Author Archives: CSLS

About CSLS

Contractors State License Service (CSLS) is the largest school in California devoted to the Construction professional. For over 23 years, CSLS has helped its students pass the exam to become licensed contractors in the State of California, licensing more students than any other school. From our main offices in Southern California, CSLS operates over 25 locations with full-service support and classrooms. We have grown to this extent by providing quality, professional services. In comparison, this provides 7 times the number of convenient locations than the second largest contractor school. Contractors State License Services is one of the only contractor schools in the state that is run by educators, not lawyers or people mostly interested in the bonding and insurance business. Contractors State License Services formerly operated under the oversight of the State of California's Bureau for Private Post Secondary and Vocational Education. As of January 1 2010, the new Bureau for Private Postsecondary Education (BPPE) came into existence replacing the BPPVE. CSLS now operates under the provisions of the California Private Postsecondary Education Act of 2009 (CPPEA), Article 4 Section 94874(f). Our Mission is simple; We can help you pass your California Contractors License Exam. Celebrating our 25th year, CSLS has helped over 120,000 students pass the California contractor licensing exam to become licensed contractors in the State of California. Additionally, we offer complete home study and online contractor’s license programs to help you pass your California contractors license exam. CSLS offers licensing classes for all types of contractor licenses, including General Engineering Contractor, General Building Contractor, Specialty Contractor, Insulation and Acoustical Contractor, Framing and Rough Carpentry Contractor, Cabinet, Millwork and Finish Carpentry Contractor, Concrete Contractor, Drywall Contractor, Electrical Contractor, Elevator Contractor, Landscaping Contractor, Warm-Air Heating, Ventilating and Air-Conditioning Contractor, and many others. For a complete list of contractor licenses, visit www.MakeMeAContractor.com and tuned for more informative posts.

How To Go From A Construction Manager To A Licensed Engineer

Construction management is a difficult, demanding profession – it involves long days at the job site in every weather imaginable, putting out fires from sun-up to sun-down (and often all the time in between!).

If you’re a construction manager yourself, you may be thinking: why not just become an engineer? In many cases, you already have 90% of the skills of an engineer; you just lack the mathematical education and skills and the licensing requirements to become an engineer – and enjoy the quality-of-life perks that come with it.

But becoming an engineer as a construction manager isn’t the most straightforward or easy path. It requires years of hard work and planning to fulfill that dream – but it’s not impossible! With that in mind, here’s our guide to the easiest way to become an engineer as a construction manager!

Understanding the Roles: Construction Manager vs. Engineer

Before diving into the transition process, it’s essential to understand the distinct roles of a construction manager and an engineer.

  • Construction Manager: Primarily responsible for overseeing the day-to-day operations of a construction site, ensuring that projects are completed on time, within budget, and adhering to set standards. Their education typically includes a degree in construction management, civil engineering, or construction science.
  • Engineer: These professionals design the initial planning and blueprints for construction projects and ensure that their directions are followed throughout the project by regularly communicating with construction managers and other stakeholders. Engineers usually work from an offsite main office, overseeing the broader aspects of planning a construction project1. Depending on the complexity of the project, engineers may have a smaller part of the process as the project progresses.

Practical Steps to Transition

Okay, so how do you transition into an engineering career as a construction manager? Well, get ready to go back to school, as you need to get a degree in engineering to get started! You need a bachelor’s degree to get any real job as an engineer on a construction project. This is obviously for safety reasons – engineers are responsible for ensuring the physical safety of their buildings.

A bachelor’s degree in engineering provides you with the comprehensive knowledge needed to operate as an engineer in the real world – ensuring construction projects are safe and within the boundaries of physical law. You learn everything from math to design – all critical skills for engineers.

  • Earn a Relevant Bachelor’s Degree: The first step to becoming a civil engineer is to earn a bachelor’s degree from a program that offers a construction engineering program. A good engineering program typically has accreditation from the Engineering Accreditation Commission of the Accreditation Board for Engineering and Technology (ABET).
  • Get A License: To practice as an engineer, you don’t technically need a license, but in reality, you do. If you’re a civil engineer, you must obtain a Professional Engineer (PE) license. Μuch like getting any other CSLB license, this includes four years of experience operating as a “journeyman” engineer under a licensed engineer. In addition to licenses for civil engineers, most states require specific licenses. All of these routes require you to pass engineering exams as well. The steps to licensing are:

In many cases, you have to apply for and receive a state license from your state. There may even be state and local requirements as well.

Skills Needed for Engineers

Transitioning to an engineering role requires a blend of technical and soft skills. Luckily, if you’re a construction manager, you have all the necessary soft skills needed, in addition to knowing the ins and outs of construction – something that gives you a huge advantage in understanding and communicating logistical realities to clients and higher-ups.

The key difference in skills needed is your engineering skills – the knowledge and understanding of the mathematics and physics needed to construct a building that is safe and fit for humans, meets local codes and bylaws, and may even need to be sustainably developed.

  • Total understanding and control of physics such as dynamics, mechanics, tension and more.
  • Strong mathematical skills such as calculus and geometry, with the ability to apply them.
  • Design skills such as blueprinting, conceiving, and sketching.
  • Proficiency with design and visualization programs like AutoCAD and TileFlow.
  • Programming skills to get maximum value from design tools such as SolidWorks and AutoCAD. In the electrical and mechanical engineering fields, specialized programming languages such as MATLAB and RAPID are often used.
  • Specialized construction knowledge of common high-use projects like roads, tunnels, bridges, and so on.
  • Ability to accurately estimate cost and communicate trade-offs when it comes to materials and design.
  • Knowledge of sustainable and energy-efficient materials and their properties with regard to construction.
  • Ability to effectively communicate the project to stakeholders.
  • A consistent ability to problem-solve real-world problems posed by the physical and material challenges of production.

Similarities and Differences Between Construction Managers and Engineers

Similarities

  • Both roles are the backbone of the construction process. Without either of them, no building gets built.
  • Both demand a profound understanding of construction principles and practices, on both a macro- and micro-scopic level.
  • Effective and consistent communication is the key in both roles, especially when coordinating with other professionals and stakeholders.

Differences

  • Engineers have more stringent education and licensing prerequisites, with a stronger emphasis on the mathematics and physics of construction.
  • Engineers are involved early on in planning and design, well before anything is touched on a job site. Construction managers take the plan and make it happen – they are the day-to-day torchbearers on a job site.
  • Engineers are generally much more mathematical and “brainy” than construction managers, and their work is much less ambiguous than construction managers. CMs are constantly working with the human side and the day-to-day work, which means they’re doing less math and less time in an office chair.
  • Engineers may never step foot on a job site, often working from the comfort of an office. Construction managers are pretty much on the site from the beginning of the project all the way to the bitter end.

Engineering vs. Construction Management Salaries and Economic Impact

It may surprise you that, in general, it is more lucrative to be a construction manager than an engineer!

As of May 2022, the median annual wage for construction managers was $101,480. The employment of construction managers is projected to grow by 5% from 2022 to 2032, which is faster than the average growth rate for all occupations. This indicates approximately 38,700 job openings for construction managers each year over the decade.

On the flip side, civil engineers (the best representation of this diverse career) had a median annual wage of $89,940 in May 2022. The employment landscape for civil engineers is projected to burgeon by 5% from 2022 to 2032. This signifies about 21,200 openings for civil engineers each year, on average, over the decade.

However, it’s important to keep in mind that financial compensation is only one piece of the puzzle when deciding one’s career. A construction manager is often in the trenches with their team, dealing with rain, snow, wind, and all sorts of weather conditions, at all hours of the day, often working long days to make sure everything runs smoothly.

Engineers, on the other hand, are generally white-collar jobs. Engineers generally work regular hours from the comfort of an air-conditioned office. With a difference of ~$10k, it makes sense for a lot of seasoned CMs to want to change to something that’s a little less demanding. You may be one of these people!

Transitioning to a Licensed Engineer in California: The Golden State’s Path

As always, let’s take a look at the process for construction managers in California looking to change course and become an engineer in the Oldie Goldie State.

Steps to Become a Licensed Engineer in California:

Pre-Application Requirements:

  • Before applying for licensure, ensure you’ve passed the NCEES Fundamentals of Engineering (FE) exam and the Principles and Practice of Engineering (PE-Civil) exam.
  • Confirm that you meet the qualifying experience requirements set by the state.

