Legal Question in Business Law in California

Re: subsidiary

Setting up a California corporation that would be a subsidiary of a Texas corporation is a purely mechanical process. We create some simple papers, fork over the filing fees, and presto! California subsidiary!

Getting the California corporation licensed to act as a contractor is far from that simple. One of the likely problems is that the CSLB (Contractors' State License Board) will require the California corporation to have a responsible person in local management who holds the requisite license. Thus, the staffing of the subsidiary corporation may be an issue in licensing. (It is also possible, I don't remember at the moment, that ownership and control of the corporation might be an issue, but I don't think so at the moment).

The CSLB has a lot of application information on its Web site at www.cslb.ca.gov, and I think a good starting point is to go to that site and download and print everything that looks like it is, or might be, applicable to a corporate license application. I think you'll find that there are two basic categories of applicants: those that are like a licensed sole proprietor who has already met all the experience and testing qualifications and is merely changing his business from a proprietorship to a corporate form; and original applications from corporations where no one already holds a California contractor's license. Obviously, the former is a lot simpler, but neither one is super-easy.

You may fall into a third category: someone who is already qualified, but the qualifications are from another state. I don't offhand know how California handles that; probably like a brand-new applicant with no experience or test results, but I don't know.

By the way, California certainly allows contractors holding licenses from other states to participate in California projects, subject to various rules and limitations.

In any case, forming the corporation and getting it licensed are separate and different deals, one easy, the other maybe, maybe not.