CSLB has new fees!

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Insert witty quote from Benjamin Franklin about taxes here.

I found the new fee schedule here.

 

Application and Licensing Fees June 30, 2017
or before
July 01, 2017
or after
Original Application (exam or waiver for one classification) $300 $330
Initial License Fee $180 $200
Additional Classification (for existing license) $75 $150
Additional Classification (each) (with waiver or joint venture application for original license) $75 $75
Re-Examination $60 $60
Add New Personnel (for existing corporation or LLC) $0 $100
Replacing the Qualifier $75 $150
License Reactivation Application $360 $400
Joint Venture Application total fee for one classification
(Application fee plus initial license fee)
$480 $530
Home Improvement Salesperson Registration Application $75 $83
Asbestos Certification Application $75 $83
Hazardous Substance Removal Certification Application $75 $83
Fingerprinting Fees—Paid to Live Scan Operator
Dept. of Justice Processing Fee
Federal Bureau of Investigation Processing Fee
$32
$17
$32
$17
Live Scan “Rolling Fees”
Each Live Scan site sets its own fee—CSLB does not set the price. Rolling fees are available on DOJ listing of Live Scan sites
Varies Varies

 

License and Registration Renewal Fees June 30, 2017
or before
July 01, 2017
or after
Active Timely Renewal
(Postmarked or received at CSLB [for hand deliveries] on or before the expiration date)
$360 $400
Active Delinquent Renewal
(Postmarked or received at CSLB [for hand deliveries] after the expiration date)
(Renewal fee plus penalty)
$540 $600
Inactive Timely Renewal
(Postmarked or received at CSLB [for hand deliveries] on or before the expiration date)
$180 $200
Inactive Delinquent Renewal
(Postmarked or received at CSLB [for hand deliveries] after the expiration date)
(Renewal fee plus penalty)
$270 $300
Home Improvement Salesperson Timely Renewal $75 $83
Home Improvement Salesperson Delinquent Renewal
(Renewal fee plus penalty)
$100 $124.50

 

Miscellaneous Fees June 30, 2017
or before
July 01, 2017
or after
Duplicate/Replacement Pocket/Wall Certificates $11 each $12 each
Certified License History for licensed or unlicensed contractor, per name researched $67 $67
Certified License History for registered or unregistered Home Improvement Salesperson, per name researched $67 $67
General Status Letter $8 $8
Bond Status Letter $8 $8
Copies of Public Documents $0.10 per page $0.10 per page
Certified Copies of Public Documents $2 plus $0.10 per page $2 plus $0.10 per page

 

 

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Construction Partnership Pitfalls

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If your going into business with someone else there are a few thing you should consider that are very important. Often times when starting a business,  joining a business or bringing in new people to an existing business there is a great deal of excitement. There can also be a tendency for partners to overlook minor details in the name of building trust and goodwill. Additionally , sometimes these details can be overlooked due to simple inexperience. Other times there can be malicious intent.

However small these details seem at first, trust me they are not. Relationships, both business and personal grow and evolve. Business partnership typically fail due to extreme difference in opinion. After all working together as a team we are stronger, smarter and better. But when one partner does all the work and one partner spends all the money it is easy to see how the situation can explode.

 

 

Who has the license and where does the buck stop?

In the state of California contractors are required to obtain a license. This means that someone is ultimately responsible. Either partner, a corporation or even an employee can hold the license. The person holding that license has a special responsibility.

Imagine if you are the license holder in a partnership and your partner is incorrectly performing work. After the work is performed you are sued by the customer. Both of you would be on the hook financially however you as the license holder could lose your license because of someone else’s mistakes.

Its important for all parties to understand and accept that the licensee(s) can stop work on any project within the organization without permission from the other partners to ensure that work meets the legal requirements set by the CSLB and building codes.

 

How are profits and losses divided?

This is probably the biggest issue people think about. Is everyone paid a salary, is everyone issued dividends or pay based on performance. Because your company may grow, shrink and change over time its best to start right from the beginning with a fully scale- able.

How are wages decided? Imagine two partners go into business. One is a CPA and the other a licensed general contractor. The CPA manages the office and the contractor finds leads and generates proposals. Who is more valuable? How should pay be decided?

