How to Know Whether an LLC or a Corp is the Best Fit for Your Construction Business

There are a number of factors that should be considered when deciding whether to set up your business as a corporate or limited liability company (LLC). This includes the type of work that you do, the number of employees that you have, as well as various tax considerations.

Deciding to formalize the structure of your company as an LLC or corporation has important implications and should only be undertaken when you have a clear understanding of the pros and cons of each. Once you have a general contractor license, and before filing papers, consider getting expert advice to ensure that you make the right decision for your business.

Choosing a Corporation vs. LLC

An LLC (limited liability company) is a hybrid form of partnership that offers many of the advantages of a corporation and a partnership. Profits and losses can be passed through to owners without the business being taxed, and owners are shielded from personal liability.

A corporation can be taxed, held legally liable for its actions and can make a profit. The main benefit of a corporation is the protection from legal liability while two key disadvantages are the costs to incorporate and the extensive paperwork that needs to be filed. An S-corporation (Subchapter corporation) helps avoid double taxation which is a drawback for regular C corporations.

Business Freedom

We find that, for most construction businesses an LLC is the best fit because, while both a corporation and an LLC offer protection for the owner from liability, an LLC offers more freedom in how the business is managed. An example of this is in an LLC’s operating agreement; the company owners can expressly outline the obligations, powers, and rights of the manager and the LLC’s members. These rights, powers, and obligations can also be directly limited if needed.

An LLC also requires fewer formalities than those associated with a corporation. Specifically, annual meetings are not required.

Get Professional Advice and Assistance

If you want to set up an LLC, Contractors Reporting Services in Tampa FL can help. They’ll take out the stress, giving you the space to focus on building your business. Their professional, experienced staff have the expertise you need to get your paperwork handled efficiently. They will help you set up an S-Corporation or an LLC, whichever is the best fit for your needs.

They are also available to assist with ancillary services related to incorporating or setting up an LLC such as:

• Corporation Amendments – if any changes are made to the corporation such as changing officers or directors, they need to be registered and recorded the Secretary of State in Florida. Their team will provide fast, stress-free amendment filing so that you can focus on running your business.
• Annual Reports – annual reports are required to be filed every year in order for a Corporation or LLC to maintain their ‘active status.’ Failure to file annual reports can have serious implications, not least of which is a non-negotiable penalty of $400 for late filing which cannot be waived. Additional reinstatement fees and penalties can mean that costs to get your business on solid footing will exceed $900.
• Annual Minutes – When any changes are made to the structure of the corporation (such as amendments, changes of officers, and stock purchases or sales) the business is required to record them either in special minutes or under the annual minutes of the corporation.

Whether you decide on an LLC or a corporation, provided that they are formed and managed correctly, both will protect the business owner’s personal assets. This means that in the event of a claim or lawsuit filed against the business, only the assets that are owned by the LLC or corporation can be attached. If you have any questions, Contractors Reporting Services would like to be of assistance.

 

The following information was originally published on How to Know Whether an LLC or a Corp is the Best Fit for Your Construction Business and is courtesy of Contractors Reporting Services. Read more on:} Contractors Reporting Services Blog Tampa

The Importance of a General Contractor License in Florida

In order to run a profitable, sustainable business as a licensed general contractor in Florida you need to comply with the relevant regulations for the state. This includes holding the correct permits and licenses. Florida State’s licensing requirements are specific and, depending on the nature of your work; you may need a different license in order to work legally.

Contracting without a license in Florida is a serious offense, and the penalties are severe. For this reason, it’s important to understand who monitors compliance, what the different licenses are, as well as the consequences for non-compliance.

Who Monitors Contractor License Compliance?

In Florida, applying for a contractor license is done with the Construction Industry Licensing Board (CILB) headquartered in Tallahassee with field offices throughout the State. They are responsible for licensing and regulating the construction industry. They meet regularly to consider applications, adjudicate on disciplinary cases as well as conducting licensing and discipline hearings.

Their website offers the functionality to perform a Florida contractor license search which makes it easy for all parties involved in a project to verify that they are working with a contractor who holds a valid general contractors license. It’s an important check as it can help protect an owner from having to double-pay, and also reduces the risk of a subcontractor or supplier not being paid by the general contractor.  The website also allows complaints to be lodged and has a portal for contractor license applications.

What are the Different General Contractor Licenses?

