Corporate Contractor License Advantages: Liability Protection, Transferability and Resale

California Contractors often ask us if there is any benefit to converting their business from being operated with a personal individual contractor license and a corporate contractor license.

There is obviously costs associated with creating and maintaining a  corporation and making the application to do the transfer.  For a lot of contractors, these costs may be worth it for the following benefits

Liability:

Operating under a corporate contractor license adds an additional layer of liability protection from yourself.

Transferability:

Transferability to non-family member partners.  Should you have non-family member partners that are actively involved in your business, a corporate license can be transferred to them under certain conditions.

Resale:

You have put in many years of blood sweat and tears, so whenever you are ready to move on and retire from your business you might as well sell it for something instead of closing it for nothing.  A corporate contractor license is an asset for buyers, as they can buy your business by buying your corporation and be able to operate under the same corporate license.  Though, there are RMO/RME considerations to take care of, this is still an advantage of corporate license, as a personal individual license can not be transferred in this manner.

An individual license can not be transferred to an arms length buyer.  If there is an unfortunate demise of individual license holder of a contractor business, there is a provision that allows actively involved family members to get an examination waiver  This does not apply to unrelated buyers who are not involved in the business.

For more information on buying, obtaining or transferring a California Contractor License, call our Client Care Manager, Sonia Chhabra at (888) 926-9193 or email cs@justelementary.com