Besides pay how should profit be decided? In this situation the office manager is barely working 6 hours a day while the partner who does the estimating is working 10 hours a day and has produced a profit of close to $500,000 for the year on top of the normal wages. Should the profit be split equally?

Another situation is a company where two partners are both licensed. They both find leads and producing estimates. One partner’s projects made a profit of $200,00 above his pay and the other partner made a profit of $325 above his pay. Should this profit be paid equally in stock dividends to both partners?

Solution – If the partner is an estimator they should be paid estimator wages. If the partner in the business is a CPA they should be paid CPA wages.These wages shouldn’t be made up numbers. If someone else can be hired to do the work for less than the wages should reflect that.  Partners should receive performance pay for working within the company. In most construction companies the lead generation, estimating and project management aspect of the job are the most intensive and skill oriented. All projects should pay a percentage of the profit to the the lead generator, the estimator and the project manager.

How much will be re-invested?How will you settle disagreements on investing or not investing money into the company and what to invest in?

So the company has profited $100,000 for the year and you need to decide how to spend the money. One partner is late on his mortgage and needs the money desperately because of poor financial planning. One partner would like to re-invest the money into equipment and an investment property.

In another similar situation the company has profited $100,000 and both partners have decided to split $50,000 between them and reinvest the other $50,000. One partner want to re-invest in a new vehicle and dislikes updating his familiar computer systems. The other partner wants to invest in new software and marketing.

 

Solution – Partners must decide on a set payment plan up front. Bad financial planning by one person shouldn’t affect the whole company as in the first scenario. It’s also best to prevent anyone from borrowing money from the company or taking early payment. Its best to plan on extracting payment in full unless a mutually agreed investment amount is decided upon. If the investment decision cannot be decided upon each party should be able to choose their investment decided by portion.

 

What is your obligation to pay overhead costs?

In the course of running a business one partner has made a tremendous amount of money on a windfall profit. Fortunately the partner had a great partnership agreement and he kept his hard earned profit. Now he spends more time planning his next vacation than working. However the building mortgage is due, the accountant needs a paycheck and the lights are still on. Should partner shoulder the expense of running business while the other partner is barely working?

In another turn of events while the partner is spending their windfall profits on a tropical vacation another one of their jobs they left to a project manager looses $20,000. Where does that money come from? Can the partner still working claw any of those profits back?

Solution – Both partners should maintain a liquid balance of profits not yet paid to them. This amount of money should be left in place to cover losses on future jobs. Also there should be an agreement that certain overhead costs are split and paid from profits equally by all parties.

 

How will you decide to meet special needs of partners?

Your business partner wants to bring his idiot son or daughter on board and pay them double the going rate.

Your business partner has been using the gas card for their company vehicle to fill his wife and children’s car.

Your business partner needs the kitchen remodeled because they prefer to prepare their own meals.

 

Solution – Business should never make special arrangements for a partner. It’s a special form of payment being made to that partner at the loss of the other partners. Ask yourself if you would make the same concessions for your best employee. If the answer is no then they should not be made for the partner. If they are made then a special cash value payment should also be made to the other partners in compensation.

 

What are the consequences of embezzling 1 million dollars. What are the consequences of embezzling 100 dollars?

What would you do if you find out your partner has been skimming money from jobs? Or asking your employees to work at their house and record another job address on their time cards? What if their is $100,000 missing due to accounting fraud? What if they are running jobs under the company license for cash on the side?

These are examples of big losses. But most embezzlement and fraud starts small and grows as the thief becomes confident and dependent on the income. What will you do if you find out they are filling up personal vehicles with the company gas card? What if you find out they are taking office supplies.

Solution – No matter how trustworthy your business partner appears you must always protect the company from theft. A partnership agreement should provide a repayment and penalty clause for any small theft and should also allow you to cut off access the financial accounts in the case of something big. In a worst case scenario you would need an injunction from a judge to stop your partner from withdrawing money. Having a crystal clear partnership agreement will help.

 

What is your partners obligation to you if you become sick or injured?

In a horrible scenario your partner is in a head on car collision. You are the CPA running the office and your partner in the hospital ran the jobs and did the estimating. Worse the doctors say no recovery is possible. These types of situations can play out and often no one is prepared. In this situation without help the remaining business partner could end up loosing money n the project and going into debt. His comatose business partner and family would also be responsible for this debt.

