One of the first decisions a new business will make is deciding between an LLC and corporation. One of my first questions to these business owners is “Will this entity require a license from a California state agency?”
Most California state agencies in my experience will not issue licenses to limited liability companies, but will license corporations without a problem. LLC’s were a relatively new business entity that came into existence in California in 2000; although corporations have been an acknowledged business entity since California became a state.
The issue of licensing an LLC comes up often with clients, but I see it the most with contractors. Effective January 1, 2012, Senate Bill 392 authorizes the Contractors State Licensing Board (CSLB) to issue contractors licenses to LLC’s.
Applications are now being accepted. This is great for companies that plan to enter into a joint venture with another company and cannot elect to be taxed as an s-corporation.
It has taken a while for the various state agencies that issue licenses to catch up to the changes in business entity formation, but it appears to be slowly making adjustments to accommodate this structure.
The requirements for LLC’s to obtain a license are similar to those required of corporations….
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