Study guide · Law & Business · Business Organization and Licensing
Company Organization: Who Actually Holds the License
About 23 minutes · 6 sections
What this guide covers
Your license belongs to the exact business you named on the application — not to you personally, and not to whatever that business turns into next year. Take on a partner, lose a partner, add an officer, form a company to run the same work, or team up with another contractor on one big job, and the license does not just follow along. Some of those changes cancel the license outright. Others you have to report in writing, on a clock, and if you are late the change does not count when you think it did — and the board can discipline you for the late notice on top of that. This part of the exam is mostly about knowing which change does which.
Key terms
- Joint venture license
- A separate license issued to a combination of already-licensed contractors so they can take work together as one contracting entity.
- General partner
- A partner who runs the partnership business. Under the license law, what happens to a partnership's license depends heavily on whether the partner who dies or leaves is a general partner or a limited partner.
- Disassociation
- Someone on the license leaving the business — a general partner or a limited partner leaving a partnership, a member entity leaving a joint venture, or an officer or qualifier leaving a company.
- Continuance
- Permission from the board to keep operating on a canceled license for a limited time. What a continuance lets you do — finish existing projects only, or also take on new work — depends on what caused the cancellation.
The rules the exam tests
4 rules · 1 minQualifying individual and examination
A contractor's license goes to an individual owner, partnership, corporation, limited liability company, or .
A participating tribe is a tribal applicant the license law recognizes as eligible to hold a contractor's license.
On the job
The license belongs to a legal entity, not to the person who passed the exam. Pick your business form carefully: it decides which cancellation, continuance and number-reissue rules apply to you later.
Exact wording
A contractor's license is issued to one of five kinds of applicant: an individual owner, a partnership, a corporation, a limited liability company, or a participating tribe.
List every officer, member, responsible manager, and director on the license application.
The requirement applies to a corporation or limited liability company seeking a contractor's license. Everyone in those four roles joins the , the people the board has on file as standing behind the licensed business.
On the job
The board licenses a business, not just the person who passed the exam, so the statute requires the people who run that business to be named on the application from the start.
Exact wording
Every person who is an officer, member, responsible manager, or director of a corporation or limited liability company seeking a contractor's license must be listed on the license application as a member of the personnel of record.
Name every partner on the application when a partnership applies for a license.
The personnel of record is the board's list of who stands behind the business. When your partnership applies, list every member on the license application as part of that record, because the board licenses the partnership itself.
On the job
The board licenses the whole partnership, so it has to know every partner behind it. Who is on the license is board business, not a private arrangement between partners.
Exact wording
Every person who is a member of a partnership seeking a contractor's license must be listed on the license application as a member of the personnel record.
Give the identification number the Secretary of State issued your corporation or limited liability company.
Foreign means the entity was formed outside California, and domestic means it was formed here. Both kinds must supply that number, and it goes on the contractor's license application.
On the job
The number ties your license to your entity's registration with the Secretary of State. That link is how the board can later check whether your entity still exists.
Exact wording
A corporation or limited liability company seeking a contractor's license, whether foreign or domestic, must provide the identification number issued to it by the Secretary of State.
Take away
6 rules · 2 minJoint ventures and additional classifications
The board issues a joint venture license only to already-licensed contractors.
The combination can be made up of individuals, corporations, limited liability companies, partnerships, or other joint ventures. Each entity in the combination must itself hold a current, active license in good standing.
On the job
A joint venture license does not qualify anyone new. Every member must already hold a current, active license in good standing, and the venture's own standing depends on all of them staying that way.
Exact wording
A joint venture license is issued to a combination of individuals, corporations, limited liability companies, partnerships, or other joint ventures, and each entity in the combination must itself hold a current, active license in good standing.
The board can license a joint venture in any classification one member holds.
The other member entities do not need to be licensed in that classification. So the joint venture can take work across every classification its members hold between them, as long as at least one member is licensed in the classification.
On the job
This is what makes joint ventures useful: partners can cover classifications the others do not hold. One member's classification opens that work to the venture.
Exact wording
A joint venture license may be issued in any classification in which at least one of the entities making up the joint venture is licensed.
One member's lapse suspends the whole joint venture license.
No board action is needed: the suspension happens by operation of law. An active joint venture license stays suspended during any period in which any member of the joint venture does not hold a current, active license in good standing.