Solution – Its important to have insurance not only for the partners family but also for the business. This allows the business to unwind by hiring emergency help to finish up project that are underway.

 

How would you go about separating the business?

After 20 of running a successful business you are ready to go your own way. This is a major problem because rarely do people plan for after. Whats the value of the company stock? Will the company still function without the partner? Will it still be as profitable, less profitable or more profitable? If someone offers to buy your shares can you sell them? Can you sell them if your old partner wont agree to the reasonable term of the new partner?

Solution – Its important from the start to make sure that the companies tangible assets, business support system and client accounts are valued properly from the start. It should also be as easy as possible for either party to leave and take their equity with them

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Construction Profit and Markup

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It is your moral responsibility to charge your customers the absolute highest amount possible and to always accept the highest paying work.

Your time is valuable. You are a smart and talented individual working to make sure that California’s homes and businesses are up to snuff and meeting the demands of the users. If you don’t charge enough how will you pay for your equipment, material and and labor? But charging whats necessary to get by isn’t enough. You need to charge the maximum because your time is valuable and special. You have earned that money through your own experience and hard work. You should be reinvesting that money to better yourself. If you aren’t taking those profits and using them for your own benefit then you are hurting everyone else in the economy by reducing your future potential to be of service or merely missing out on your earned right to some relaxation. Nobody is more qualified than you to spend that money!!

Even more important it’s always best to accept the highest paying work. The person who offers the most money earned that money by helping other people. This good Samaritan, laden with money, has been working hard to offer their services to others and relying on the fact that in turn someone would be there to help them in their time of need. If you are out helping someone at a reduced rate your hurting yourself, your hurting the economy and your unjustly enriching the poor person who doesn’t have any money because they are too selfish and lazy to help anyone else!

Remember.

It is your moral responsibility to charge your customers the absolute highest amount possible and to always accept the highest paying work.

 

But how should you figure your profit and overhead?

It depends on the job and the type of company you are involved with for example;

 

With a larger company you typically charge set rates based on time/material or unit pricing. If for example you or another employee goes out to run and meet the customer a few extra times its really not a big deal as long as the company pays you your wages and the company makes the minimum percentage for the job.

Large companies typically aim for profit percentages. For example they may sign an 5 million dollar contract with a goal of a 5% profit margin after all expenses and overhead are paid. Now if that same company bids a $5,000.00 job they might aim for $2,000.00 profit. With a smaller company profits must be higher and more secure. If the larger company that normally does multi-million dollar work does a job for $30,000.00 and accidentally only makes $3,000.00 there is no real effect on anyone personal life. If a small contractor works all month only to make $3,000.00 he might find himself in a very bad position.

When it comes to material markup I don’t use a fixed percentage. Why? Because sure enough someone will ask me to go pick up a $5 item and expect me to mark it up a certain amount. This would work at a big company where these transaction are all washed together but for a small contractor spending 3 hours driving back and forth for a quarter doesn’t make sense. Its always best to give combo bids including both materials and labor or to charge for time plus material.

As a general rule of thumb I always charge the going market rate or more so no matter what I can have someone else fill in for me in case I can’t complete the work for some emergency reason.

 

 

 

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The myth of the paper contrarctor.

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Paper Contractor: A person who makes a construction contract with the customer and hires subcontractors to perform the complete scope of work.

 

Can it be done? Yes, but not by you.

Sorry to break the news.

 

First lets start with the difference between a construction manager and a paper contractor.

In my mind a construction manager is not-at-risk. Much like a consultant they offer service and advice. However they do not sign contracts with the subcontractors directly. They merely manage the construction process through a fixed fee. This is a great way to make money because when an unexpected job expense occurs they simply tell the owner to write a check so they can hire someone to come fix it. If you sincerely want to avoid an actual work then this is the way to go.

A paper contractor on the other hand signs a contract and attempts to make a difference in the “arbitrage” between the subcontractors price and his own. I’m not saying the paper contractor isn’t charging management fees, what I’m saying is that a paper contractor is signing the subcontractor agreements. If something goes wrong they are 100% responsible. They are buying the labor/materials and reselling it. They are an integral part of the supply chain.

 

Why paper contracting is harder than it seems.

