Hi All,
The contractor I currently work for is strongly suggesting I get my contractors liscence. In fact he’ll pay for the schooling! My wages with him will immeadeatly go up 10% -15% ( but I’m sure that may get eaten up elsewhere but…)
He suggested Golden West but he got his liscence years ago. I’ll get the B1 so I’ll need to know it all.
Any other insights to the process are welcomed and encouraged!
Thanks,
Notrix
Replies
I'm in the state just to the north of you, but I don't know the specifics of California licensing so take what I say with a well-intended grain of salt.
Classes are required in Oregon for a GC license and I remember when I sent my application in to the state contractors board, I became inundated with flyers from a whole host of training companies offering the necessary course work. The fees ranged from about $150 to over $1000 (this was in 1994). I ended up contacting the local Homebuilders Association and they provided the coursework for $125.
The other question I wanted to raise is, why does your employer want you to get your license? Now, don't get me wrong; there's nothing wrong with that...in fact, I have an employee right now who I've been encouraging to get licensed.
But here's the potential problem for YOU: If you get licensed and continue to work for your employer, but as an independent contractor, he will no longer have to carry workers comp on you, or submit payroll withholding, or provide you with anything, really, except maybe continued work.
You will find that the 10%-15% raise you get, may, in fact, reduce his costs but increase your own, considering bonding, liab. insurance, the licensing fees, overhead, quarterly tax filings, etc.
So if you're getting your license so you can legally strike out on your own and gain some independence, great! But if you're doing it with the intention of continueing to be "an employee" of this guy, I think you need to sharpen your pencil, get out your calculator and do some homework about finding yourself in the position of being an independent contractor.
I wish you the best.
notrix,
I think it's great that you're contemplating getting your own license, but don't get too excited about an extra %15 in pay.
If you are a contractor, you are going to be responsible for several annual, monthly and bi-weekly expenses. It's been years since I worked in CA. so I'll probably miss some things, but here goes.
Federal
1. Social security and Medicare. I know you're already paying this; alot of employees don't realize that they pay half and the employer pays the other half. Grab a pay stub and double whatever you paid in. That's all your responsibility. So is the paper work. (There goes 6.5% of your 'raise').
2. Federal withholding. This you already pay, but will your 'raise' effect your tax bracket? More paper work.
State
1. Worker's comp. This used to be optional for self employed, probably not anymore. More paperwork. And money.
2. Income tax. See above.
3. Annual license renewal. Probably a few hundred or so there.
4. Sales tax. When I was in CA nobody collected or paid sales tax on labor only, or much other construction stuff. I would guess that this has changed. Here in Washington, we are supposed to report how much business we did in any city, so the sales taxes can be allocated properly. More paper work. Which brings me to...
Local
1. City business license. Here, you need a license from each city you work in. They find you out through the State sales tax deal. See above.
General
In order to be licensed in the State of CA, you must have a Bond, and Liability Insurance.
1. Bond. Fairly easy if you own any real estate. Fairly impossible if you have lousy credit.
2. Liability Insurance. Don't know what the State requires for a B1 now, but I'll bet your premiums are gonna be at least 5K per year. Also they tend to be higher the first year in business.
3. Health Insurance. If your employer pays it now, he won't when you're licensed.
That all said, if your like most guy's, you'll probably pay someone to keep all this straight, so figure a couple of hundred quarterly.
I certainly encourage you to get your license, but please do the math. My guess is your employer will do much better than you with the deal he offered. Now if the offer is 50%...might be a good way to get started in business for yourself.
I hope this is helpful.
skipj
First off,
In CA it's illeagal to make more than $500 for a job. Any contract signed above that ( and posibly that) is null and void. To even do that you need a handymans lisence and what's that worth. "Boss" is willing to pay for the school and licence fees. Last we heard it's $325 for 3 years.
As far as I know the school isn't mandatory but advised. The exam is 1/2 law/business the other your trade or in the case of a general you can be tested on any trade at random. My freind the contractor is a tile setter who got his B1 on the concrete exam. I also understand the schools basically give you sample questions and answers no real teaching involved.
Thanks for pointing out all the pit falls,
N
I just got a book and some tapes to listen to. Never listened to the tapes but did read the books a few nites before the exam. The sample tests in the books had virtually identical questions to the official exam. In other words you are buying the test before you take it so you can study to the actual exam questions rather than to the overall concepts/information.
Taking a sit down course required a chunk of time I just couldn't free up though it was tough to sit down with the books in the evening.
Karl
Where are you in CA?
I'll bet he wants you to get your license so that he can legally call you an independent contractor and 1099 you at the end of the year. He won't need to pay for workers comp or any of the other "Taxes" he has the burdeon of paying now. If you do this, you will need to get your own disability(and heath if you have any from him right now). Its a lot harder to make a legitimate claim on a private party policy than a Workers Comp Policy( I did say LEGITIMATE). And individual heath insurance policies cost quite a bit more than a group policy and they usually are not as good of a quality. You will also be liable for all of your social security payments, not just half. You might be required to have your own liability insurance policy
This will make you a SELF EMPLOYED individual with no perks? Can you take vacation or a day off with out being fired?
I vote for the license, but don't use it unless it really benefits you, not him
Sorry if I seam to sinical. I think it is the oldest trick in Calif. Contractors Law requirements. I know too many people that have had their boss request it. Including my boss 18 years ago. I think most legite employers really would rather you not have a license, it makes them uneasy. You could go out on your own at any time a steal their clientel. I hgave had a friend who, for the past 20 years, had 3 or 4 of his guys get their license and try to steal clients from underbidding. They always thought they could do it for less, with out tall the liability insurance, and worker's comp. When I left the guy that I worked for, many of his clients contacted me to do the work for them. By the time I had left him, I had more work than I could handel with out his clientele. Then, the recession hit and that's another story in itself.
I don't know about California, but here in New Jersey, if a sub-contractor's work is more than a certain percentage for one contractor, that contractor is responsible for paying the sub's bennies. I think it's 50%.