On the job
A joint venture license is built out of its members' licenses, so the statute ties the joint venture's own status directly to whether every member's license stays current, active, and in good standing.
Exact wording
An active joint venture license is automatically suspended by operation of law during any period in which any member of the joint venture does not hold a current, active license in good standing.
Get your joint venture license before you and another licensee are awarded a contract together.
The rule covers two or more of you each licensed in California to act separately as a contractor. Not just a joint award: any contracting work you do together needs the joint venture license first. A violation is cause for disciplinary action.
On the job
Your own license authorizes you to contract alone. Two licensees working as one is a different arrangement, and the joint venture license has to be in hand before the contract is awarded.
Exact wording
Two or more contractors who have each been issued a license to act separately as a contractor within California may not be awarded a contract jointly, or otherwise act as a contractor together, without first securing a joint venture license, and a violation is a cause for disciplinary action.
You can submit a joint bid before your joint venture license is issued.
Each of you must already hold a license under the Contractors State License Law when the joint bid goes in. Only the joint venture license can wait until after the bid.
On the job
Bidding and licensing both take time, so the law lets them overlap. Bid first is allowed; being awarded the contract first is not.
Exact wording
Contractors licensed under the Contractors State License Law may jointly submit a bid for the performance of work that requires a joint venture license before the joint venture license has been obtained.
If your joint venture bids and fails to obtain its license, the abandoned-bid penalty still applies.
Your combination of licensees bid work requiring a joint venture license, then failed to obtain that license. That failure does not prevent any penalty the law sets for a contractor who submits a bid and then does not enter into the contract on that bid.
On the job
The permission to bid early is not a free option to walk away. If the joint venture license never comes through, you still face the ordinary penalty for backing out of your own bid.
Exact wording
When a combination of licensees submits a bid for work requiring a joint venture license and then fails to obtain that license, the failure does not prevent imposition of any penalty specified by law for a contractor who submits a bid and then does not enter into the contract on that bid.
Take away
5 rules · 3 minLicense numbers on a change of entity
You cannot transfer your contractor's license to any other person or entity.
That applies to every license type and every classification, under any circumstances. There is no sale, no gift, no handover: you cannot pass your license to a buyer, a partner, or a family member, and no one can pass one to you.
On the job
A license records that a particular applicant met the board's requirements, so the statute forbids handing it to someone the board never evaluated.
Exact wording
No contractor's license, regardless of its type or classification, is transferable to any other person or entity under any circumstances.
You can apply to have your old license number reissued to the same business.
The number must first have been canceled, revoked, suspended, or expired beyond the renewal period. Then four circumstances qualify on application: an individual; a partnership with no change in the partners or the partnership structure; a corporation with no change in its status as registered with the Secretary of State; and a limited liability company with no change in its status as registered with the Secretary of State. Reissuing or reassigning a number to a different entity runs on a separate list of conditions in the same section.
On the job
A number can come back to the same entity that lost it. For a partnership, corporation or LLC the test is whether the entity itself changed, which is why those three routes say 'no change'. An individual simply reapplies.
Exact wording
A contractor's license number may be reissued after cancellation, revocation, suspension, or expiration beyond the renewal period, on application in four circumstances: to an individual; to a partnership if there is no change in the partners or the partnership structure; to a corporation if there is no change in its status as registered with the Secretary of State; and to a limited liability company if there is no change in its status as registered with the Secretary of State. Reissuing or reassigning a license number to a DIFFERENT entity is governed by a separate list of conditions in the same section.
The board can reassign a license number to the new entity that continues the business.
Six conditions let the board reassign a number to a different entity, and three of them are corporate restructuring. First, the board can reassign the number to a corporation when the parent corporation has merged or created a subsidiary, when the subsidiary has merged into the parent corporation, or when the corporation has changed its filing status with the Secretary of State between domestic and foreign — in each case only where the new entity is being formed to continue the business of the formerly licensed corporation. Second, the board can reassign it to a limited liability company on those same terms. Third, the board can reassign it to a limited liability company that a corporation forms to continue that corporation's business after cancellation of the corporate entity's license, and only if the listed for each entity are the same.
On the job
The thread running through all three is that the business continues and only its corporate wrapper changes. A restructuring that keeps the same business going can keep the number.