In Florida the law provides for two different license classifications:

• ‘Certified’ – a certified contractor license is valid throughout Florida
• ‘Registered' – a registered contractor license limits the license holder to specific local jurisdictions.

Certified Contractors in Florida

To become a certified contractor in Florida, one must first pass the Florida State Certification Exam. The content covered depends on whether your application is for a Division I or Division II license.

For Division I license (general building and residential contractors), the exam consists of:

• Project management
• Contract administration
• Finance and business

A Division II exam (for trade-specific contractors such as plumbing, pool installations, drywall, and HVAC), there are two sections:

• Business and finance
• Trade knowledge

Registered Florida Contractors

Registered contractors must either have passed the Certification exam or hold a Certificate of Competency (which are issued by the local licensing office). Once this exam is passed one then submits a full application to the CILB in Florida along with:

• Proof of experience (minimum of 4 years or a combination of college and work experience)
• Credit report
• Fingerprints (for background checks)
• Proof of insurance (both public liability and property damage insurance that must be valid when the application is submitted.

What are the Penalties for Non-Compliance?

The State of Florida takes contract work done without a license seriously. For first time offenders, there is provision for up to a year of jail time or probation. Further offenses are considered a third-degree felony with jail time or probation of up to five years. Also, one can be liable for civil penalties of up to $10,000. An unlicensed contractor will also forgo rights as any contracts are unenforceable by law and liens are no longer valid. Also, if your work is found to be faulty or defective, treble damages can be awarded to the owner (and the contractor may have to return any payments made).

Navigating red tape and state bureaucracy can be frustrating, not to mention confusing. The team at Contractors Reporting Services in Tampa have been helping general contractors in Florida apply for licenses and permits for over 50 years. They’re ready to help you get your paperwork in order and assist with keeping your licensing up-to-date as well as ensuring that your permits are all in order. They understand that you need to be able to focus on building your business, without worrying about whether or not you are in compliance with Florida’s Construction Industry Licensing Board.

The following post was originally published on The Importance of a General Contractor License in Florida and is republished from Contractors Reporting Services. See more on:} Contractors Reporting Services LLC

The Importance of Filing Annual Reports with the Secretary of State

There are around 2 million businesses in Florida including many general contractors that are required to file an annual report by May 1^st including LLCs as well as limited and limited liability partnerships in order to continue operating as legal entities that comply with the regulations set by the state.

Basic information needs to be updated annually including the primary business location, the officers’ names, as well as the business agent’s details. It is important to note that the annual report does not include financial information but is rather used to update state records. Regardless of whether or not businesses need to make changes, it is still a legal requirement that the annual report be submitted to maintain their ‘active’ status with the Department of State in Florida.

The cost to file depends on the type of business. If the report is filed by May 1^st, the costs are $150 for-profit corporations, $138.75 for limited liability companies and $500 limited or limited liability partnerships.

There are important implications for general contractors who neglect or forget to file including late fees, company dissolution and potential loss of business.

Late Fees

Regardless of the business entity that a contractor operates under, they are required to file an annual report. The report must be filed by May 1^st otherwise a late fee of $400 applies. Unfortunately, the penalty is automatically applied by the filing system and as such cannot be reduced or waived. A failure to file an annual report can also result in expensive feeds for reinstatement in addition to other penalties that can be more than $900.

Company Dissolution

The state may administratively dissolve the company if it fails to comply with the annual report requirements for a long enough period of time. In Florida, this time is set as the third Friday in September, and dissolution will happen on the following Friday (the fourth Friday of September).

Once this happens, the business may not continue with any of their activities aside from the process of winding up the company. Once a company has been dissolved, an owner’s personal assets are no longer legally protected from business creditors. In effect, this means that owners are personally liable for business debts and judgments.

Loss of Business

Failing to file a company’s annual report will result in forfeiting its ‘good standing’ with the State. This can have a big impact on expansion plans and financing opportunities. In Florida, the Certificate of Good Standing is referred to as a Certificate of Status. If a company is unable to provide the certificate, it serves as an indication that there is something wrong with the company’s standing with the State.

For general contractors, in particular, this can be problematic as it is often a requirement for businesses before they will award a building contract. Lenders may also require a company to be in good standing before it will approve new financing, and the company will be viewed as an increased risk if it is not able to produce the certificate.