FOR CIVIL ENGINEERS ONLY – APPLY TO BPELSG

  • Once you’ve passed the necessary exams and have the required experience, submit your application for licensure to the California Board of Professional Engineers, Land Surveyors, and Geologists using the online BPELSG Connect portal.
  • California requires additional state-specific exams: Civil Seismic Principles and Civil Engineering Surveying.
  • These exams are offered on a continuous quarterly basis, and there’s no final filing date.

Get Your CSLB License

  • Now you need to apply for your CSLB Class A General Engineering Contractor License!
  • As always, you have to meet the CSLB’s licensing requirements before applying.
  • Then, you just have to pass the CSLB exam and get the necessary bonds and insurance
    Receive Your License And Start Working!

Once you’ve passed the CSLB exam, you can start working as an engineer right away!

Additional Information:

  • For Civil Engineers – Three Types Of BPELSG Licenses: BPELSG California offers three categories of licensing for engineers:
      • Practice act (Civil, Electrical, and Mechanical Engineering)
      • Title act (Agricultural, Chemical, Control Systems, Fire Protection, Industrial, Metallurgical, Nuclear, Petroleum, and Traffic Engineering)
      • Title authority (sub-branches of Civil Engineering: Structural Engineering and Geotechnical Engineering).
  • Eligibility and Experience Requirements: Applicants must meet the qualifying experience requirements outlined in Business and Professions Code sections 6751(c) and 6753 and Title 16, California Code of Regulations section 424.
  • Background Check and Fingerprinting: All applicants are background checked and fingerprinted by the CSLB before they are given a license. Check out our comprehensive article on that topic for more information.

Should I Become An Engineer As A Construction Manager?

The answer to that question can only lie within. The reality is that construction managers do make a bit more money, but the trade-offs of having set, reliable hours, and working off-site (or even from home!) means that it could be absolutely worth it for you and your family to make the transition to engineering.

If you’re looking to become an engineer in California, we’ve got you covered with everything you could need to know about what it takes to become a CSLB-certified construction engineer in our great state.

Can a Residential Contractor Work on Commercial Jobs in California?

If you’re a general contractor working on homes, apartments or other residential spaces, you might wonder if you are legally able to work on commercial jobs, even if you’ve only worked on residential jobs before.

In this article, we’ll cover everything you need to know if you’re a residential contractor looking to make the jump to the bigger, higher-paying commercial jobs in your part of California.

Key Differences Between Residential and Commercial Contractors

The obvious difference between commercial and residential contractors is that one builds residences like homes and apartments, while the other works on commercial properties: offices, data centers, strip malls, and so on.

Both groups tend to stay in their own respective lanes, but there is a fair bit of overlap as well. Here are the main differences (and similarities) between residential and commercial contractors.

1. Scope and Scale of Projects

  • Residential Contractors: Build homes, apartments, and other living spaces. The projects are typically smaller in scale and involve a more personalized approach to meet the homeowner’s needs. They require a fair bit of direct customer interaction – more so than commercial contractors.
  • Commercial Contractors: They construct non-residential buildings like offices, malls, and industrial structures. These projects are almost always larger, involving more complex systems and more stringent regulations than residential jobs.

2. Building Codes and Regulations

Residential Contractors: Adhere to residential building codes, which might be more lenient in aspects like accessibility and materials. Basically, if you’re building a safe and habitable home or apartment that fits the neighborhood, residential contractors have little to be concerned about when it comes to codes and regulations.
Commercial Contractors: Must comply with commercial building codes, which have stricter guidelines concerning safety, accessibility, and durability due to the public nature of the spaces and the sheer amount of people who use commercial spaces.

3. Design and Materials

Residential Contractors: The design often prioritizes aesthetics, comfort, and functionality, with a lot more flexibility and openness to unique designs. Materials used might prioritize cost-effectiveness or visual appeal. There’s a lot more freedom here.
Commercial Contractors: The design must cater to the functionality of the business or industry, often involving the use of more durable and industrial-grade materials to withstand higher traffic and usage.

4. Project Timeline and Budget

Residential Contractors: Residential projects almost always have a shorter timeline and might have a more flexible budget, with a focus on meeting the homeowner’s specific needs and preferences.
Commercial Contractors: Projects often come with a stringent timeline and budget, with a higher emphasis on adhering to the predetermined schedule to prevent financial losses. Commercial contractors have a lot more on their shoulders than residential contractors, with dozens or hundreds of stakeholders pushing hard on the project to meet expectations and deadlines.

5. Licensing and Insurance

Residential Contractors: Licensing requirements might be less stringent, and insurance might focus more on aspects like property damage and injury. However, in most states, residential contractors have strict licensing guidelines.
Commercial Contractors: While all residential contractors are required to have licenses and insurance in California, commercial contractors are often required to have even more comprehensive licenses and insurance policies due to the larger scale and higher risks involved in commercial projects.

6. Client Interaction

Residential Contractors: Interaction is often with individuals or families, requiring a personal touch and understanding of individual needs. This can sometimes mean overly demanding or needy clients when compared to the residential world, where the general contractor is communicating with an intermediary.
Commercial Contractors: Interaction is usually with business entities, requiring a focus on meeting the functional needs of the business and adhering to commercial standards and regulations. Generally, they have less need for shmoozing or working hard to win clients over.

Licensing: The Key Area

In California, the key license required for general contractors looking to work on both residential and commercial projects is the Class B General Contractor License. Both sets of general contractors need this license to do any work in California. This license is designed for individuals specializing in both residential and commercial construction tasks.

The scope of work under this license is broad as you might expect, covering all sorts of general contractor responsibilities. Some of the things that the Class B General Contractor license encompasses:

  • Design & Builds
  • Residential and commercial building construction
  • ADU Builds
  • Tenant Improvements
  • Repairs and fixes
  • Remodeling (in some instances – in others you’ll need a class B-2 license)

It’s extremely important to note that without a Class B license, you cannot do any general contracting work at all – residential or commercial, so you’re going to want to take care of that first.

The Fine Print

However, the General B License comes with its set of caveats. A general building contractor may engage in a project involving framing or carpentry directly. But for projects involving other trades – in California, anyone holding a Class C License – the scenario gets a tad complex.

Here’s the deal:

If a project involves trades beyond framing or carpentry, a general building contractor can take a prime contract only if it necessitates “at least two unrelated building trades or crafts”.
Alternatively, the contractor should hold the appropriate license classification or subcontract with an appropriately licensed specialty contractor to perform the work.

The Legal and Regulatory Rundown

There are a bunch of legal and regulatory guidelines that govern commercial and residential contracts. The main thing to be aware of – as always – is licensing. Generally speaking, license laws are the laws that will govern everything when it comes to residential and commercial general contracting.

A Class B General Contractor License, for example, allows GenCons to take on any general contracting job in the state – including residential or commercial – but many jobs require contractors to acquire further licensing or certifications to perform certain types of work.

The B&P Code §7057, for example, places further limitations on the types of work GenCons can take on, stating that general building contractors cannot engage in certain works unless they add specific classifications to their license or subcontract with a specially licensed contractor.

As always – it’s illegal for unlicensed contractors to work on any construction project valued over $500, and a license is mandated for 40 construction-related trades in California.

Here’s some more specific information.

Commercial Construction Contracts

One of the biggest laws affecting general contractors working in residential and commercial jobs is SB 474, signed back in 2011. This law established the following changes:

  • SB 474 broadened the scope of unenforceable indemnity provisions, particularly the “Type I” indemnity provisions which previously allowed an upstream contractor to be indemnified by a downstream contractor even for liabilities arising from the former’s own active negligence.
  • Imposed stricter limitations on contractors’ ability to require their subcontractors and suppliers to cover the costs of defense in litigation. Specifically, the law added requirements for a formal written tender of the claim before a subcontractor is obligated to contribute to defense costs.

Carpentry & Framing Restrictions

General contractors in California have specific restrictions when engaging in projects outside the domains of framing or carpentry on their jobs. This gets a bit sticky, so we’ll cover this more in-depth in a later article, but here’s a bird’s eye view of how carpentry and framing trades affect residential and commercial general contractors.

  • A general contractor may take a prime contract or a subcontract for a framing or carpentry project.
  • For projects involving trades other than framing or carpentry, a GenCon can only take a prime contract if it requires at least two unrelated building trades or crafts.
  • Similarly, a GC can take a subcontract involving other trades only if it involves at least two unrelated trades or crafts, aside from framing or carpentry.
  • Furthermore, the law restricts general contractors from contracting for projects that include any CSLB Class “C” specialty contractor projects, unless they hold that certification themselves. Even then, they cannot perform the work if there are less than two trades involved. There must be at least two trades involved.