Exact wording
A contractor's license number may be reassigned to a different entity in three of the six conditions the statute lists, all of them corporate restructuring: to a corporation when the parent corporation has merged or created a subsidiary, when the subsidiary has merged into the parent corporation, or when the corporation has changed its filing status with the Secretary of State between domestic and foreign — in each case only where the new entity is being formed to continue the business of the formerly licensed corporation; to a limited liability company on those same terms; and to a limited liability company formed by a corporation to continue that corporation's business after cancellation of the corporate entity's license, provided the personnel listed for each entity are the same.
You can reassign a license number to immediate family or to a company you control.
Three of the six conditions for reassigning a license number to a different entity work this way. First: to an individual who is an immediate family member of a licensed individual who is deceased or absent, where the license is required to continue an existing family contracting business. Second: to a corporation or limited liability company created by immediate members of an individual licensee's family to continue that deceased or absent individual licensee's existing contracting business. Third: to a corporation or limited liability company formed by an individual licensee who keeps ownership, directly or indirectly, of shares or membership interests evidencing more than 50 percent of the voting power.
On the job
These routes keep a family contracting business alive when the licensee dies, goes absent, or incorporates. The ownership route turns on keeping more than half the voting power, not on merely being an owner.
Exact wording
The other three of the six conditions for reassigning a contractor's license number to a different entity turn on family or ownership: to an individual who is an immediate family member of a licensed individual who is deceased or absent, where the license is required to continue an existing family contracting business; to a corporation or limited liability company created by immediate members of an individual licensee's family to continue an existing deceased or absent individual licensee's contracting business; and to a corporation or limited liability company formed by an individual licensee who maintains ownership, directly or indirectly, of shares or membership interests evidencing more than 50 percent of the voting power.
Immediate family for reassigning a license number means spouse, parent, sibling, child, stepchild, grandchild, or child-in-law.
For reassigning a contractor's license number, an immediate family member of a deceased or absent licensed individual means only spouse, father, mother, brother, sister, son, daughter, stepson, stepdaughter, grandson, granddaughter, son-in-law, or daughter-in-law. Any other relative is outside the list.
On the job
The statute names the qualifying relatives instead of asking the board to judge how close a family is. If your relationship is not on the list, this route is closed to you.
Exact wording
For purposes of reassigning a contractor's license number, an immediate family member of a deceased or absent licensed individual is a spouse, father, mother, brother, sister, son, daughter, stepson, stepdaughter, grandson, granddaughter, son-in-law, or daughter-in-law.
Take away
17 rules · 7 minChanges in personnel and ownership
An individual contractor's license is canceled the moment the licensee dies.
An individual license is personal to the one person it was issued to, not to a business name that outlives that person. The license does not pass to the family or the estate.
On the job
An individual license was personal to that one person, so it ends with them. Cancellation is automatic: nobody has to file anything for it to happen.
Exact wording
An individual contractor's license is canceled upon the death of the person licensed as an individual.
A continuance request must arrive at headquarters within 90 days. Mailing it is not enough.
When a person licensed as an individual contractor dies, an immediate family member may request a continuance. The request must be in writing and received at the board's headquarters office within 90 days after the death, not merely mailed.
On the job
A continuance lets the family keep the business running after a death — finishing projects in progress and taking new work — for a reasonable time. The clock runs from the death, and the request must actually arrive at headquarters, not merely be sent.
Exact wording
After the death of a person licensed as an individual contractor, an immediate member of the deceased licensee's family may request a continuance of the license. The request must be made in writing and received at the board's headquarters office within 90 days after the death.
After the continuance expires, you need your own license to keep contracting.
A continuance only lets an immediate family member keep operating on the deceased individual licensee's license for a limited time. Once it expires, you may contract only under a license you applied for and obtained in your own name.
On the job
A continuance is a bridge, not an inheritance. The family member has to earn their own license, so the sensible move is to start that application immediately rather than at the end.
Exact wording
The immediate family member operating under a continuance of a deceased individual licensee's contractor license must apply for and obtain his or her own license to continue contracting after the continuance expires.
The board may condition a deceased individual licensee's continuance on bonding within 90 days of notice.
If the board sets that condition, the person seeking the continuance must meet the contractor's bond requirements within 90 days of the board's notification of the requirement. The 90 days run from that notification, not from the licensee's death.