-Your bids will be less competitive. You as a paper contractor are paying retail prices for your work and then charging a variety of management fees, paperwork fees, insurance fees and profit on top of that. This is completely understandable but unless you have multi-million dollar projects lined up you may hit a snag. If your like most new contractors you will be starting on smaller projects. This means its easier for the customer to hire vendors and attempt the project themselves. The customer can also hire a project manager who is not-at-risk for much less to manage the project.

-Your bids will be too competitive ( I see this all the time). Even worse you make a mistake bidding and underbid a section of the work. Now you are facing the potential to make zero money on the job. What will you do? Like most beginning contractors you will go out and solve the problem yourself. Now you are no longer a paper contractor. Many, many times I have been called out by paper contractors who have attempted a job and are now working late into the night installing materials to save their profit margins. I applaud there effort and commitment to the customers project but if they think this is the last time they will ever make that mistake they are only kidding themselves.

-Subcontractors are slow and unreliable. When you sign a contract with a customer they will likely have few thoughts as to how you got this done. They are trusting you to handle the situation and your reputation is on the line. So what will you do when a pipe springs a leak in the late afternoon and your plumber won’t pick up the phone as the customers office start to fill with water? Or what will you do when your subcontractor suddenly can’t make it on the job for an extra week? Sure it’s easy to say that you have insurance to handle these issues. I doubt your customer will appreciate that response when their trying to run their business or business on their front lawn!

-Most paper contractors aren’t completely qualified. If your doing million dollar projects steadily you can afford to hire some general labor and carpenter or two at minimum. So you are not a paper contractor. If you are doing small jobs and are attempting to relying on subcontractors completely then its probably because you don’t understand the work enough yourself. Personally I know that I can outperform almost anybody a subcontractor send to my job. Subcontractors are merely a convenience. When a paper contractor is attempting to win a job against myself they can only do so by offering a lower price for their own services. The customer will ultimately realize that they know less than me and they will ultimately spend more to complete the project because they rely solely on vendors. This two pronged factor will push their earnings down. Really the only offset to these factors that I’m aware of is to be a designer and be valued for artistic ideas rather than project performance.

 

This is not meant as a means of discouraging you but rather a friendly warning to be prepared. You’ll be trading in that car for a truck sooner than you think.

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Triple Your Income From Construction with continued education

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Many people who are browsing this website already know the advantages and disadvantages of being self employed.

More Money vs More Responsibility

 

But how many people really evaluate how they arrived at their current position?

Most people get into construction by accident. They fall ass backward into a job because they need money at the moment. Only realizing after a while that they can make good money if they put in some effort. Many of these people will learn a single job and go off to build a career around that one thing.

Think about that for a second. Someone spends 2-3 years learning a trade and then parlays that knowledge into a lifetime career.

Imagine what they could have done if they continued their education!!

 

So why don’t people continue with their education?

They are too busy with family, too busy with work or too busy tinkering on their fishing boat. Every excuse boils down to the fact that they have enough money to live on currently and they don’t want to take even 20 minutes out of their day for the headaches of learning something new.

Also they don’t want to loose the guaranteed income of now for possible income of the future.

However this strategy is doomed to fail. I have witnessed time and time again small contractors with great career momentum who find a few good customers and then just put the business on autopilot. They are not learning, not seeking new opportunities and instead are relying on what they know at the moment. But I’ve been around to see this scenario play out many times. Business conditions change and all of a sudden the formula that used to work is no longer working. But it’s only when they hit the ground stumbling that they realize how un-competitive they have become! So they start slashing prices and trying to play catch up.

 

 

How important is continuing education?

Most contractors take a small amount of knowledge and squeeze a lifetime of income from that. Imagine if they knew double or triple what they know? They could become very wealthy.

Think about myself…the website writer for example. I can, and do, make lots of money from my regular job as a contractor.  But I’m taking time off during my day to study something new which is computer programming and web design. Because as my career has evolved my goal of making hundreds of thousands a year has turned into a goal of making millions a year. So this year my income suffers. But 5 years down the road I have no doubt that my sacrifice now will pay off ten fold.

Many of the people who browse this website are already subcontractors. I know because their emails resemble something like this; arnieselectrical@gmail.com or marylou@ccctileandstone.com. But they are ready to expand to that next level and start managing or performing other trades.

The more you know the more options you will have and the more people will respect you and therefore be willing to pay you.