In addition, to these overarching laws, there’s been a number of recent bills and other legislation that dictate the finer points of commercial general contracting. Here are some of the most important ones for contractors to know.

2022 General Contractor Laws

Electronic Records for Contractors and Subcontractors (AB 1023):

  • This regulation was introduced to enable electronic record-keeping, making it easier for contractors and subcontractors to maintain and access their records digitally.

Direct Contractor Liability on Private Works (SB 727):

  • This legislation expands the liability of direct contractors on private works projects. It requires direct contractors to make certain payments and extends their liability, ensuring that subcontractors and laborers are paid appropriately for their work​​.

Property Assessed Clean Energy (PACE) Program (AB 1551):

  • This law concerns the PACE program which provides financing for homeowners and business owners to make energy efficiency, renewable energy, and water conservation improvements.

Enforcement of Liens on Real Property (SB 572):

  • This regulation addresses the enforcement of liens on real property, providing a legal framework for contractors and other stakeholders to claim their financial rights.

Change Order Cap (Los Angeles County ONLY!):

  • A law was enacted that allows Los Angeles County to implement a change order cap of $400,000 for contracts whose original cost exceeds $25,000,000, and a cap of $750,000 for contracts exceeding $50,000,000. These caps are adjustable annually based on the percentage change in the California Consumer Price Index​.

2023 General Contractor Laws

Workers’ Compensation Laws

  • Probably the biggest piece of legislation that went into effect in 2023 are the new Workers’ Comp laws. These laws legally require all contractors to have $25,000 in Workers’ Compensation.

Housing Affordability and Environmental Laws

  • A series of laws were passed aimed at improving housing affordability, tackling climate change, and facilitating the construction of new housing, impacting both residential and commercial contractors. This is an opportunity for general contractors to reach new markets

Procurement Authorities

  • New procurement authorities were introduced for contractors, potentially altering the way contracts are awarded and managed.

Accessory Dwelling Units (ADUs) Laws

  • New laws concerning ADUs were passed to make it easier and more affordable to build such units, impacting residential contractors primarily but also commercial contractors involved in residential projects.

Minimum Wage Increase

  • Effective January 1, 2023, the minimum wage in California will increase to $15.50 per hour for businesses with 26 or more employees, affecting the labor costs for contractors.

Increased Civil Penalties (AB 1747):

  • Contractors who violate building laws will see an increase in civil penalties under AB 1747 in 2023. The bill increases the fine from $8,000 to $30,000 for every violation of BPC Section 7110 (violations of building laws) and amends Section 7099.2 (assessment of civil penalties) regarding building permit violations​.

Conclusion

If you’re a residential contractor in California – good news! You don’t need anything special to do commercial jobs, as long as you’re working on jobs that fit your classification, and making sure that you’re paying attention to all the exceptions to the rules – things like specialized classifications and the “two trade” laws.

Marketing yourself as a commercial contractor is a whole different kettle of fish, though – maybe we’ll write an article with some of the best tips to get you going!

References

CSLB – Building Official Information Guide
CSLB – Class B General Contractor License
Smith, Currie & Hancock – 2023 Construction Laws
Digital Constructive – Jobs You Can Do With A General B License
Contractors License Guru – What Can and What Can’t General Building Contractors Do
LegalMatch – Can Homeowners Hire an Unlicensed Contractor?
Lorman – Fundamentals of Construction Contracts in California
Pillsbury Law – Shifting of Liability

How to Market to Your Local Area as a California Contractor

As a California contractor, one of the hardest parts of being a contractor is growing your business.

While some contractors are lucky enough to work a number of jobs across different zip codes and geographies, the reality is that the majority of the contractors in the state work in the same area for their entire careers.

With this in mind, it’s absolutely essential for any contractor looking to build success to have a strong local presence. People in your neighborhood need to know who you are and what you do before they can even think about hiring you.

So how do you reach your local market? What are the best ways for California contractors to get their name out there – and ultimately to win more business? Here’s how.

Define and Understand Your Local Market

Before you can market to your local area, you need to understand it, as well as how your skills, or license fits into your local area’s needs. For example, if you’re a C-57 Well Drilling contractor, you might not find much work in Santa Monica.

Here are some easy ways to define your market:

  • Demographics: Who are the people in your local area? What is their age range, income level, and housing situation? What types of properties are in your area, and which ones need contractors in your discipline?
  • Needs: What are the common construction needs in your area? Are there more demands for home renovations or new constructions?
  • Competition: Who are your local competitors? What services do they offer, and how can you differentiate yourself? A quick Google search can provide you with a list of local contractors. Analyze their services, pricing, and customer reviews to identify gaps that your business can fill.
  • Networking: Attend industry events, stay up to date with your union meetups, and join professional organizations both locally, regionally and nationally. This not only helps you stay updated with the latest trends but also provides opportunities for networking and collaboration between contracting disciplines. If someone needs a roofer, they’re going to call the roofer they know.

Person-To-Person Contact

Once you’ve understood your local market, the next step is to build a strong local presence. The best way to achieve growth, just like networking, is by face-to-face, in-person connection.

Especially when it comes to something as expensive and important as construction, people want to hire people they trust. Here are some specific ways you can do that.

  • Community Involvement: Participate in local events and sponsor local teams or charities. This not only increases your visibility but also builds your reputation as a community-focused business. People trust people who are invested in their own community and success – so put your money where your mouth is.
  • Local Partnerships: Partner with local businesses to offer joint promotions or discounts. This can help you reach a wider audience and increase your customer base. For instance, partnering with a local home improvement store or joining forces with other contractors in the area to offer discounts is a great way to net new customers.
  • Angie’s List: Angie’s List is a great way to build your local network, as many people use it to find contractors in their area. Sure, this isn’t a direct, in-person way, but usually, if you book a job on Angie’s List, and deliver well, you’ll get hired again.
  • Referral Programs: One of the best ways to grow your business locally is via a referral program. Offer incentives like discounts or free services to motivate satisfied customers to refer you to friends. Referential power is the best way to grow your business – Nielsen underlines that 92% of people trust referrals from people they know.

Digital Marketing Is Essential

In today’s digital age, online marketing is a powerful tool for reaching your local audience. Here are some strategies to consider:

  • Social Media: You need to be using social media if you want to market yourself effectively – not even contractors are exempt from this. Share updates about your projects, offer home improvement tips, and respond to comments and messages – this will help you stay top of mind for your local customers. And don’t underestimate a good, old-fashioned Facebook group for your local community – it’s a great way to connect with people in your area.
  • Online Advertising: Use platforms like Google Ads and Facebook Ads to reach a wider audience. You can target your ads based on location, demographics, and interests to ensure your ads stay relevant to the people you’re trying to reach.
  • Email Marketing: Along those lines, sending regular newsletters to your subscribers, offering updates, promotions, or useful content can keep you top of mind. According to a study by Campaign Monitor, email marketing has an ROI of $44 for every $1 spent.
  • Local SEO: Optimize your website for local search. This includes using location-specific keywords, such as “California contractor,” and ensuring your business is listed in local directories and on Google Business, so people can find you when they search for you. According to a study by BrightLocal, 93% of consumers used the internet to find a local business in the last year – underlining how important this is to local marketing.
  • Content Marketing: Create valuable content related to home construction and renovation and post it on your own website. This not only positions you as an expert for anyone looking at your services but also increases visibility by improving your website’s SEO. You can even go as far as creating video or photo content for TikTok or Instagram.

Track Your Efforts And Iterate

At the end of the day, you have no idea how your efforts are going if you don’t track your data and record the results of your marketing efforts.

Use tools like Google Analytics to monitor your website traffic, social media insights to track engagement, and customer feedback – in the form of customer surveys after a completed job – to gauge satisfaction. According to a report by HubSpot, companies that track their inbound marketing see a 12% increase in conversion rates, really underlining the importance of seeing how your work is doing.

Even if it looks like your marketing efforts aren’t working at all, stay patient. In many cases, it takes a long time for prospective customers to become real customers, up to months or even years in some cases, especially as contractors.

And if you think something isn’t working, you can always iterate upon it. Sometimes it’s as simple as the image you are using for your ad or the subject line of your email. Iteration is a great way to quickly and easily improve your marketing.

