California LLC contractor licenses are subject to bond and insurance rules. The LLC Employee/Worker Bond is required for the issuance, reissuance, reinstatement, reactivation, and renewal of both active and inactive licenses. Scope of Cover found that, as of January 1, 2014, liability insurance policies for LLCs must come from insurers licensed by California or from eligible surplus line insurers. The specific requirement for the bond is located in Business and Professions Code section 7071.6.5.
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#What is the LLC Employee/Worker Bond Requirement?
The LLC Employee/Worker Bond is required for several licensing actions. These include the issuance, reissuance, reinstatement, reactivation, and renewal of a license. The requirement applies to both active and inactive LLC licenses.
The specific statute is section 7071.6.5.
#LLC Liability Insurance Requirements
The requirements for LLC liability insurance are outlined in B&P Code section 7071.19.
B&P Code section 7071.19 (c) states that LLC liability insurance policies must be issued by insurers licensed by the state of California or by eligible surplus line insurers.
#How LLC Rules Affect Partnerships and Joint Ventures
An LLC can serve as a partner on a partnership license. When an LLC acts as a general partner, it must fulfill additional surety bond and liability insurance requirements. However, this is not always the case.
An LLC that serves as a limited partner on a partnership license is exempt from those additional requirements. An LLC may also be listed as an entity on a joint venture license.
#What Are the Naming Rules for a Contractor LLC?
The name of a California 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 as "Ltd." and "Co.", respectively. This rule is stated in Corporations Code section 17701.08 (a).
An LLC's name cannot include certain words, such as "bank," "trust," "trustee," "incorporated," "inc.," "corporation," or "corp.". The restrictions on business names are specified in Corporations Code section 17701.08 (e).
A foreign LLC must adopt an alternative name that complies with Corporations Code section 17701.08 if it intends to transact intrastate business in California and its original name does not conform. This requirement is found in Corporations Code section 17708.05.
#Contract Disclosures for LLCs
Specific general liability insurance information must be part of an LLC’s home improvement and service and repair contracts.
This disclosure requirement is specified in B&P Code sections 7159 and 7159.10.
#Personal Liability During License Suspension
The state codes detail certain consequences for LLC members if the company's contractor license is suspended. The personal liability for members of an LLC during a period of license suspension is detailed in B&P Code section 7076.2.
Frequently asked questions
Is the LLC Employee/Worker bond required for an inactive license in California?
Yes. The LLC Employee/Worker Bond is required for the issuance, reissuance, reinstatement, reactivation, and renewal of both active and inactive LLC licenses.
What kind of individuals must qualify an LLC contractor license?
An LLC license must be qualified by a responsible managing employee (RME), responsible managing officer (RMO), responsible managing manager, or responsible managing member.
Can a California LLC be a partner on a partnership license?
Yes. An LLC may act as a general partner if it fulfills additional surety bond and liability insurance requirements. If an LLC acts as a limited partner, it is exempt from those additional requirements.
What words are not allowed in a California LLC's business name?
A California LLC's name cannot include the words "bank," "trust," "trustee," "incorporated," "inc.," "corporation," or "corp."
What are the requirements for an LLC's liability insurance provider?
According to Business and Professions Code section 7071.19 (c), LLC liability insurance policies must be issued by insurers licensed by California or by eligible surplus line insurers. This rule has been in place since January 1, 2014.
Sources
- CSLB: Limited liability companiesContractors State License Board · retrieved
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