At Contractors Reporting Services in Tampa, FL we can help ensure that your general contractor business remains in good standing. We will compile and file an annual report for your business so that you are not exposed to the cost and risks of late filing. Our team will ensure that your annual report is filed correctly and on-time, every time. In addition to filing annual reports, Contractors Reporting Services is also able to offer other business services such as corporation set up, corporation amendments, renewal services, annual minutes as well as business tax registrations and renewals.

The next article was first seen on The Importance of Filing Annual Reports with the Secretary of State and is courtesy of Contractors Reporting Services. Read more on:} http://activatemylicense.com

8 Different Licensing Services That You Might Need as a Florida General Contractor

Once a contractor has passed the state exam, there are a number of licenses and reports that they will be required to hold in order to work as a general contractor in Florida. There are also several that may become necessary under certain circumstances. Eight important licensing and reporting requirements include initial applications, change of status, state and county registration, additional business licensing, license reinstatements, financial stability reports and works comp exemptions.

Initial Applications (Including Certification and Registration)

Once a contractor has passed their State exam, they will need to provide trade-specific information. As these requirements vary from trade to trade, using a specialized application service can save time and money as delays have a direct impact on a contractor’s ability to work.

Change of Status (Also Known as a Transfer)

In the event of a contractor moving from one company to another, there are licensing implications. The State requires that a contractor files an application and meets specific requirements to be eligible to transfer. This process can be time-consuming as there are often delays.

County and State Registration

Once contractors have passed the state county exam, they are required to obtain a State Registration as well as a Certificate of Competency (also referred to as a county registration) in order to operate as a general contractor in Florida.

Registration and Renewal of Licenses

Registering your license is a requirement if you are working, wanting to obtain permits or advertising in a local municipality. Keeping up to date with State and County license renewals allows a general contractor to remain in compliance with Local Codes and State Statutes.

Additional Business Guidelines

The process of applying for the qualification of additional businesses can be convoluted and confusing. This process is for general contractors that hold a single license and want to qualify a second company, or for contractors who hold multiple licenses and are looking to qualify a separate company using one of the licenses.

License Reinstatement

In certain situations, a contractor’s license may be revoked or place on Null and Void Status. In cases like these, a contractor would apply to the State to have the license reinstated under the Reinstatement Guidelines. This time-consuming process can be frustrating for those that are unfamiliar with the requirements.

Financial Stability Review & Report

The Business Financial Stability Review & Report checks against public records at County, State, and Federal levels and are accepted and approved by the State as well as the local county or municipality. Using a service such as Contractors Reporting Services, contractors in Florida can have the report back within one business day.

Workers Compensation Exemption

A worker’s compensation exemption is for an officer of a corporation or a member of a limited liability company who wishes to be exempted from worker’s compensation. If a general contractor is granted a Certificate of Election to be exempted, they will not be able to claim benefits. In order to be exempted, there is a form that must be completed, and specific requirements need to be met.

Get Assistance with Licence Applications

If you need help with your license applications, Contractors Reporting Services in Tampa, Florida offers reliable results. Our in-depth understanding of the requirements for each license will help relieve frustration and confusion.

Regardless of whether you need financial reports, licensing or business services, we’re confident that we can help you tackle your admin. Procedures and requirements change regularly, staying on top of what is required can be time-consuming and frustrating. Our goal is to offer our clients peace of mind by taking care of paperwork and licensing processes so that they can focus on building.

The next post was originally seen on 8 Different Licensing Services That You Might Need as a Florida General Contractor and is republished from Contractors Reporting Services. Find more on:} Contractors Reporting Services Blog Tampa

How to Get a General Contractor License in Florida

To get a Florida contractor’s license, you are required by the state of Florida to be approved by the Department of Business and Professional Regulation, and there are two key steps to complete before a license can be issued: first, completing the exam and second, submitting an application.

There are two different licensing classifications. The first is a general contractor certified license. This is valid throughout Florida and grants permission for the contractor to work anywhere in the state. The second is a general contractor registered license. This limits the contractor to working within certain specified local jurisdictions. The contractor is also required to hold a certificate of competency issued by those jurisdictions.

Step 1: Complete the Exam

Certified General Contractor License in Florida

An applicant who has applied for a certified general contractors license in Florida will need to pass the Florida State Construction Examination before beginning the application process.

General Contractors License Exam

Developed by the Bureau of Education & Testing, the examination is split into three parts, and the applicant is required to pass all three. The three exams are project management (written exam taken at a test center), contract administration (written exam taken at a test center) and business and finance (computer-based exam, administered at Pearson VUE).