A Comprehensive Guide To ADU Builds For California Contractors

Accessory Dwelling Units (ADUs) have emerged as a huge economic opportunity for both homeowners and contractors alike. The ADU market in California has experienced unprecedented growth, evidenced by a 50% increase in permit applications in 2022 compared to the preceding year. There’s a reason why – it represents a huge opportunity for both contractors and homeowners alike.

With bill after bill of pro-ADU legislation coming through the California legislature, the state is definitely making it easy for people to offer ADUs on residential property. If you’re a builder looking to take advantage of this new market or a person looking to make a little bit of extra cash, an ADU looks like an enticing opportunity. But make no mistake – building an ADU is no joke. It requires a lot of work, a lot of money, and a lot of regulatory legwork.

If you’re someone looking to build an ADU, either for yourself or your client – this guide will cover everything you need to know about ADUs and what it means to actually build one or enter the market as a specialty ADU contractor.

A Closer Look at the Historical Evolution

The trajectory of ADUs in California is marked by significant legislative milestones, each contributing to easing housing shortages. The introduction of Senate Bill 1069 in 2017 was a game-changer, relaxing parking and utility fee requirements and thereby catalyzing ADU developments.

Assembly Bill 68 in 2021 further expedited the approval process and allowed for multiple ADUs on single-family lots, setting the stage for a thriving ADU market with contractors steering this transformative shift

Navigating the intricate regulatory framework is paramount for contractors. The California Department of Housing and Community Development (HCD) outlines comprehensive guidelines encompassing zoning, size, and design, with local jurisdictions adding another layer of specificity. Contractors must meticulously consider:

  • Zoning Requirements: Adherence to varying local zoning ordinances is crucial, dictating the permissible locations for ADU construction and often adding to the cost.
  • Size Limitations: With a typical cap at 1,200 square feet, size regulations demand careful attention, considering the lot size and local variations.
  • Local Design Standards: Compliance with local design standards ensures that ADUs stay within local building codes like heights and lawn care.

Innovations and Trends: Crafting the ADU of Tomorrow

Innovation is at the heart of ADU construction, with contractors employing advanced technologies and sustainable methodologies to meet the evolving market expectations. Emerging trends include:

  • Sustainable Building Practices: The incorporation of features like solar panels, rainwater harvesting systems, and energy-efficient appliances is becoming the norm, reflecting California’s sustainability goals.
  • Modular Construction: The rising popularity of modular construction offers a blend of cost efficiency and time-saving benefits.
  • Smart Home Integration: The integration of smart home technologies enhances the appeal and functionality of ADUs, aligning with modern living expectations.

Statistics About the ADU Market in California in 2023

The ADU market in California in 2023 has witnessed significant developments, reflecting the evolving legal and economic landscape. Here are five noteworthy statistics:

  • Permit Applications: There has been a 60% increase in ADU permit applications in California in 2023 compared to the previous year, indicating heightened interest and activity in the ADU market.
  • Construction Costs: The average construction cost of an ADU in California is approximately $200,000, varying based on size, design, and location.
  • Rental Rates: Rental rates for ADUs in California have seen an average increase of 8%, making them a lucrative investment for homeowners.
  • Sustainability Trends: Approximately 70% of new ADUs constructed in 2023 have incorporated sustainable building practices, reflecting the growing emphasis on eco-friendly living.
  • Financing Options: The availability of ADU-specific financing options has increased by 25%, providing homeowners with more avenues to fund ADU construction.

Best Tips for Contractors Who Want to Enter the ADU Market

Establishing yourself in the piping-hot ADU market in California presents a golden opportunity for contractors. While every contractor’s situation is different, here are some general tips that will put you in the right direction when it comes to ADUs.

  • Stay Informed on Regulations: Regularly update knowledge on state and local ADU regulations to ensure compliance and stay ahead of any legislative changes.
  • Specialize in Sustainable Practices: Embrace and specialize in sustainable building practices to meet the growing demand for eco-friendly ADUs.
  • Build Relationships with Local Authorities: Foster relationships with local planning and zoning authorities to facilitate smoother permit applications and approvals.
  • Offer Customized Solutions: Provide tailored ADU designs and solutions to cater to the diverse needs and preferences of homeowners.
  • Engage in Community Outreach: Actively engage with communities to address concerns, build trust, and establish a positive reputation in the ADU market.
  • Budgeting and Financing: Providing accurate cost estimates and assisting homeowners in navigating financing options, such as ADU-specific loans and grants, is essential.
  • Site Assessment: Comprehensive site assessments identify potential challenges related to topography and utility access, enabling preemptive solutions.

Pros and Cons of Hiring a Contractor to Build Your ADU

As a homeowner, deciding whether to hire a contractor for your ADU build is probably the most important step you’ll make when building an ADU, because, obviously, you’re going to be the one building it if you don’t hire someone to build it!

Obviously, we think that most people would benefit from having a contractor build your ADU, but here are some pros and cons of bringing on an expert to take care of the building of your ADU property.

Pros

  • Expertise and Experience: Contractors bring a wealth of experience and expertise in construction, ensuring that the ADU is built to high standards and complies with all applicable regulations.
  • Streamlined Permitting Process: Navigating the permitting process can be challenging. Contractors are familiar with local ordinances and can streamline the application and approval process, saving homeowners time and hassle.
  • Quality Assurance: Hiring a contractor provides quality assurance, as they are accountable for the workmanship and must adhere to industry standards, reducing the risk of construction errors and subsequent costs.
  • Time Efficiency: Contractors manage the construction timeline efficiently, coordinating with subcontractors and suppliers, which can expedite the building process compared to a DIY approach.
  • Less Stress: Building an ADU can be stressful. Having a contractor manage the project alleviates the burden on homeowners, providing peace of mind throughout the construction journey.

Cons

  • Cost Implications: Hiring a contractor can be more expensive than a DIY approach due to labor and management costs. Homeowners need to weigh this against the potential costs of mistakes and delays if they were to manage the project themselves.
  • Less Personal Control: While contractors consult with homeowners, there may be less personal control over every detail of the construction process, which might be a drawback for those who prefer a hands-on approach.
  • Potential Communication Gaps: Homeowners may experience communication gaps or misunderstandings with the contractor, which can affect the project’s outcome. Clear and consistent communication is essential to mitigate this risk.
  • Finding the Right Fit: Identifying a reliable and qualified contractor can be time-consuming. Homeowners need to conduct thorough research, check references, and obtain multiple quotes to find the right fit for their project.
  • Contractual Disputes: There is a risk of disputes arising over contractual agreements, such as costs, timelines, or work scope. A well-drafted contract and open communication can help prevent and resolve any issues.

The Final Word

If you’re a contractor looking to get into ADUs, now is the time. The longer you wait to become a trusted ADU contractor in your area, the more competition there will be when you finally take the plunge.

The good thing is you don’t need a specific CSLB license to build an ADU – at the very least, you only need a Class B license, or, if you’re a homeowner modifying your own property, and the materials cost less than $600, you can build your own ADU. We have to be honest, though, that’s unlikely unless you’re just installing a new shelf or something. Considering the average cost of an ADU is $200,000, that’s highly unlikely.

Additional Reading

LA Times – Deep Dive on ADUs
California Legislative Information – Senate Bill 1069
California Legislative Information – Assembly Bill 68
California Department of Housing and Community Development – ADU Handbook
Terner Center for Housing Innovation at UC Berkeley – The State of ADUs in California
California Contractors State License Board – Owner-Builder Responsibilities
California Department of Housing and Community Development – ADU Construction and Financing
California Housing Partnership – ADU Market Trends and Statistics
U.S. Green Building Council – Sustainable ADU Construction in California

Business Structures 101 for California Contractors

You’ve put in the hard hours, you’ve done the hard work, and you’ve finally passed the notorious CSLB exam. Now’s the time to submit your bonds and insurance to the CSLB and get your contractor’s license.

Not so fast. There’s one thing that many contractors overlook – every contractor needs to establish a company for themselves, whether they’re a day jobber working on roofs in their neighborhood, or a multinational company beginning work in California for the first time.

But what kind of business should you establish for your contracting business? How do you even decide? In this article, we’ll cover some of the essentials when it comes to deciding what kind of business structure you should establish for your contracting company.

The California Secretary of State and the CSLB

The authority that regulates business in California is called the Secretary of State, but the CSLB – as always – is the one who requires all contractors to register as a business in the state.

