# Using contractor's lic number for "two" businesses?



## sobeadit (Mar 13, 2008)

Hello all, I am not the contractor it's my best friend's husband but he knows nothing about computers so I am here on his behalf. 

He is a General Contractor and has a lic number. He uses this for simply his own use when he does side jobs, he has no employees or a "company" per se, it's just himself. So my question is, he and his wife and myself have started a foreclosure cleaning company. one of our big perks is that we have him as a GC on the team, who can make repairs to the properties etc. BUT of course now it's not "smith construction" technically, our biz name is Smith Cleaning Services. But we want to bill him and his lic number as our Team Contractor. Question is, can we do this, have 2 businesses both using his license number? Or can only Smith construction use it, and Smith Cleaninng Services would have to "sub contract" the contractor work to Smith Construction? Or, Smith construction would have to incorporate and be the mgmt company for Smith Cleaning Services?

We are hoping that we don't have to do this, and the Lic number can be used on both businesses. Again, though, Smith Construction has no BUSINESS license or DBA or separate business account with that name on it. It's just for his lic number so he can work side jobs and be legal.

Does this all make sense> We want to do things the right way and not get in trouble with the contractor board or anything. Thanks if you can help!!

steph


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## EricTheHandyman (Jan 29, 2008)

laws vary from state to state (or country for that matter.) Where are you located?


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## send_it_all (Apr 10, 2007)

Sounds like "SMith Cleaning" should just bite the bullet and part with the nearly $100 it should take to get a business license. The cleaning company shouldn't need a contractors license as they are not making any permanant modifications to a structure.....ARE THEY?

In Ca., no contractors license would be required anyway, if the jobs are worth under $500 in labor and materials combined.

You really should just be a legitimate company and get all the proper licensing, bonding, and insurance. Go to your city hall or county office or whatever place has a person who can tell you all the things you need to have to run the business properly.


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## sobeadit (Mar 13, 2008)

thanks for the replies. yes we are in california. the county we are in, Yuba,does not require business licenses. 

well if the contractor made repairs to a foreclosed home, then yes wouldn't that be a permanent modification> or are you talking like removing a wall or something? We want my friend to be the listed owner of the business on the bank accounts and stuff, and we want to make sure he can own Smith construction AND also Smith Cleaning services and use his contractor's license under the cleaning services. For instance let's say something on a cleaning job, where he was repairing something (working under his contractors lic) let's say he got hurt or i walked by and the hammer fell on my head or whatever can happen. we want to make sure that the insurance under his contractors license will operate if he is doing a job for smith cleaning services. I guess his contractors license number covers HIM the person, no matter what he is doing, even if it's a job for Smith Cleaning Services, HE the person can operate with that lic number anywhere he wants, right? Like, the insurance follows the car not the driver, the license number follows the contractor, the PERSON, not the business name....i guess is what i am asking?

steph


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## Meetre (Nov 2, 2007)

*sub him the work*

if it's that big of a deal, just sub-contract the work to his construction business.


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## sobeadit (Mar 13, 2008)

it might not be a big deal, i'm just trying to find out. if i am being paranoid, then we'll just go along with things as they are.

the thing is, can smith cleaning, owned by mr smith, contract work out to smith construction, also owned by mr smith, if we are not incorporated and all that jazz???

steph


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## MALCO.New.York (Feb 27, 2008)

It certainly would work best if the License holder would sub the work to Smith. If only on paper.

As others have stated...There is no need, apart from a general Business License or just a Tax ID #, for there to be a GC license involved.


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## send_it_all (Apr 10, 2007)

What I was saying is that you should seperate the two businesses. The cleaning business shouldn't need a contractor's license of any sort because cleaning is not a permanant modification to the structure. If the house needs work or modifications, then Smith Construction should be hired and he should do the work under his license. 

Am I just not understanding something?


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## sobeadit (Mar 13, 2008)

yeah...i just wanted to know if basically someone can sub a job out to himself. we are only using the contractors lic number on the biz card and we are upselling our cleaning service with the fact that we have a lic contractor on board in case any repairs are needed, our team has one, the realtor doesn't have to go out separately and find someone to fix stuff. so IF the cleaning job required repair work (and maybe my assumption that you need a lic. contractor to do simple repairs is wrong?!) then bam, there he'd be already.

steph


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## Dansbell (Jul 28, 2007)

I would be careful. I Suspect California is similar to Oregon. In Oregon Smith Cleaning Services could not subcontract any work on a real property to any one because Smith Cleaning services is not a licenced contractor. In fact, in Oregon it would violate the licence of Smith Construction to subcontract work from an unlicensed entity other than the property owner. 

You could refer Smith Construction to your clients if repairs are needed.

You may be able to add Smith Cleaning Services as a DBA to the existing licence, but I doubt it.