On the job
Public protection does not pause because a licensee died, so the bond has to be in place. Watch the clock here: it runs from the board's notification, not from the death.
Exact wording
Approval of a continuance of an individual contractor's license after the licensee's death may be made contingent on meeting the contractor's bond requirements within 90 days of notification by the board of that requirement.
The license law still applies in full during a continuance.
You may operate on a continuance after a death, disassociation, or dissolution of an individual, partnership, or joint venture license. The continuance excuses only the cancellation; every other requirement of the Contractors State License Law still binds that license.
On the job
A continuance keeps a canceled license working for a limited time; the statute says plainly that it does not suspend anything else the license law requires of that license.
Exact wording
An individual, partnership, or joint venture contractor's license continued after a death, disassociation, or dissolution remains subject to all other provisions of the Contractors State License Law.
A partnership license is canceled upon the death of a general partner.
The remaining partner or partners must notify the registrar in writing within 90 days of the death, because the license is canceled either way. Missing that 90-day deadline is grounds for disciplinary action.
On the job
A partnership license is tied to that specific combination of partners, so losing a general partner ends it. Cancellation happens whether or not you report it; reporting is a separate duty with its own penalty.
Exact wording
A partnership's contractor license is canceled upon the death of a general partner; the remaining partner or partners must notify the registrar in writing within 90 days of the death, and failure to notify the registrar within 90 days is grounds for disciplinary action.
If your general partner dies, request a continuance in writing within 90 days.
The board's headquarters office must receive your written request within 90 days after the general partner's death. A continuance keeps the partnership license working only for a limited time. To keep contracting after it expires, apply for and obtain a new license.
On the job
The surviving partners get the same bridge an individual's family gets. Note the wording: what comes next is a brand-new license, not the old one restored.
Exact wording
After the death of a general partner, the remaining general partner or partners may request a continuance of the partnership license. The request must be made in writing and received at the board's headquarters office within 90 days after the death, and they must apply for and obtain a new license to continue contracting after the continuance expires.
Your partnership license is canceled when a general partner disassociates. Late notice cannot undo it.
The partnership dissolving cancels the license too. Either the disassociating partner or the remaining partner or partners must notify the registrar in writing within 90 days. Notify late and cancellation takes effect the date the board's headquarters office receives the notice; late notice is separately grounds for disciplinary action.
On the job
A partner leaving is treated the same as a death, because either way the licensed combination no longer exists. Reporting late does not undo the cancellation; it moves the effective date and is separately punishable.
Exact wording
A partnership's contractor license is canceled upon the disassociation of a general partner or upon the dissolution of the partnership, and either the disassociating partner or the remaining partner or partners must notify the registrar in writing within 90 days; failure to notify within 90 days of the disassociation or dissolution causes the license to be canceled effective the date the written notification is received at the board's headquarters office, and the failure to notify within 90 days is separately grounds for disciplinary action.
If you lose your only , add another within 90 days or lose the license.
A limited partner's death or disassociation does not affect your partnership license, unless that partner was your only limited partner. Then add a new limited partner within 90 days of the death or disassociation, or the license is canceled.
On the job
Limited partners do not run the business, so losing one normally changes nothing. The exception is the partnership that has only one, because then the limited-partner role would disappear entirely.
Exact wording
The death or disassociation of a limited partner does not affect a partnership's contractor license unless the partnership license has only one limited partner, in which case the license is canceled unless a new limited partner is added to the license within 90 days of the death or disassociation.
As a general partner, you have 90 days to report a limited partner's death or departure.
Put the notice in writing and send it to the registrar. Missing the 90 days is grounds for disciplinary action. A disassociation not reported within 90 days takes effect the date the board's headquarters office receives the written notice.
On the job
A limited partner's departure usually leaves the license standing, so the statute keeps the reporting duty and its discipline separate from the question of whether the license survives.
Exact wording
The general partner or partners must notify the registrar in writing within 90 days of the death of a limited partner and within 90 days of the disassociation of a limited partner, and failure to notify within 90 days is grounds for disciplinary action; where a limited partner's disassociation is not reported within 90 days, the disassociation becomes effective the date the written notification is received at the board's headquarters office.
