a $450 dollar job. THen a week or two later you do a similar job for them. Is this still legal?
$500 or less you don't need a contract (around here that is) but to do work you have to be licensed.
 

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I think you could be taking a chance saying you did work for the same customer within a short time in which the total was over $500, including materials. Proceed at your own risk as far as that goes but I haven't heard anything against having a repeat customer. If an investigation were to come up, too close together of jobs might get looked at as one total job I suppose.
You definitely can't separate it out by the day or by the task as far as that goes.

Why not get licensed to avoid that concern?
 

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The whole job cannot exceed 500 dollars. In other words you can't bid it in phases. And if the GC contract is for a whole kitchen he can't hire you to Paint even of your paint is less then 500 dollars because the kitchen remodel totals more then 500 dollars. Also if you are not licensed you must notify the HO in writing.
 

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Here's an excerpt from the Cailfornia State Licensing Board:

A project for which the combined value of labor, materials, and all other costs on one or more contracts is less than $500. Work on a larger project, may not be broken down to smaller amounts of less than $500 in an attempt to meet the $500 exemption;
 

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So everyone agrees that an unlicensed contractor may not do work that exceeds $500 on a project. But how is this defined? Is this in a single day? A year? What if there is no contract per se, but just an odd job kind of thing? Someone pays you to do some work and you do a $450 dollar job. THen a week or two later you do a similar job for them. Is this still legal?
well if its honest good ole fashion hard working american **** who gives a f--k just as long as your not dishonest..
:thumbup:
 

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You can work by the hour for any amount.

You can work for a homeowner or contractor for an hourly rate for as much money as you want as long as you have an hourly agreement and no contract agreement.

You can do a contract job up to $500 and write in your contract that the customer pays for the materials, but don't add the material costs into the contract. Then write a separate receipt for the materials for as much money as you want and you can mark up the materials as much as you want, but when you mark up the material cost you will need a resale permit and you will have to pay the difference for the sales tax, or you will get nailed with the biggest fines and penalties you can imagine. You do not need a contractor's license to get a resale permit and you to not need a contractor's license to sell the materials with a marked up price.

What will happen if you don't have a resale permit is customers will call you the following year when they do their taxes and they will want to know how much the sales tax was so they can get a deduction on their taxes. For homeowner, this is probably not cross-referenced with the sales tax board, but when you do business with other businesses the sales tax you charged will be cross-referenced with your company and you will be in trouble. For my company, I pay sales tax at the supply houses and every job I do is a contract that includes materials. Therefore, I never markup materials, never charge my customers for sales tax, and never report to the sale tax board because I already paid the sales tax at the supply houses. I closed my sales tax account almost 35 years ago.

So, if you pay the sales tax at Home Depot and you don't mark up the materials you don't have to report to the sales tax board, but if you mark up the materials you will have a problem. So, if you mark up the materials get a sales tax permit and pay, or you will be sorry down the road for profiting by charging sales tax and stealing from the government.

There is no time limit for how many times you can do a $500 job for the same homeowner or business. For example, you may have a customer that owns several homes and you can bill up to $500 for as many times in one day as you want as long as you are not breaking breaking the same job into separate parts. Also, it is normal to have customers call you the same day for the same address, but for another problem and this it is okay to bill for the same address several times in one day.

What you can't do is something like a copper repipe for $3,600 and try to break it into 10 separate jobs. So, if I did not have a license I would charge $500 for the labor and write a separate receipt for $3100 for the materials. This would not be far from the truth because many contractors are repiping houses for $3600, the materials cost about $1900 and with a $3100 price tag for the materials you would have a 50% markup which is not unreasonable for plumbing contractors.

The problem I see with not having a license and the $500 limit is you will have a problem getting permits. In California you need a permits for just about everything including changing a light fixture, light switch garbage disposer, water heater, toilet, etc., and you will have to get the homeowner to take out a homeowner's permit, but this is not right because the homeowner is not really doing the work himself. Although, people get away with the homeowner obtaining permits.
 

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You can do a contract job up to $500 and write in your contract that the customer pays for the materials, but don't add the material costs into the contract. Then write a separate receipt for the materials for as much money as you want and you can mark up the materials as much as you want
Sorry but, there's an example of trying to skirt the $500 limit

Straight from CSLB

"It is illegal for an unlicensed person to perform contracting work on any project valued at $500 or more in labor and materials"
 

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There is no time limit for how many times you can do a $500 job for the same homeowner or business. For example, you may have a customer that owns several homes and you can bill up to $500 for as many times in one day as you want as long as you are not breaking breaking the same job into separate parts. Also, it is normal to have customers call you the same day for the same address, but for another problem and this it is okay to bill for the same address several times in one day.
I'm reconsidering my response.
 

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Why spend all this mental energy trying to skirt the law and just go get your license. If you know what you doing this shouldn't be a problem.
 

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Except that the cslb is making it increasingly difficult to obtain a B license. If you are submitting self employed experience (and often times even if you aren't) you have to be able to show proof of that experience. Any one who plans on obtaining their license needs to keep accurate records.

