CSLB Law & Business ExamBusiness Organization and LicensingMedium
A newly formed limited liability company (LLC) applying for a CSLB contractor's license must obtain, in addition to the standard $25,000 contractor's bond, which additional bond specific to LLCs?
- AA $100,000 LLC employee/worker bond
- BA $12,500 Bond of Qualifying Individual only
- CA $50,000 disciplinary bond
- DNo additional bond is required for LLCs
Show answer & explanationAnswer & explanation
Correct answer: A. A $100,000 LLC employee/worker bond
LLC applicants must obtain an additional LLC employee/worker bond of $100,000 (on top of the standard $25,000 license bond) as well as liability insurance, due to the limited personal liability protection LLC members enjoy.
Why the other options are wrong
- B. The BQI bond applies to non-owner qualifiers, not specifically to LLC formation.
- C. There is no bond by this name at this amount required for LLCs.
- D. LLCs face additional bonding requirements beyond the standard license bond.
LLC Employee/Worker Bond
An additional $100,000 bond required of LLC contractor license applicants to protect employees due to limited member liability.
- Required in addition to the $25,000 standard bond
- Amount is $100,000
- LLCs also must carry liability insurance
Memory trick: 'LLCs pay extra to protect the crew.'