08/04/2022
Construction (LLC & Corporation)
As promised with one of the members in this group regarding LLC/Corporation, this discussion will go into depth a little more about this topic, based on our knowledge and experiences. Please consult with your tax advisor and construction attorney when forming a business entity.
If you find this post helpful, please share to other construction groups to help other contractors
Every construction business is different, from a general contractor to a trade. The question was should I create an LLC for your construction business? The decision is for you to make, but here is the highlight:
· California allows a construction business to be an LLC to protect your personal assets. However, the current CSLB bonding requirement for LLC is $100K LLC employee/worker bond and $1M Liability Insurance Minimum. Buying bond/insurance for an Construction LLC will be expensive because of these requirements. Insurance cost will be depending on many factors (project size/company size, safety records, etc), but will be thousands of dollars.
· Most of the construction companies form “corporation” instead of LLC. This is the most popular way. Insurance requirement for corporation will be smaller but you will need a lot more paperwork to do for maintaining a corporation.
· Either LLC or Corporation for a construction company will require a valid contractor license to operate
What if you do not have a contractor license and still want to work in the construction industry?
You may want to work for a construction management services company. However, you cannot perform any construction activities if you are not licensed. And you need to have a lot of experience in construction. So what are construction manager responsibilities?
· Represent the owner
· Construction administrations
· Manage the contractor, any issue during constructions
· Review construction documents, solve problems, and coordinating
· Tracking construction progress
· Inspect work, and be onsite with the contractor as needed
· Read more here from my previous post: https://www.facebook.com/.../permalink/1237870783680582/