It’s important to note that while technically speaking you do not need to have a business or to be registered with the California SoS, it’s all but necessary for contractors to have their own business. Without a proper business structure and registration, you expose yourself to financial risk, liability risk, to reputational risk in case anything goes wrong.

Registering a Business: A Prerequisite for CSLB Licensing

Before you can apply for a contractor’s license from the CSLB, you must first register your business with the state of California. This is a critical step in the licensing process. The type of business structure you choose will determine the specific registration process you must follow – more on that later.

Once your business is registered, you can then proceed to apply for a contractor’s license from the CSLB. The application process involves demonstrating your qualifying experience, passing an examination, and getting fingerprinted for a criminal background check.

Remember, operating a contracting business without a valid license from the CSLB is illegal in California and can result in hefty penalties. Therefore, it’s crucial to ensure your business is properly registered and licensed before you start offering contracting services.

Sole Proprietorship: Simplicity with Personal Liability

For 99% of contractors, you’ll want to set up as a sole proprietorship.

In its simplest form, this means you are the only operator and only employee in the business. As you can imagine, this is the structure that independent construction specialists (those with Class C licenses) like plumbers, HVAC techs, and welders use, as they’re often one-man bands.

In California, contractors operating as sole proprietors must register their business with the county clerk’s office in the county where the business is located. They must also obtain an Employer Identification Number (EIN) from the IRS, even if they don’t have employees, as an EIN is required for certain federal tax filings.

Partnership: Shared Ownership and Responsibilities

A partnership is a business structure where two or more individuals share ownership. Partnerships can be general or limited in liability – which essentially defines what you’re liable for in case of losses.

In a general partnership, all partners share in the business’s profits and losses, and each partner is personally liable for business debts. In a limited partnership, one or more general partners have unlimited liability, while the limited partners have liability only up to the amount of their investment.

This setup is a good situation for family businesses or situations where you and some of your friends, family, or local community are all banding together to work together. This way, the people involved in your company’s success are liable for losses as well as profits.

When setting up a partnership, documentation is key. Partnerships require a written agreement detailing the division of profits, roles and responsibilities, and procedures for resolving disputes. Partnerships in California must register with the Secretary of State and obtain an EIN from the IRS.

Corporation: Maximum Protection with Increased Complexity

“Corporation” might be a dirty word nowadays, but for contractors, it can be a very useful business structure. A corporation is a legal entity separate from its owners, providing the most protection from personal liability, but the tradeoff is it takes tons of resources to begin – and even more to maintain.

Corporations have the most complex business structure and require more time and money to maintain. Corporations are required to hold regular board meetings, maintain corporate records, and file corporate income tax returns – all of which are extremely complicated and difficult, especially for corporations.

In addition to filing a formation of business with the California SOS, corporations must also adopt bylaws, issue shares of stock, and file an annual report. Corporations are taxed at the corporate rate and may face double taxation if profits are distributed to shareholders as dividends.

Limited Liability Company (LLC)

An LLC combines the liability protection of a corporation with the tax benefits and simplicity of a partnership. This, in addition to Sole proprietorship, are rather common in the construction world, as it blends both the liability protection of corporations with the freedom and flexibility of a sole proprietorship or partnership.

Owners of an LLC, known as members, are not personally liable for the company’s debts and liabilities. There can be as many members as you want to name. We have to recommend an LLC structure for your contracting business, it’s a nice balance of all the other various structures.

The Role of Qualifying Individuals in Business Structures

In California, every contractor license requires a qualifying individual, or “qualifier,” who has demonstrated their knowledge and experience through the application process and holds one or more license classifications. If you’re a contractor, you either are a QI or work for a QI.

A qualifier may be a Sole Owner, Qualifying Partner, Responsible Managing Employee (RME), Responsible Managing Officer (RMO), Responsible Managing Manager, or Responsible Managing Member.

Being a qualifier on a license can be a significant risk and liability. Under Business and Professions (B&P) Code section 7122.5, if the performance of an act or omission by the license constitutes a cause for disciplinary action, it also is a cause for disciplinary action against the qualifier, regardless of their knowledge and participation.

Conclusion

Choosing the right business structure for your contracting business in California is a critical decision to both your business’s success and your personal liability. It’s essential to consider your business’s nature, your personal risk tolerance, and your long-term business goals when making this decision, as this decision is extremely subjective and equally important.

When opening your business, it’s definitely worth the time to meet with someone who can help you make the right decision. Someone with experience in California law knows the tax codes, and has the general financial know-how that can provide individualized advice – these are definitely worth the money when opening your business.

Additional Reading

“Starting a Business Checklist.” California Secretary of State
“Employer ID Numbers.” Internal Revenue Service
“Partnerships.” Internal Revenue Service
“Corporations.” California Secretary of State
“Corporation Tax Rates.” Franchise Tax Board
“Contractors State License Board.” State of California
“Absentee Qualifiers.” Contractors State License Board

Do You Really Need to Join A Union To Become A Master Electrician?

If you’re an electrician or thinking about becoming one, you’re probably thinking about joining the union – whether that’s the national unions like the IBEW and NECA, or your local union like the CSAEW. If you’re even vaguely aware of electricians, what they do, and what the career entails, then surely you’ve at least heard of these.

These unions are the collective bargaining groups in the electrician’s field, and beyond the basic benefits of unions like arguing for wage and safety standards, the union serves as a psychological standard for electricians.

That is to say, being a union electrician carries a certain amount of prestige for electricians – it legitimizes many of them in the eye of the public. Likewise the title “Master Electrician” – it’s a title that everyone has heard from and it carries with it an air of trustworthiness and quality.

The thought that comes into one’s mind when one hears “master” versus “journeyman” or “apprentice” is that of a professional versus an amateur. Anyone who aims to be an electrician wants to be a master electrician.

What is a Master Electrician? And do you have to be in a union to become one? In this article, we’ll examine what a master electrician is, how to become one, and how the IBEW fits into this whole thing. Let’s take a look.

What Is A Master Electrician?

At the pinnacle of the electrical profession stands the master electrician—a title that signifies not just expertise but years of dedication, training, and hands-on experience. But what does it mean? What is a Master Electrician?

To be honest, it’s a little nebulous and frankly, ill-defined. A master electrician is actually not a specific title, like a journeyman or an apprentice. Rather, it’s a general signifier that suggests an electrician who has gone as far as they can go in their field.

What that means is typically a few things. A master electrician is a title that exists for electricians who have completed the apprenticeship and journeyman stages of their careers. They are people who have passed all the exams, gotten all the certifications, have worked the hours, and have overseen journeyman and apprentice electricians.

The specific requirements for becoming a master electrician vary by state, but generally speaking, it’s a title that only exists by necessity; it describes electricians who have surpassed journeyman status.

It’s also a term that seems to be dying out as the electrical profession continues to become more standardized. For example, California doesn’t create a distinction between these. You’ve satisfied the requirements to become a licensed C-10 electrical contractor, in which case, you get your license. Or you’re not. There’s no in-between.

In other states, like Arkansas or Colorado, there are distinctions between different types of electricians (some even getting as granular as apprentice journeyman electricians), so be aware of what the requirements are in your state. You may have to apply for a new license every single time you reach a new designation.

The long and short of it is what a master electrician actually is is vague at best, and meaningless at worst. There are some states where it doesn’t even exist.

Do I Have To Join The Union To Be A Master Electrician?

So now that you know that a master electrician simply means, well, being a good electrician for a long time, you can finally start moving in that direction. In some states, it’s a meaningless title or one that doesn’t exist. In others, becoming a master electrician is a quantifiable boost to your career.

Either way, the question remains: do you have to join the union to become a master electrician? In most cases, the answer is: technically no, but realistically yes.

Why do we say that? Well, because even though you are technically not required to be a part of any trade organization to become a master electrician in any state, the benefits of electrician’s unions are powerful. They provide invaluable resources that make getting any electrician’s license easier – they can definitely point you in the right direction to your master’s status.

You don’t need a union for anything as an electrician, really, but they do provide strong support for new electricians especially. However, you can still gain the same skills from non-union apprenticeships or non-union trade associations.

Union apprenticeships are known for their competitiveness and rigorous standards that will set you up in the professional for life, as well as induct you into the union, a big benefit to many just starting out. Union apprenticeships come with added prerequisites but offer better pay and benefits. Such apprenticeships are coordinated through partnerships, notably the International Brotherhood of Electrical Workers (IBEW) and the National Electrical Contractors Association (NECA).