Even as a cleaning service, I would want to protect myself with general liability insurance. I think the best thing would be to create a partnership where your friend is the Responsible Managing Individual (Licence Holder). You would then have the insurance and bond required by the licencing authority in the name of Smith Cleaning Services. Every one involved will be better protected with a new licence.


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## sobeadit (Mar 13, 2008)

hmmm not sure i understand that. I am a graphic designer but i could take on a big job, and then subcontract the tedious work out to someone else...right? I am not a licensed contractor.

see the contractor, the "smith construction" doesn't even have a DBA or anything. It's just my friend with his contractor's license and some biz cards he made up, doing side jobs. his normal job is that he works for a small company doing home repairs. We just watned to advertise him as being on our team. and when repairs were needed, we could....hmmmwell, maybe thebest thing is that when repairs are needed, he gives an estimate and bills them separately for the repairs, as "smith construction." when he is just helping us clean and haul, we don't need to worry about it. but when you go look up his lic. number, you see...well you see his name, you don't see "smith construction" i don't think.

oh yeah we def want to get liability insurance. under "smiths cleaning svcs"

so you mean he should own smith cleaning svcs as a ltd partnership? with who?


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## DAVIS081404 (Oct 20, 2006)

sobeadit said:


> hmmm not sure i understand that. I am a graphic designer but i could take on a big job, and then subcontract the tedious work out to someone else...right? I am not a licensed contractor.quote]
> 
> Taking on a big job, and then subcontracting the tedious work out to someone else is the text book deffinition of a General Contractor. As someone stated before if the value of the contract exceeds $500.00 you are legaly required to be licensed. Two Businesses operating under the same license is not legal:
> 
> ...


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## sobeadit (Mar 13, 2008)

Ok so.....do you think there is a problem with Mr Smith, the contractor, being listed as the DBA owner of Smith Cleaning Svcs? Because we need to knwo this asap, because i might have to be the listed owner. But we still want to call it smith cleaning because we already got flyers and biz cards.

even if we do refer all repair biz to smith construction.

and just to be clear, what we are saying here is that we should NOT advertise his lic number on our cleaning flyers, and that we "have a lic contractor on our team" and leave his lic number and that he is a lic contractor OFF the biz cards.

steph


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## sobeadit (Mar 13, 2008)

i just called the contractors lic board and talked so someone, it sounds like it is OK for him to own the cleaning company, but we cannot advertise that he is a contractor with his lic. number on the cleaning flyers or cards. we have to refer contractor biz to him as a contractor.

i wonder if now he has to get a DBA his construction company. he doesn't advertise or anything, just hands out his card sometimes to friends he does work for to refer him. i hope he is not doing anything illegal by not having a DBA for his construction co. he might have to get one before doing any repair work for the cleaning co, since it's banks and such paying his invoices.

steph


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## Kgmz (Feb 9, 2007)

Are you sure you are ready to start a new business if you can't even figure out how to structure a business?

Also who will be owning this business?

Are there any legal documents stating who owns what and what percentage if more than one?

If it is the contractor and his wife and you, then you have to file a partnership agreement with the state or county and make it a legal business entity.

How are the profits going to be split up if you are partners? 

What are your salaries going to be?

The partnership agreement will need to have the answers to these questions. 

And what happens if you guys decide to split or the business is losing money?

The partnership agreement should have something in it to handle these situations.

Who is the ultimate decision maker?

Who is going to be responsible for taxes being paid, and if they are not paid who is the state or feds going to think is responsible?



I could go on and on with questions about all of this, and you should know the answers to these and any other questions.





Also you will need to register with various agencies of you hire employees to pay the taxes, workmans comp, etc. besides the IRS. And there is a income tax in California for businesses isn't there, so thats another agency to deal with.

Here are some links for you.

California Business Portal
http://www.sos.ca.gov/business/business.htm

http://www.calbusiness.ca.gov/


Setting up a business in California Guide from the California Business Portal
http://www.calbusiness.ca.gov/pdf/cbguideinvestor.pdf





When setting up a business you need to have a plan on how things are going to go, and you need to have a plan on what happens if it fails. And these are even more important when partners are involved. Do you want your partner leaving you holding the bag when substantial bills, taxes, etc. are unpaid


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## sobeadit (Mar 13, 2008)

it's not that we can't figure out how to structure it, it is just the contractor license sticky area that i wanted to clarify.

i will pay quarterlies on my income as a contractor. he will own it solely. these people are like family and we do not anticipate being so busy as to be doing this 8 hrs a day every day. It's more for extra money. so he will be writing me a check.

we each have our strengths. i am the computer geek./marketing/emailing/website person, he is the muscle, and his wife is the money/cleaning guru. LOL so it works pretty nicely.


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