The cslb has said in public meetings that they will not go after people who have been working over the $500 limit if they are applying for a license.

Nonetheless... cross the t's, dot the i's, and keep accurate records.
 

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Discussion Starter #12
You can work for a homeowner or contractor for an hourly rate for as much money as you want as long as you have an hourly agreement and no contract agreement.
Can I get a witness? Is this correct everyone? Does this mean there has to be a written agreement that I'm working for an hourly rate? Can I work every single day for the same homeowner as long as I bill them hourly and not by the project?

Also, how does materials figure into this? If I work hourly can I still buy and resell materials?

And to answer what several have asked, why not just get a license? Well they make it very hard. I have a 3 year community college landscaping certificate and have been self employed for 7 years, but I don't know if this is enough proof, haven't kept very good tax records, so i don't want to pay the exam fee and find out that I don't get it.
 

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Can I get a witness? Is this correct everyone? Does this mean there has to be a written agreement that I'm working for an hourly rate? Can I work every single day for the same homeowner as long as I bill them hourly and not by the project?

Also, how does materials figure into this? If I work hourly can I still buy and resell materials?

And to answer what several have asked, why not just get a license? Well they make it very hard. I have a 3 year community college landscaping certificate and have been self employed for 7 years, but I don't know if this is enough proof, haven't kept very good tax records, so i don't want to pay the exam fee and find out that I don't get it.
You can work for a HO on an hourly basis, you don't bill them........they pay you a regular employee paycheck...... and pay their employer tax burden, deduct your payroll taxes, fica, disability, and pay worker's comp insurance. You would be their employee with everything that goes along with that.
 

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You are right if you are charging for materials.

Sorry but, there's an example of trying to skirt the $500 limit

Straight from CSLB

"It is illegal for an unlicensed person to perform contracting work on any project valued at $500 or more in labor and materials"
You are right if you are putting the materials and labor in one contract and the total is greater than $500, but you can write a contract for $500 and states that the customer will pay for the materials. Therefore, you do not have a contract that is greater than $500 and the contractor's board will not get involved when the customer pays for his own materials.

A customer has the right to pay you $500 for a job and purchase his own materials and the CSLB does will not get involved in the markup of the materials because there is no contract involved.

Suppose, I have an unlicensed shop and you want to purchase some materials. I paid $2500 for the materials and charge you $3500. The contractor's board will not get involved because this is a sale for materials and not a contract. Then, you ask me to install the materials and I quote you $500. We never combined the materials into one contract.

Suppose, you want an unlicensed contractor to install an air conditioner on your roof. The contractor tells you he will install the air conditioner for $500 and you ask him to pick up the $8,000 air conditioner, pay for it, and you will reimburse him. You do not have a contract that includes materials and labor. You only have a contract for $500 and a separate agreement that states you (the customer) will pay separately for the materials.

Every day, I see unlicensed contractors installing water heaters for $200 to $500 for labor only, the water heaters cost $500, and the contractor's board can do nothing.
 

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pcplumber said:
You are right if you are putting the materials and labor in one contract and the total is greater than $500, but you can write a contract for $500 and states that the customer will pay for the materials. Therefore, you do not have a contract that is greater than $500 and the contractor's board will not get involved when the customer pays for his own materials. A customer has the right to pay you $500 for a job and purchase his own materials and the CSLB does will not get involved in the markup of the materials because there is no contract involved. Suppose, I have an unlicensed shop and you want to purchase some materials. I paid $2500 for the materials and charge you $3500. The contractor's board will not get involved because this is a sale for materials and not a contract. Then, you ask me to install the materials and I quote you $500. We never combined the materials into one contract. Suppose, you want an unlicensed contractor to install an air conditioner on your roof. The contractor tells you he will install the air conditioner for $500 and you ask him to pick up the $8,000 air conditioner, pay for it, and you will reimburse him. You do not have a contract that includes materials and labor. You only have a contract for $500 and a separate agreement that states you (the customer) will pay separately for the materials. Every day, I see unlicensed contractors installing water heaters for $200 to $500 for labor only, the water heaters cost $500, and the contractor's board can do nothing.
This is not true the whole job can't cost more then 500 dollars regardless of paperwork or who's paying it. That includes everything that's related to the job, everything!
 

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pcplumber said:
You are right if you are putting the materials and labor in one contract and the total is greater than $500, but you can write a contract for $500 and states that the customer will pay for the materials. Therefore, you do not have a contract that is greater than $500 and the contractor's board will not get involved when the customer pays for his own materials. A customer has the right to pay you $500 for a job and purchase his own materials and the CSLB does will not get involved in the markup of the materials because there is no contract involved. Suppose, I have an unlicensed shop and you want to purchase some materials. I paid $2500 for the materials and charge you $3500. The contractor's board will not get involved because this is a sale for materials and not a contract. Then, you ask me to install the materials and I quote you $500. We never combined the materials into one contract. Suppose, you want an unlicensed contractor to install an air conditioner on your roof. The contractor tells you he will install the air conditioner for $500 and you ask him to pick up the $8,000 air conditioner, pay for it, and you will reimburse him. You do not have a contract that includes materials and labor. You only have a contract for $500 and a separate agreement that states you (the customer) will pay separately for the materials. Every day, I see unlicensed contractors installing water heaters for $200 to $500 for labor only, the water heaters cost $500, and the contractor's board can do nothing.
Also it doesn't say the contact can't be more then 500 dollars it says the whole job can't be more then 500 dollars. That means it can't be split up.
 