The first and second test segments may be taken in Orlando, Miami or Tallahassee (the applicant is required to select a first and second choice when applying). The tests can be taken in February, April, June, August, October, and December. In order to take the tests, the completed application and fees need to be received by the testing office at least 30 days before the exam date.

After successfully passing the examination, the applicant may complete the application for a certified general contractors license in Florida.

Registered General Contractors License in Florida

Instead of taking the Florida State Construction Examination, applicants for a contractor’s license can present their Certificate of Competency. The jurisdiction’s building authority issues this certificate.

Applicants that do not have a Certificate of Competency are required to take a construction exam, before beginning the contractor's license exam process. The procedure covered in the certified general contractor's license section above applies for the registered license as the exam is the same for both.

Step 2: Apply for a General Contractor License

Certified General Contractor License

A General Contractor Certified License can be applied for as an individual contractor or as a qualified business. After passing the state certification exam, the licensing process can begin.

Download and fill in the details on the application and attach the additional documents that are required. This includes proof of financial stability (usually a FICO approved credit score), proof of education and experience (for a certified license, applicants are required to have four years of experience or a combination of both college and work experience).

Additional requirements include that the applicant is at least 18 years old, is willing to undergo a background check and must secure workers compensation insurance (or be granted an exemption) within 30 days of receiving their license.

Registered General Contractor License

As with a certified license, the registered license can be applied for as an individual contractor or as a qualified business.

After first passing the Florida State Construction Examination (or being exempted on the basis of holding a certificate of competency), an applicant then needs to download and complete the application (either as a qualifying business or as an individual general contractor.)

Documents that should be submitted along with the application include a credit report (including a FICO approved credit score), and a copy of the Certificate of Competency (if applicable).

Additional application requirements include that the applicant is at least 18 years old, undergoes a background check (including fingerprinting), has general liability and property damage insurance and will secure workers compensation within 30 days of receiving the license (or be granted an exemption).

If you’re still not sure of the process that you need to follow for becoming a general contractor, Contractors Reporting Services in Tampa, Florida can help. They have over 50 years of experience helping individuals and businesses keep up to date with their paperwork and licensing.

The following information was first published on How to Get a General Contractor License in Florida and is courtesy of Contractors Reporting Services. Read more on:} http://activatemylicense.com

What is a Florida Contractor’s License and Why is it So Important?

In order to provide contractor services in Florida, a person should hold a general contractor’s license. In Florida, there are two classifications for contractor license, namely ‘certified’ and ‘registered.’ A contractor should hold a valid license to avoid penalties and a loss of rights (an exception is if the scope of work falls under ‘basic handyman services’).

What is the Difference Between a Registered and a Certified Contractor License?

The key difference between the two is that a certified contractor license allows the contractor to complete work throughout the entire state whereas a contractor with a registered contractor license is limited to specific jurisdictions.

Certified Contractor License

To become a certified contractor, a contractor needs to pass the Florida State Certification Exam, either the Division I (for general building and residential contractors) or Division II license (for trade-specific contractors such as commercial pool installation, HVAC, drywall and plumbing).

The Division I exam consists of 3 sections:

• Project management
• Contract administration
• Business & finance

The Division II exam has only two sections

• Business & finance
• Trade knowledge

Registered Contractor License

To become a registered contractor, you need to have passed the certification exam or hold a Certificate of Competency (issued by the local licensing office).

Why is a Florida Contractor’s License Important?

Holding a valid license is vital to avoid penalties issued by the State of Florida, as well as the loss of rights that happen as a result of working as a contractor without a license.

To Avoid Penalties

In Florida, unlicensed contract work is taken very seriously. A first offense (considered a 1^st-degree misdemeanor) allows for up to a year jail sentence or probation. Any further offenses that are committed are considered a 3^rd-degree felony, making an unlicensed contractor liable for a jail sentence or probation of up to 5 years. In addition, you may be liable for civil penalties of up to 10 000 dollars.

To Prevent a Loss of Rights

This falls into three main points; unenforceable contracts, voiding of lien rights and triple liability for damages.

Unenforceable Contracts

A contract (whether it is performed or not) is unenforceable by law. This means that, as a contractor, you are not able to force someone to honor the contract, nor are you able to pursue the legal route to recover payment.