A joint venture license cannot outlive its members. One member leaving cancels the whole license.
A joint venture license is canceled when any one of its member entity licenses is canceled, is revoked, or that entity disassociates. It is also canceled when the joint venture itself dissolves.
On the job
A joint venture license is built on its members' licenses, so it cannot outlive them. Any one member's cancellation, revocation or departure is enough to end the venture's license.
Exact wording
A joint venture license is canceled upon the cancellation, revocation, or disassociation of any of its entity licenses, or upon the dissolution of the joint venture.
Notify the registrar in writing within 90 days of a joint venture disassociation or dissolution.
Written notice must reach the board's headquarters office. If it arrives after the 90 days, the joint venture license is canceled effective the date of receipt there, and the late notice is separately grounds for disciplinary action.
On the job
The board can only keep the public record accurate if the venture reports its own break-up. As with partnerships, a late notice both shifts the cancellation date and is grounds for discipline on its own.
Exact wording
The registrar must be notified in writing within 90 days of the disassociation of a joint venture entity or the dissolution of a joint venture; failure to notify within 90 days causes the joint venture license to be canceled effective the date the written notification is received at the board's headquarters office, and is separately grounds for disciplinary action.
A merger cancels a corporation's contractor license even though the business keeps running.
Dissolution or surrender of the right to do business in this state cancels the license too. The corporation or must notify the registrar in writing within 90 days of the event. A limited liability company follows the same rule and the same 90-day deadline.
On the job
The licensed entity itself has stopped existing, so the license goes with it. Merger is the trap here: the business often carries on, but the licensed corporation does not.
Exact wording
A corporation's contractor license is canceled upon the corporation's dissolution, merger, or surrender of its right to do business in this state, and the corporation or participating tribe must notify the registrar in writing within 90 days of that event; the same rule and the same deadline apply to a limited liability company.
The board cancels your license 60 days after finding the dissolution on its own.
If your corporation or limited liability company dissolves, merges, or surrenders its right to do business in this state and you never notify the board, the license is canceled 60 days after the board discovers that event in corporate records or Secretary of State records.
On the job
This is the branch for silence, not for lateness. Staying quiet does not preserve the license; it just moves cancellation onto a clock the board starts, not you.
Exact wording
When a corporation or a limited liability company does not notify the board of its dissolution, merger, or surrender of the right to do business in this state and the board instead discovers it independently, the license is canceled 60 days after the board's discovery of that event while researching corporate records or the records of the Secretary of State.
After a death, your continuance covers new work as well as projects in progress.
The death can be that of an individual licensee, of a general partner, or of a partnership's only limited partner. Projects in progress and new work are both allowed, for a reasonable amount of time determined by board rules.
On the job
The statute writes the two kinds of continuance differently: after a death it lets the business keep going for a reasonable time, and after a disassociation or dissolution it only lets the work already on the books be finished.
Exact wording
A continuance granted after a death — of an individual licensee, of a general partner, or of a partnership's only limited partner — allows the canceled license to be used to complete projects in progress AND to undertake new work, for a reasonable amount of time determined by rules of the board.
After a disassociation or dissolution, your continuance covers only projects already contracted for.
This continuance follows a general partner's disassociation, a partnership's dissolution, the disassociation of a partnership's only limited partner, or a joint venture entity's disassociation or the joint venture's own dissolution. You may finish projects contracted for or in progress before that date. New work requires a new license.
On the job
The statute writes this continuance narrowly — it lets the work already on the books be finished rather than letting the business carry on.
Exact wording
A continuance granted after a disassociation or a dissolution — of a general partner, of a partnership, of a partnership's only limited partner, or of a joint venture entity or the joint venture itself — allows only completion of projects contracted for or in progress before the date of that disassociation or dissolution; a new license is required to undertake new work.
A late dissolution or merger notice cancels the license the day it reaches headquarters.
A corporation or limited liability company has 90 days to report its dissolution, merger, or surrender. Notify the registrar in writing after those 90 days, and the license is canceled effective the date the board's headquarters office receives the notification.
On the job
This is the branch for lateness rather than silence. Reporting late does not undo the cancellation — it fixes the date at the day your notice lands, and the lateness is separately grounds for discipline.