 

 

Whats the best way to continue your education?

Consistency. Learning something new every single day.

Never ever think you can sit back and relax or not learn something new. If you are on this site you are probably working for another company or you have started contracting as a handyman or illegally and now you need to become legitimate. So there is a very real roadblock that is forcing you to take action.

But what will be your driving force when you get into your comfort zone 12 months down the road? Even worse will you have the opportunity to pause and learn something new when you are working every minute of everyday to make payments on all the new stuff you are buying?

Creating a system to insure continued progress

  1. You need to create a list of education goals. Its not something you have to look at every day but its something you need to adjust at least once a month.
  2. You need to make progress every single day. Even if its only 10 minutes a day. But preferably 2 hours would be ideal.
  3. Create goals such as reading a book a certain or leaning a new subject.
  4. Mast your current job skills but also branch out into new things. You may be a contractor but business, finance, marketing economics and other topics all affect you!
  5. Find motivation. Who do you admire? Are you emulating their strategies? What would you do with the money? Who is counting on you? Would your success prove someone wrong?

 

 

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License Test Study Guide

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These two study guides are for sale in the products section!

These study guides could be in your email inbox in as little as 5 minutes!

study guide sales page

YES! TAKE ME TO THE PRODUCTS PAGE NOW

(There is a free 3 page sample download of each test on the products page!)

 

These Study guides are the fast & easy solution

Other study guides are over 300 pages. But you need to study FAST!

This study guide condenses the IMPORTANT INFORMATION into just 51 pages!

This study guide is designed for people who have enough experience  to know the difference between a shovel and a hammer. It only contains the information needed to pass the test.

 

The other options just plain suck!

I made this website because I couldn’t find an affordable easy study guide when I was studying for my license test.

I kept finding outdated  study guides or classes being peddled for $500.00 or more.

The test isn’t that hard if you simply brush up on some basics. When I took the test I created a study guide for myself and passed the first time I took the test.

When I passed my test I was glad I kept my $500.00 and didn’t have to sit in a room full of annoying strangers for two days.

 

If you think you can afford to pass up this study guide think again…here’s why…

A good friend of mine working at the same company also planned on taking the license test with me. We both had big plans about how we could run our own businesses! He bought one of those 300 page study guides and guess how many pages he read?? He didn’t make it through the first two chapters. So he never got around to finishing the book and he never got around to taking the license test. Hes still working for someone else… years later…

 

Most importantly remember this!

The study guide I’m selling here is small enough to read in a single day! Read it three or four times and if there is anything you don’t understand due to brevity use the internet to do some extended research! Going into business for yourself is a new and daunting challenge. My test is a shortcut to your success! 

 

Download this license test today and you could be ready to take your test in as little as 2 or 3 days!!

YES! TAKE ME TO THE PRODUCTS PAGE NOW

(There is a free 3 page sample download of each test on the products page!)

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How to Ask for a Raise

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You want more money and less work.

Your company wants more work for less money.

It’s an important step in anyone’s career to ask for a raise and to get a solid answer from their employer. Let me take you inside the mind of your employer so you can get an upper hand at asking for a raise. This post has two parts A) Should you ask for a raise and B) How to ask for a raise.Your employer is already thinking about your position at their company. Trust me, as the person writing this article I think about my employees pay constantly and each person falls into three distinct categories for their ability to negotiate a raise.
Continue reading “How to Ask for a Raise” »

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Construction Company Business Plan

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A business plan is an essential tool for a business owner. This business plan is as good for a fortune 500 company as it is for a sole proprietor. Not to get super cheesy but a business plan is more than just some document you file away.

candle business plan

A business plan is you guiding light.

Continue reading “Construction Company Business Plan” »

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Charging For Estimates

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cashYes it’s coming back into style.

Most contractor’s can’t imagine charging for estimates. After all nobody is charging right? Well that’s what I thought but I have been known to be wrong.
Continue reading “Charging For Estimates” »

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Saving a Failing Construction Company

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doomWhen an established company is failing there is usually a few very good reasons. Often you have to consider if it’s worth saving and can it be saved before you invest time into the work. The irony in saving a company is that it’s usually an internal people problem rather than an external situation. However if you are reading this article you probably know all too well how internal people problems can lead a company to doom.
Continue reading “Saving a Failing Construction Company” »

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