Lien Rights

As an unlicensed contractor, you do not have any lien or bond rights.

Triple Damages

Any work that you are paid for exposes you to liability. If your work is found to be faulty or defective, a court may award treble damages to the owner, and you may be required to return any money paid under the contract.

Are There Any Exceptions?

Under the law of the State of Florida, there is an exception for “basic handyman services.” While there is no limit to the amount of the contract, the scope of services is quite limited.

To fall under this exception, you are not allowed to work on structural walls or foundations, any plumbing or electrical jobs, asbestos abatement or other tasks that require a license. If you are not performing this type of work, you may not need an FL contractor’s license, but you will still need to hold a valid business license.

There are a number of counties that will still require a license even though the work is exempt from state licensing purposes. Check with the particular county license board to see whether a license is needed before you begin any work.

If you’re a contractor and are feeling overwhelmed at the through of keeping your paperwork on track, help is at hand. Contractor’s Reporting Services in Tampa, Florida helps contractors keep up to date with their paperwork freeing up time and energy to focus on building. They specialize in permits, tax forms, employment documents.

The following blog post was originally seen on What is a Florida Contractor’s License and Why is it So Important? and is courtesy of Contractors Reporting Services. Read more on:} The Contractors Reporting Services Blog in Tampa

Understanding the Notice Requirements Under Florida’s Lien Law

An Introduction to Lien Law and Filing the Notice Commencement

If you work in the construction industry or own a property that requires work done to it, it is important to have a thorough understanding of Florida’s lien law and the Notice to Owner requirements.

What is the Purpose of Florida’s Lien Law?

The lien law can be utilized by a supplier, contractor or subcontractor to ensure that they are fully compensated for work that they complete or for their materials. It also protects the owner of a construction project from having to pay twice for work done or materials associated with the project.

What are Lien Rights?

These are the rights established by law in Florida that allow a lien to be filed in the event of non-payment. It’s important to understand the implications of this to make sure builders are compensated for their work, and owners do not become a subject of a lien or end up paying twice for the work.

Lien rights are particularly important because of the way that they govern the builder's relationship with the owner of the property as there can be a significant impact on lien rights if there is a crossover between a subcontractor and a contractor’s scope of work.

Common Contract Situations and Implications for Serving a Notice to the Owner

There are two main contract situations that commonly arise: when the contract is with the owner of the property, and when the contract is with someone else other than the owner.

Contract with the Owner

If the contract is for an amount greater than $2500 between the owner and the contractor, there needs to be a disclosure (found here), and the disclosure needs to be on the first page of the contract or on a separate page but signed by the owner.

If this statutory disclosure is not included, the rights of other lienors who do not have a contract with the owner are not affected, and the contractor may only be barred if the owner was adversely impacted by the failure to include the disclosure.

Contract with Someone Other Than the Owner

In most cases, Subcontractor and Supplier lien rights cannot be perfected without first serving a Notice to Owner (which can be viewed here).

The purpose of the Notice to the Owner informs the Owner of the property that someone is supplying material for their project. Typically, the Owner will work exclusively with the Contractor which means that the Owner may not know which Subcontractors or Suppliers have been responsible for providing services or materials.

The Notice to Owner, therefore, serves two important functions, firstly identifying the parties who have been working on the project and secondly, informing the Owner that Subcontractors and/or Suppliers have a right to lien the property in the case of non-payment.

The timing for serving the Notice to Owner is vital, as the technical lien laws laid out in Florida Statute 713.06 show. It must be served either before providing labor, services or materials; within 45 days of furnishing labor, services or materials; or before the Owner makes final payment for the project (after receiving the Final Payment Affidavit from the Contractor).

If you need to deliver a Notice to Owner, best practice is to deliver it before work on the project starts. If it’s not served then, then the Subcontractor will need to keep a careful eye on the timeline in order to perfect the lien. If this is not adhered to, it may result in losing lien rights.

A Notice to Owner does not automatically perfect a Subcontractors lien rights, but missing the deadline for serving the notice can be fatal to those rights. Keeping track of deadlines and a log of when Notices were sent will help protect lien rights. Contractors Reporting Services in Tampa, FL can help with managing the paperwork aspects of general contracting licenses and services.

The next blog post was originally seen on Understanding the Notice Requirements Under Florida’s Lien Law and is republished from Contractors Reporting Services. Find more on:} Contractors Reporting Services website