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yes, you can work for any hourly rate you want.

Can I get a witness? Is this correct everyone? Does this mean there has to be a written agreement that I'm working for an hourly rate? Can I work every single day for the same homeowner as long as I bill them hourly and not by the project?

Also, how does materials figure into this? If I work hourly can I still buy and resell materials?

And to answer what several have asked, why not just get a license? Well they make it very hard. I have a 3 year community college landscaping certificate and have been self employed for 7 years, but I don't know if this is enough proof, haven't kept very good tax records, so i don't want to pay the exam fee and find out that I don't get it.
An hourly rate is not a contract agreement and you can work as many hours as you want for as much money as you want without a contractor's license and you can buy and resell the materials as long as you have a resale license and do the proper reporting.

The thing you need to watch for when working by the hour for one person is you need to pay your federal and state taxes, or you will get nailed. Your employer, even if an apartment owner, is supposed to carry worker's comp insurance for you and report all your earnings. Although, just because nobody reports your earnings this does not mean you are an independent contractor and you do not need a license. For example, a person owns 100 apartment units and you work for him for $40 an hour. He is your only customer and this does not require a contractor's license.

As for qualifying for a license, I got my first California contractor license base on my working as a janitor for several apartments buildings. The landlord was deceased and I had nobody to verify my work experience with the exception of friends and I had no problem qualifying the work experience, but that was 40 years ago

I think people worry too much like the contractor's board is a monster that doesn't want you to have a license. I think the opposite because the contractor's board want people to have licenses because they profit from the fees and the licenses raise the bar for everyone.
 

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jdrains said:
well if its honest good ole fashion hard working american **** who gives a f--k just as long as your not dishonest.. :thumbup:
Skirting the laws is not dishonest? I don't like some laws anymore then anyone else, but to keep my business an honest business it includes abiding by the law.
 

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Not correct at all.

This is incorrect!

You CAN NOT do more than one job for one client in any format to bypass the $500 limit. If you perform work for HO X this month, and then perform more work for HO X next month, the cslb will consider the aggregate amount of both jobs as one job.

Absolutely not correct. There is nothing wrong with the same customer calling you to do more than one job up to $500 and there is no time limit.

I call Jose from the front of Home Depot to install a water heater and he quotes me $450 for the labor. He does the job this morning. Later the same day, I think Jose did a terrific job and I ask him to install a garbage dispose and replace the drain parts under my kitchen sink. This is an entirely different contract for less than $500 and there is no way the CSLB is going to tell Jose that he can't do this 2nd job on the same day due to a time limit that does not exist.

Doing two jobs may seem to be in the gray area, but it is what it is if it is two entirely separate contracts. There is no way Jose is going to have to tell me that he can't come back to my home for a specific number of days.
 

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No Way Jose!

This is not true the whole job can't cost more then 500 dollars regardless of paperwork or who's paying it. That includes everything that's related to the job, everything!
I'm standing in front of Home Depot and a customer just purchased a water heater for $489. I have a sign hanging around my neck that says "Unlicensed Plumber Looking For Work." The homeowner asks me for a flat price to install the water heater and according to you I can charge only $11 because the total will be at the $500 limit.

You are crazy! I can charge a contract amount of up to $500 to install the water heater and will not violate any law.

The law states you cannot have a contract with the labor and materials combined for more than $500 and the law is only concerned about the contract amount. Suppose a customer buys a $3000 piece of granite. According to you no unlicensed contractor can touch this granite because it is already over the $500 limit.

My unlicensed contractor writes in his contract, "install owner's granite for contract amount of $450." The customer does not have a contract for more than $500 and that is all the CSLB cares about. The CSLB is not going to ask the price the customer paid for the granite. The issue is the contract, only the contract, and not the price the customer pays for the materials when the materials are not incorporated in the contract.

What you are trying to say is; a customer can enter into a contract with an unlicensed contractor to install the granite for $450 and then file a complaint against the contractor for $3450. This is not true. The only thing the CSLB looks at is 'THE CONTRACT'. If the contract is less than $500 there was no violation.

What was the show when the detectives said, "only the facts, maam!" The CSLB says, "only the contract, maam. We need to see the contract and everything every said verbally doesn't matter!"

When the materials are not incorporated in the contract and are paid for separately by the customer the unlicensed contractor can charge up to $500 for as many jobs as he wants, at the same address as many times as he wants, as frequent as he wants, but each job must be en entirely different job, and a contractor cannot break one job into multiple jobs to get around the laws.

As licensed contractors whether we like it or not that is the way it is. The sad thing is the unlicensed contractors have a higher profit margin because they skirt all the taxes, business licenses, worker's comp, general liability, etc.
 
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