Exact wording
Where a corporation or limited liability company notifies the registrar in writing of its dissolution, merger, or surrender AFTER the 90 days have run, the license is canceled effective the date that written notification is received at the board's headquarters office.
Take away
3 rules · 1 minCancellation and continuance
You must notify the registrar in writing every time your recorded license information changes.
As the licensee, you have 90 days from the change, and you must use the form the registrar prescribes. Reportable changes cover any information recorded under the Contractors State License Law: business address, personnel, business name, a qualifying individual's bond exemption, or an exemption to qualify multiple licenses. Those are examples, not the whole list.
On the job
The board's record is what the public relies on when checking a contractor. Read 'including but not limited to' carefully: the listed changes are examples, so any recorded information that changes is reportable.
Exact wording
A licensee must notify the registrar, on a form prescribed by the registrar, in writing within 90 days of any change to information recorded under the Contractors State License Law, including but not limited to changes in business address, personnel, business name, a qualifying individual's bond exemption, or an exemption to qualify multiple licenses.
If you report a change late, it takes effect when the board receives your notice.
The deadline covers any change to the information recorded on your license. Notify the registrar after the 90 days and the change is effective the date your written notice reaches the board's headquarters office, not the date it happened.
On the job
The board's record is what other people rely on, so the statute makes a late-reported change take effect when the board actually learns of it rather than backdating it to when it happened.
Exact wording
When a licensee fails to notify the registrar of a change to recorded license information within 90 days, the change becomes effective the date the written notification is received at the board's headquarters office.
Notify the registrar of a license change within 90 days. Late notice is its own violation.
The 90 days run from the change to your recorded license information. Missing that window is grounds for disciplinary action by itself.
On the job
Late reporting is its own violation, separate from whatever the change was. You can be disciplined for the paperwork even when nothing about the underlying change was improper.
Exact wording
Failure to notify the registrar of a change to recorded license information within 90 days is grounds for disciplinary action.
Take away
Important numbers to know
Where people go wrong
Sounds right: The buyer can take over my license when I sell the business.
Where’s the catch?
Sounds right: Losing any partner cancels the partnership's license.
Where’s the catch?
Sounds right: The 90 days is a grace period on the change itself.
Where’s the catch?
Sounds right: A cancellation always dates from the event, however late you report it.
Where’s the catch?
Sounds right: The joint venture license replaces the members' own licenses.
Where’s the catch?
Easy to mix up: Canceled license vs. suspended license
Which is which?
Sounds right: Only the owners have to be listed as .
Where’s the catch?
Glossary
Every term this guide defines, in one place. Each is also defined where it first appears.
- Limited partner
- A partner who is in the partnership as an investor rather than as someone running the business.
- Participating tribe
- A tribal applicant the license law recognizes as eligible to hold a contractor's license. It is one of the kinds of applicant the statute lists.
- Personnel of record
- The people the board has on file as standing behind a licensed business — officers, partners, members, managers, and the qualifier. They are listed on the license application, and the list has to stay current.
- Reissuance of a license number
- Putting a license number back into use. The number can move to a new entity in a few narrow situations even though the license itself never transfers.
Keep going
- Practice questions for Law & Business — Business Organization and Licensing is 13% of the exam.
- Job scenario: The Partner Who Left
- Job scenario: The Ninety Days
- Also in Business Organization and Licensing: Licensing: Getting the License, Keeping It, and Staying Inside It
- Also in Business Organization and Licensing: Advertising and Salespeople: What You Put in Front of the Public
- Every number on one page — this guide’s figures alongside every other Law & Business guide’s.
Test yourself: 9 questions for this guide
A paid account adds more ways to practice and prepare: study questions after every chapter, practice questions for every topic, timed practice exams, and job scenarios drawn from real jobs. A free account gets you one timed practice exam and saves your progress across devices. Here is one of this guide's questions:
Your partnership's license lists you and one other general partner. She dies on June 1. What happened to the license, and what do you owe the registrar?
AnswerThe license is canceled — a partnership license is canceled upon the death of a general partner. You must notify the registrar in writing within 90 days of the death, and failing to notify within 90 days is grounds for disciplinary action. Two things to do rather than just know: you may request a continuance to finish projects in progress and take new work, but that request must be in writing and received at headquarters within 90 days of the death as well. And the remaining partners must apply for and obtain a new license to keep contracting once the continuance expires.
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