In years’ past, the CSLB did not allow LLC’s to hold a license. They now do, but one of the requirements is that the licensee procure a $100,000 Employee/Worker bond. This is in addition to the standard $12,500 license bond required of all contractors. The rate for premium on the $100,000 bond is higher because it is considered a high risk for claims by the surety companies.
Depending on the applicant’s credit, the range for premium can be $3,000 to $10,000 per year on this type of bond. This high premium sometimes causes the venture to unravel, after the expenses of construction attorney’s counsel, etc. has already been invested.
If you are considering forming an LLC, please contact Shauna Lucero in the bond department to see what the financial risks are before you invest in your time and money into forming the new business. Knowing the investment costs up front, will help you to make an educated decision.