Non-union apprenticeships offer more flexibility and are often preferred by those who wish to avoid union dues and seek a less structured work environment. local contractors or non-union trade organizations, such as the Independent Electrical Contractors (IECI) or the Associated Builders and Contractors (ABC) offer these apprenticeship programs and can be a good start for people who lack the money for union dues.

The reality is both pathways are equally viable. Electrical work is pure science that anyone can learn – even from a library – but both come with pros and cons that may fit your lifestyle better than the other.

The Transition From Apprentice to Master

The journey from an apprentice to a master electrician is filled with milestones and largely dependent on where you live. In some states, there are specific requirements that delineate between apprentices, journeymen, and master electricians. As we said before, in some states, the master electrician title does not exist at all!

In general, though, you’ll often see an hourly or yearly work requirement. That is to say, in order to be certified as a master electrician in certain states, you have to either work a number of hours or work for a number of years in a certain position.

For example, in Georgia, you can either do four years’ on-the-job training or four years’ apprenticeship and that’s it – you can get your license. In Arkansas, you need to complete 8,000 hours of work experience, AND 2,000 hours in the classroom, AND you have to pass an exam!

This underlines all the different definitions and standards for what makes a master electrician. In reality, what makes a master electrician depends on your local jurisdiction, on both a state and municipal level. If you’re reading this, you probably already know your area’s regulatory requirements. If you don’t – you need to get into gear!

Licensing and Regulations

Master electrician licensing is a complex tapestry of requirements that vary across states, and they become increasingly complex as you get more local – with town, municipal, and county regulations coming into play with state regulations as well. In some places, you’ll be up to your neck in licenses and regulations before you’re even a journeyman!

While the National Fire Protection Association’s National Electrical Code (NEC) serves as a foundational standard for many states, local jurisdictions often have their own specific requirements, modifications, and examinations, and as we covered in the last section, they can be radically different state-by-state.

In most cases; however, it’s a simple case of doing on-the-job training, in the form of apprenticeship, and then journeymanship. Only after completing these two steps can you reach the next level of becoming a master electrician.

Circling back to our central question: Do you have to be in a union to be a master electrician? The answer is no – with a ton of caveats.

While unions offer a myriad of benefits and can significantly influence an electrician’s career, they are not a mandatory or exclusive pathway to mastery. You don’t ever have to join a union to get your contractor’s license or to become a certified master electrician. And in many areas – like the 40 million people in California – master electricians don’t even exist!

That said, the electrician’s union is giant and popular amongst electricians for a reason – they do provide quite a bit of value to electricians just starting out and those at the end of their careers. If you’re just starting out, we recommend checking out an introductory meeting at your local chapter of the IBEW.

What Is the Best Degree for a General Contractor?

As a general contractor, you wear many hats (or helmets, if you want to keep your job) – construction expert, business owner, marketing professional, logistics maestro, engineering authority, and so on – all of which require knowledge and experience with a variety of fields.

While the beauty of general contracting is that you don’t need anything but job experience and hard work to reach the GC level, one does sometimes wonder if a college degree is necessary – or even beneficial to becoming a general contractor.

In this article, we’ll take a look at whether it makes sense to get a college degree if you’re planning to become a general contractor. Is it worth it? And if so, what degree makes the most sense if a general contracting career is in your future?

Do You Need A Degree As A General Contractor?

A general contractor is akin to the conductor of an orchestra, ensuring every instrument plays in harmony to create a symphony. From the initial design and planning stages to the final brick laid, they oversee every nuance of a construction project.

The cold reality is that being a general contractor is a ton of work. Sure, it’s physically taxing, with long hours and constant problem-solving, but for most contractors, we’re used to spending long hours on our feet, often in hot buildings or cold winds.

No, more significantly, being a general contractor is extremely taxing mentally. It requires you to constantly be in problem-solving mode, both on a micro and macro- scale. You need to pay attention to a thousand different things at once, often doing complex calculations and cost-benefit analyses in your head about materials, labor, and client expectations.

This leads us to our original question – do you need a degree as a general contractor? The answer is no. But do you need a flashlight when inspecting a job site at night? Nor do you need a worksite trailer when a tent would do. Sure, you can do without it, but education is like any tool – it can only make you better if you know how to use it.

A degree can arm you with the wide array of tools gen cons needs to not only survive as a general contractor – an extremely competitive field – but to thrive. All education and knowledge can give you a massive advantage over your competitors, so while you don’t need a degree, if you work at it, it’ll reap big rewards for you and your business.

What Is The Best Degree For a General Contractor?

If you’re thinking about becoming a general contractor, there’s a variety of different degrees out there that can benefit your business. While construction-related degrees used to be relegated to the worlds of engineering and architecture, schools across the country have begun offering construction-related degrees in things like general contracting!

That said, general contracting degrees are still rather rare and lack pedigree at this point in time. Usually, you find that the best educational opportunities for general contracting-specific education are local schools (like ours) that have established streamlined content relevant only to general contractors.

With that in mind, you’ll find that universities and colleges offer degrees related to only a few general contracting skills, like engineering or architecture.

Which of these types of degrees you pick isn’t specific. There isn’t really the best degree for general contractors. They all offer different things, with different pros and cons.

Bachelor’s in Building Science

  • Overview: A fusion of construction techniques with business acumen.
  • Key Subjects: Mathematics, design principles, building codes, construction methodologies, cost estimation, and project management.
  • Pros: Offers a panoramic view of the construction landscape, while also getting into the nitty gritty with mathematics and understanding of codes.
  • Cons: Few. Hard to tell if programs lean towards one or the other – business or construction.

Bachelor’s in Construction Engineering

  • Overview: As the name suggests, this degree yields an understanding of the technical and mechanical aspects of construction.
  • Key Subjects: Structural dynamics, geotechnics, materials science, and construction logistics.
  • Pros: Prepares students for the technical challenges of large-scale construction projects. An engineering degree means you can tackle any challenge.
  • Cons: Unlike many building science degrees, this program is often lacking in business programs.

Bachelor’s in Architecture

  • Overview: Architecture is basically an intersection of design with construction.
  • Key Subjects: Architectural design principles, building systems integration, and presentation and communication skills.
  • Pros: Ensures projects are both visually appealing and structurally sound. Forces you to work through real-world problems as you develop your work.
  • Cons: You might find yourself pigeonholed as an architect rather than a general contractor. If you like doing on-site work, this might not be for you

The Best Universities for General Contractor-Related Degrees

Want to get a degree in one of these fields? Here are some of the most well-respected degrees in the nation. While many of these universities are expensive, they may give you a leg up on the competition not only in the pedigree of their classes but also in the value of their network.

What’s really important is you choose an area of expertise that is interesting to you, as that will give you the best chance of success in your field.

Building Science:

Construction Engineering:

Architecture:

There’s No Wrong Answer Here

When it comes to becoming a general contractor, the wonderful thing is that there is no wrong answer. It’s one of the things we love about our profession – anyone, from any walk of life, can work hard, acquire the right skills, make the right moves, and ultimately become a general contractor!

That is to say, we neither recommend going to, or skipping school as a general contractor. If it works for you, there’s certainly a lot to gain. If you’d rather skip school and start getting experience, that path is relevant as well.

While many of us turned to the construction field because we didn’t like school, the potential upsides of going to school for general contractor-related education far outweigh the negatives of going back to school.

And honestly, if you can’t hack it in the cushy halls of a college, you frankly won’t be able to handle the significant demands of effective general contracting. We always recommend arming yourself with knowledge – and in that vein, we have to say that more education is better. That said, everyone’s situation is different, so make sure it makes sense for you.

Additional Reading

National Association of State Contractors Licensing Agencies
Best Degree Programs – Construction Project Manager
College Consensus – Construction Degrees

Does a Contractor Have to Pull Permits?

Introduction

“Does a contractor have to pull permits?” is a question that every contractor runs into at some point early on in their careers. Given the legal ramifications of running afoul of local codes and regulations, it’s no wonder this is a question that gives many a new contractor cause for pause.

So – are contractors the ones who are responsible for pulling permits for the job? Or is it the construction manager, project manager, or maybe even the foreman on the job site? Does the responsibility change depending on whether you’re a general contractor or a Class C specialty contractor?

In this article, we’ll cover everything about permits: what they are, who is responsible for acquiring the right permit, the legal points surrounding permits, and so on. Let’s dig in.

What Does “Pulling Permits” Mean?

