Limited Liability Company Licensing Begins in Late December
Limited liability companies (LLCs) will be able to apply for a CSLB license by January 1, 2012, as required by 2010 state legislation. The passage of Senate Bill 392 authorized CSLB to issue contractor licenses to LLCs.

CSLB’s licensing and programming staff has nearly completed the new application processes, which will add new types of personnel to this license category: officers and members. The LLC license will also require a $100,000 employee bond and $1,000,000 to $5,000,000 in liability insurance.

LLC applicants will have to fill out a separate application for licensure as a sole owner, partnership, or corporation. Those interested in applying for an LLC license should periodically check the Forms & Applications section of the CSLB website; the form will appear there as soon as CSLB is prepared to process the new LLC applications.

The separate LLC application is specifically designed for LLCs to obtain an original license (exam or waiver), to add a classification, or to replace a qualifying individual.

Below are some primary requirements for and components of LLC licenses that will apply once CSLB begins processing applications for LLC licenses.

$100,000 Surety Bond

A $100,000 surety bond (in addition to the $12,500 contractor bond) is required for the issuance, reissuance, reinstatement, reactivation, and renewal of an LLC license for the benefit of any employee or worker damaged by the LLC’s failure to pay wages, interest on wages, or fringe benefits, as well as other contributions (not required for inactive LLC licenses).

$1 Million Liability Insurance Minimum

Liability insurance with the aggregate limit of $1 million for licensees with five or fewer persons listed as members of the personnel of record is required; plus, an additional $100,000 is required for each additional member of the personnel of record, not to exceed $5 million total.

Personnel of Record

Every person who is an officer, member, or manager must be listed as personnel of record on LLC applications.

Qualifying Individual

LLC licenses must be qualified by appearance of a responsible managing employee (RME), responsible managing officer (RMO), responsible managing member, or responsible managing manager.

$1 Million Personal Liability during Secretary of State Suspension

If an LLC license is suspended for failing to be registered and in good standing with the Secretary of State, each person within the LLC may be held personally liable up to $1 million each during the time the LLC is suspended.

Liability Insurance Information on Contracts

Specific general liability insurance information is required to be included on the LLC’s home improvement and service and repair contracts.

License Number Reissuance

Sole owner and corporate license numbers may be reissued to LLCs under certain circumstances.

Joint Venture Licenses

An LLC may be listed as an entity on a joint venture license.

Partnership Licenses

LLCs may serve as a general partner on a partnership license provided the LLC meets the above requirements relating to the additional surety bond and liability insurance. An LLC serving as a limited partner on a partnership license is not required to meet the additional surety bond and liability insurance requirements.

Business Name Styles

According to the Secretary of State’s office, LLC business names have specific requirements and restrictions. Interested parties should visit the Secretary of State’s website for full information about LLC business name issues. Briefly, LLC business names must comply with the following:

  • The name of an LLC must end with the phrase “Limited Liability Company” or the abbreviation “LLC” or “L.L.C.” The words “Limited” and “Company” may be abbreviated to “Ltd.” and “Co.,” respectively.
  • The name of an LLC may not include the words “bank,” “trust,” “trustee,” “incorporated,” “Inc.,” “corporation,” or “corp.”
  • The name of an LLC may not include the words “insurer” or “insurance company” or any words suggesting that it is in the business of issuing policies of insurance and assuming insurance risks.
  • If the name of a foreign (out-of-state or out-of-country) LLC does not conform to the requirements of California Corporations Code Section 17052, the foreign LLC must agree to transact intrastate business under an assumed name that meets CCC 17052 requirements in order to register with the Secretary of State.

Other Requirements

Most other requirements and provisions that apply to corporate licenses will also apply to LLC licenses. The best way to receive future updates is to sign up for CSLB Email Alerts on any page of the CSLB website. Be sure to sign up for “Industry Bulletin” or “All of the Above” to receive information on LLCs and other important news. You can also “like” CSLB on Facebook or follow the Board on Twitter. LLC updates will also be posted on CSLB’s website.