Pulling permits is a colloquial term used to describe the act of securing the necessary permits or authorizations from relevant governmental bodies. Usually, permits are given out by local governments like counties, cities, or townships.

These permits ensure that the construction or renovation work complies with local building codes, zoning laws, and other regulations. Actually “pulling” a permit requires a number of steps – involves submitting detailed plans of the proposed project for approval, and working with local government to make any changes until your plans meet the necessary code. After your project is approved, you’ll receive your permit – but whether or not you’re in violation of said permit may require inspections before, during, or after the construction.

The Legal Landscape

No matter where you do construction work, there’s a well-defined legal framework that mandates contractors to secure permits for particular types of work.

For example, the California Code of Regulations requires employers to obtain Project Permits and Annual Permits from Cal/OSHA before initiating specific construction activities. These regulations aim to ensure that all construction activities meet the safety and quality standards set by the state.

Who is Responsible for Pulling Permits?

As always with construction, the responsibility for pulling permits…depends on so many factors.

This burden generally falls on the contractor overseeing the project, but that could be anyone from a general contractor to a homeowner installing a new window. In a typical construction company, however, the task of applying for, compiling, and maintaining permits is often assigned to a project manager, or in some cases, a designated permit expediter.

They are responsible for understanding the types of permits required, gathering the necessary documentation, and liaising with the relevant authorities.

However, in some cases, either the homeowner or a licensed contractor can secure the essential permits. This would be in situations where it’s you doing work on your own home, or where you’re an out-of-town GC who hires a local. In many cases, the local will know the permitting system in their local jurisdiction better than you would, so in that case, they may offer to take care of that (often for an additional fee).

How to Obtain a Permit

Obtaining a permit usually involves several steps, but they’re rather straightforward and follow simple common sense.

  • Identify The Type of Permit Needed: Different projects may require different types of permits, such as building, electrical, or plumbing permits.
  • Develop Plans: Create detailed plans for the project that comply with all local bylaws and regulations.
  • Submit Plans: Now take your plans and submit them to the relevant authority for review and approval.
  • Pay Fees: There are usually fees associated with permit applications. Most of the time they are paid upon submission, but you may also be waived the fee in the case of a permit rejection.
  • Await Approval: Once submitted, the application undergoes a review process, which may take anywhere from a few days to several weeks. Not much you can do in this step of the process but prepare your resources for deployment when you do get approved.
  • Receive Your Permit: If your permit is found to be compliant with the authority’s regulations, you will receive your permit! If not, you will usually get a chance to re-apply for a new permit.

What Requires a Building Permit in California?

While California is stringent about environmental regulations, each municipality interprets these regulations uniquely for their specific area.

Generally, projects that likely require a building permit in California include:

  • Demolition of an existing building
  • Roof replacement
  • Plumbing, electrical, and mechanical replacements
  • Adding an accessory dwelling unit (ADU) or a junior accessory dwelling unit (JADU)
  • Changing the layout of a house
  • The addition or removal of exterior walls
  • Stormwater
  • Grading
  • Mechanical Operation

It’s crucial to note that additional permits, such as stormwater, electrical, plumbing, grading, and mechanical permits, might be required based on the project’s scope.

Examples of Permits You Need For Construction In California

With one of the most complicated and comprehensive legal frameworks in the nation, California mandates contractors to obtain permits for almost any type of construction work.

The California Code of Regulations, for instance, requires employers to secure Project Permits and Annual Permits from Cal/OSHA for specific construction activities1.

You may also have to deal with permitting for the California Environmental Quality Act (CEQA). This usually involves an environmental review for projects that may have significant environmental impacts, ensuring sustainable development for projects that can affect the local ecology. These days, that’s most projects.

Here are some more types of permits you might run into in California, depending on your location, the nature of the job, and what role you have.

  • Annual Construction Permits: These permits are required for specific construction activities and are issued by the Division of Occupational Safety and Health (DOSH). More information on annual construction permits and the list of permit holders can be found on the DOSH Annual Construction Permit Holders page.
  • Construction Stormwater Permit: Construction projects in certain watersheds must apply for a Regional Water Board permit rather than a statewide permit. More details are available on the Construction Stormwater Program page.
  • Building Permits: These are required for various construction activities such as building garages, storage buildings, decks, carports, patio covers, and additions to single-family dwellings. More information can be found on the Building Department Documents page.
  • Energy Compliance Permits: Compliance with Title 24, State Energy Code, is mandatory for construction projects in California. More details are available on the Building Permit – Department of Planning and Development page.
  • Model Code Adherence Permits: Every three years, the State of California adopts new and/or updated model codes and adherence to these codes is mandatory. More information is available on the Building Permits and Inspection – Sacramento County page.

Do You Need To Pull A Permit As A Contractor?

Let’s answer the question once and for all: do you need to pull permits as a contractor in California?

And everyone’s favorite answer: most likely, but it depends!

California is a complex patchwork of legal standards, especially when it comes to construction. In addition to statewide regulations like sustainability standards, you have local codes and bylaws that are county, city, town, or even community-wide.

With that in mind, the reality is that you will most likely have to pull a permit as a contractor, at some point! The most important thing is you familiarize yourself with all the codes and regulations in the area you’ll be operating in.

It’s your responsibility to know the codes and adhere to them – or face the consequences, which can often be severe. Even if you’re not physically the one pulling the permits, you could face such penalties as a suspended or revoked CSLB license!

Additional Reading

California Department of Industrial Relations – Permit Requirements
Census.gov – Building Permit Survey
AvaTrade – What Are Building Permits?

New Laws for California Contractors in 2023

We’re always hearing stories from former clients and current contractors that they’re seeing frequent violations of new contractor laws that just came into effect this year, in 2023.

There are a ton of new laws that are – to be frank – absolutely critical to know as a contractor, no matter your classification, location, or size. Any violation of these new laws carries serious penalties – including time in jail for repeat offenders.

Arm yourself with the knowledge and take the steps necessary to protect your business by becoming familiar with the following pieces of new legislation.

Senate Bill 216 (Dodd)

If you’re a concrete, HVAC, Asbestos or Tree Service contractor in California – listen up!

Senate Bill 216 (SB216), which amends the Business and Professions Code (BPC) Section 7125, is a piece of legislation that requires 5 Class “C” contractors to carry workers’ compensation insurance, even without employees.

This mandate means that contractors with a C-8 Concrete, C-20 Heating, Warm-Air Ventilating and Air-Conditioning, C-22 Asbestos Abatement, or D-49 Tree Service license must have valid workers’ compensation insurance by January 1, 2023.

And as a note to all contractors of all classifications: by January 1, 2026, all contractors must have valid workers’ compensation insurance, irrespective of whether or not they have employees.

The only exception to the new CSLB workers’ comp requirements is joint ventures without employees. Anyone with this structure of business is exempt from SB 216’s workers’ comp requirements.

Senate Bill 607 (Min)

In another insurance-related move, the California Senate passed Bill 607 (SB 607), which marks another important change in the requirements to hold a CSLB license. It updates numerous sections of the BPC – with one huge change in bond amounts.

SB 607 mandates that the CSLB qualifier, license, and minimum disciplinary bonds be raised from $12,500 and $15,000, respectively, to $25,000 for all three bonds as of January 1, 2023.

As a bonus for the families of military members looking to become licensed contractors, SB 216 also requires the Department of Consumer Affairs (DCA) boards and bureaus (including the CSLB) to waive application and license fees for military family members.

What if I Don’t Have Workers’ Compensation Insurance Or My Bond Amount Is Insufficient?

If you are currently in one of the above classifications and you do not have workers’ comp or a sufficient bond amount…well, we’ve got bad news for you: your license is surely suspended.

Don’t panic – just stop doing work entirely if you are still doing it. This is critical as you can face serious legal consequences for working without a license.

Next, you should immediately begin the process of getting the necessary workers’ compensation insurance and/or increasing your bond amount. Once that is sorted out, you can re-apply for your license.

If you’re unsure or don’t remember if you have workers’ compensation insurance, you should immediately check your license status.

Senate Bill 1237 (Newman)

Huzzah for troops-turned-contractors – SB 1237 is here to waive any renewal fees!

Senate Bill 1237 (SB 1237) updates the current law that requires DCA boards, including the CSLB, to waive renewal fees for a licensee who is called to active duty as a member of the U.S. Armed Forces or California National Guard.

This applies if the licensee or registrant is stationed outside of California. The new law expands the definition of “called to active duty” and extends it to licensees on active duty during a “state of insurrection” or a “state of extreme emergency.”

Assembly Bill 2105 (Smith)

In another move that will have veteran contractors excited, Assembly Bill 2105 (AB 2105) mandates a 50% fee reduction for an initial license or registration fee for all veterans!

All you have to do is provide paperwork proving you are a veteran who has served as an active-duty member of the United States Armed Forces, including the National Guard or Reserve components and was not dishonorably discharged.

For HIS contractors, this still applies to you as well! This applies to all initial license fees for anyone acquiring a CSLB license.

Assembly Bill 1747 (Quirk)

Assembly Bill 1747 (AB 1747) increases the civil penalty from $8,000 to $30,000 for every violation of BPC Section 7110 (savvy legal contractors will know these are building code violations) and amends Section 7099.2 (how much in penalties violators will pay).

This bill expands BPC 7110 to include failure to comply with certain health and safety laws, water laws, safe excavation requirements, pest control requirements, illegal dumping, and other state laws related to building and insurance requirements.

Assembly Bill 2374 (Bauer-Kahan)

Bad news for litterbug contractors: your time is up.

Assembly Bill 2374 (AB 2374) amends Penal Code Section 374.3 and now requires courts to notify CSLB or other DCA boards or bureaus when a licensee is convicted of an illegal dumping crime. This is so the board can publish the conviction on their website.

The bill also increases the fines a court may impose for this crime, which is great for everyone everywhere. In a double-swoop of awesome for contractors who like to do the entire job right, it also requires the court to order a person convicted of dumping commercial quantities of waste to remove or pay for the removal of, the waste matter that was illegally dumped. Which, again, is an absolute win for everyone involved.

Assembly Bill 2916 (McCarty)

Assembly Bill 2916 (AB 2916) amends BPC Section 7124.6 and modifies the CSLB Letter of Admonishment (LOA) program to allow CSLB to determine whether it should be issued for one or two years, rather than the current one-year limitation.

In making that determination, CSLB is required to consider the gravity of the violation, the good faith of the licensee or applicant being charged, and the history of previous violations.

This is a pretty technical bill and to be honest, it remains to be seen how it will affect contractors. It seems to really only affect disciplinary actions, which affect only a small number of contractors. We’ll keep you posted on how it develops.

Stay Compliant…Or Else!

These new laws have serious consequences for any contractor that is non-compliant and remember: Ignorantia juris non excusat – ignorance of the law does not mean you are free from the consequences of violating it.

And in the CSLB’s case – the punishments are extremely severe for anyone violating contractor law in California. So don’t do it!

Save Money On Your Taxes As A California Contractor

As a licensed contractor, you’ve got enough on your plate with high-pressure deadlines and constantly shifting targets to hit. The last thing you need is to be buried under a mountain of tax paperwork, trying to make heads or tails of any of it!

With so many moving parts and costs, it can feel impossible to navigate the complicated labyrinth that is the US and California tax codes.

With these simple tips, however, you can easily and quickly make sure you’re maximizing your tax savings.

How Do You Structure Your Business?

Before diving into tax requirements, it’s crucial to understand how your business structure influences your tax obligations.

You probably already know this information, but it’s important to restate it here so that we have a good starting point.

  1. Sole Proprietorship: As a sole proprietor, you’ll report business income on your personal tax return. Keep track of expenses and income throughout the year so you can report them when tax day comes. Many, if not most contractors, are sole proprietors.
  2. Partnership: Income and losses are passed through to individual partners. Partners report their share on personal tax returns. Rarely are contractors partnerships, but in cases where it is a family business, you may see it.
  3. LLC: Limited liability companies offer flexibility, allowing owners to choose their tax classification (e.g., sole proprietorship, partnership, or corporation). The second-most common form of business structure for contractors.
  4. Corporation: Let’s be honest, if you’re a big enough construction company that you need corporation status to maximize your tax benefits, you either already know how to best file your taxes, or you have an accountant who handles your voluminous balance sheet.

Choose a structure that best suits your business needs and tax goals. Most construction professionals, as previously mentioned, will find sole proprietorships to be more than enough to fulfill their tax needs and will find the most savings there. But the more you grow, the more you’ll need the protection of LLCs and partnerships or corporations.

Know Your Taxes: Federal, State, and Local

Federal Taxes

There’s no escaping Uncle Sam. Always pay your taxes in full – you do not want the IRS sniffing around your business, causing trouble, when you could just take care of it ahead of time by educating yourself and planning effectively.

  • Income Tax: All businesses must file an annual income tax return. Tax rates and filing requirements depend on your business structure.
  • Self-Employment Tax: Self-employed contractors who operate as sole proprietors have to pay self-employment tax, which covers Social Security and Medicare taxes.
  • Estimated Tax: Again, if you are a sole proprietor (working as a 1099 employee), you may need to make quarterly estimated tax payments if you expect to owe tax of $1,000 or more when filing your return.
      • You don’t have to make these payments, but they will lower your tax burden at the end of the year.

State Taxes

It’s no mistake – California has high taxes. Make sure you’re keeping enough cash on hand to pay when April comes around; or, if you’ve got the right tax plan, get ready to get a rebate.

Either way, you can prepare yourself to file your state taxes as a California contractor by checking out the Franchise Tax Board’s website.

  • State Income Tax: If you’re doing business in California, you have to pay an income tax. You can find how much you expect to pay based on your revenue. Here is the Franchise Tax Board’s tax bracket.
  • Sales Tax: California has a sales tax, so you’ll be paying tax on things like materials and payments to any subcontractors or yourself.
  • Employment Taxes: If you have employees, you may need to withhold state income tax and pay state unemployment tax.

Local Taxes

Local tax requirements depend on where in California you’re operating. These local taxes can come in many forms, like business licenses or filing fees. Be prepared to pay local taxes when starting a new construction.

Employment Taxes: A Responsibility You Can’t Ignore

If you have employees, you must withhold and pay employment taxes. These include:

  • Federal Income Tax Withholding: Based on the employee’s Form W-4 and their earnings. This will fluctuate based on the number and types of employees you have. You are exempt from paying taxes for contract workers who file Form 1099.
  • Social Security and Medicare Taxes: Employers and employees share responsibility for Social Security and Medicare taxes.
  • Federal Unemployment (FUTA) Tax: Every employer must pay FUTA tax, which provides unemployment compensation to workers who lose their jobs.
  • State Unemployment Tax: You must also pay into California’s unemployment fund if you have full-time employees. This will also be a variable cost for your business as you grow.

Tax Deductions: Your Best Friend

If you’re a contractor, you probably can save tons of money by taking advantage of various tax deductions that are favorable to construction professionals – people who are constantly spending money on their business in order to survive.

We recommend researching these common deductions for a full scoop, but hiring a tax pro who has the expertise to successfully navigate the various deductions you qualify for is even better.

Common Deductions for Contractors

  • Home Office Deduction: If you use part of your home exclusively for business purposes, you may qualify for the home office deduction.
  • Vehicle Expenses: Deduct business-related vehicle expenses such as mileage, fuel, maintenance, and insurance.
  • Tools and Equipment: Contractors can often deduct the cost of tools, equipment, and supplies used in the course of business.
  • Contract Labor: Payments made to subcontractors are generally tax-deductible if they meet specific criteria.
  • Insurance: Business insurance premiums, such as general liability or workers’ compensation, can be deductible.
  • Training and Education: Expenses related to improving your professional skills may be tax-deductible.
  • Advertising and Marketing: You can deduct advertising expenses, including website development, business cards, and online advertising.

Hire an Accountant For Your Contracting Business

As we have said multiple times in this article: Hire. An. Accountant.

If you’re doing business in California as a contractor, we can’t recommend hiring an accountant. Simply put, an accountant will save you tons of time, energy, and money when it comes to filing your taxes – as well as being more likely to keep you from being audited.

The reality is that American taxes can be extremely confusing, so employing the skill of a professional accountant can help big time when it comes to saving the most money (and saving you the energy of having to understand the un-understandable).

You can even hire an accountant who specializes in California contracting taxes – saving you more money than ever before.

Taxes Can Actually Save You Money

Everyone has to pay taxes (well, mostly everyone). But by understanding and executing an effective tax plan for your contracting business, you can actually find yourself with more money in your pocket come tax time next year.

One thing we definitely can’t emphasize enough as you continue to grow your contracting business – hiring a qualified accountant or tax professional service is a critical element of maximizing your tax deductions and saving money every year.