Over 90% of licensed California contractors incorporate as a California corporation (often electing S-Corp status) rather than forming an LLC because a CSLB Contractor LLC must post an extra $100,000 LLC Employee/Worker Bond (BPC § 7071.6.5) on top of the $25,000 contractor bond (BPC § 7071.6) and carry $1,000,000 to $5,000,000 in general liability insurance (BPC § 7071.19). A California contractor corporation requires only the standard $25,000 contractor bond (plus a $25,000 Bond of Qualifying Individual under BPC § 7071.9 when qualified by an RME or non-10% RMO).
Official source: California Legislative InformationOfficial source: California Legislative InformationOfficial source: California Legislative InformationOfficial source: California Legislative InformationVerified against the California Secretary of State and FTB on Oct 21, 2026
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Compare the $25,000 Contractor Bond vs. the $100,000 LLC Employee/Worker Bond
Under BPC § 7071.6, every active CSLB license requires a $25,000 contractor license bond. Under BPC § 7071.6.5, an LLC applicant or licensee must additionally maintain a $100,000 surety bond for the benefit of employees or workers, bringing total mandatory bonding to at least $125,000 before any RME/RMO qualifier bond.
Official source: California Legislative InformationAccount for Mandatory $1M–$5M LLC Liability Insurance (BPC § 7071.19)
A CSLB-licensed LLC must maintain at least $1,000,000 in general liability insurance for up to five personnel, plus $100,000 per additional person up to $5,000,000 total (BPC § 7071.19). General stock corporations are not subject to § 7071.19 as a condition of CSLB license maintenance.
Official source: California Legislative InformationCalifornia Trucking & Motor Carrier Permit Rules (DMV MC 706 M, CHP CA# & AB 5)
California motor carriers operating commercial vehicles require a CHP Carrier Identification Number (CA#), DMV Motor Carrier Permit (Form MC 706 M), insurance/workers' comp filings, and compliance with AB 5 business-to-business contracting criteria under Cal. Labor Code § 2778.
Official source: California Legislative InformationYour preparation checklist
- Verify CSLB classification and qualifying individual (RMO vs. RME)
- Compare $25,000 corporate bond path vs. $100,000 extra LLC worker bond (BPC § 7071.6.5)
- Match exact SOS entity name and officers/managers to the CSLB application
- For trucking/motor carriers, coordinate CHP CA# and DMV Form MC 706 M
Compare California S-Corp vs. LLC tax layers
Compare California S-Corp vs. LLC tax layers
Default-taxed LLC
$800$800 annual tax + $0 income fee
General S corporation
$8001.5% income calculation: $750
$800 minimum applies
Illustrative only, not tax advice. Different income measures are intentional. No total savings claim: federal, shareholder, payroll and administrative costs are excluded. Financial S corporations are excluded.
FTB Form 3522 pays the $800 LLC annual tax; Form 3536 pays an estimated LLC income fee by the 15th day of the sixth taxable-year month; Form 568 is the LLC Return of Income. Eligible pass-through entities may elect the 9.3% PTE tax on qualified net income, paid using Form 3893 and elected using Form 3804. Review eligibility, owner credits and current-year payment rules; it is not automatic tax savings.
Official source: California Franchise Tax BoardR&TC § 17946: an LLC with a taxable year of 15 days or less and no California business during that year is exempt from the annual LLC tax for that short period. For a calendar-year LLC, December 17–31 is 15 days inclusive. This is not a general first-year exemption and does not waive all filing obligations.
Official source: California Legislative InformationOfficial source: California Franchise Tax BoardKeep the requirements separate.
| Requirement | Verified detail / confirmation needed | Official authority |
|---|---|---|
| Standard Contractor License Bond (BPC § 7071.6) | $25,000 surety bond required for both corporations and LLCs | Official source: California Legislative Information |
| LLC Employee/Worker Surety Bond (BPC § 7071.6.5) | $100,000 additional surety bond required ONLY for LLC contractor licenses | Official source: California Legislative Information |
| LLC Liability Insurance (BPC § 7071.19) | $1,000,000 minimum (up to 5 personnel) + $100,000 per additional person up to $5,000,000 | Official source: California Legislative Information |
| Bond of Qualifying Individual (BPC § 7071.9) | $25,000 bond when qualified by an RME or an RMO who does not own at least 10% of voting stock/membership | Official source: California Legislative Information |
| Motor Carrier Permit & AB 5 (Labor Code § 2778) | CHP CA#, DMV Form MC 706 M, and B2B subcontractor compliance under Labor Code § 2778 | Official source: California Legislative Information |
Carry the decision forward.
Corp USA is not a law firm and does not provide legal advice. State fees are pass-through. Service fees and taxes are separate. Review the order price before payment.
Before your next step
Because BPC § 7071.6.5 requires a $100,000 LLC employee/worker bond and BPC § 7071.19 requires $1M–$5M in liability insurance on file with CSLB, whereas a corporation requires the $25,000 contractor bond under BPC § 7071.6 and can elect S-Corp tax treatment.
Official source: California Legislative InformationUnder BPC § 7075.1, a license number may be reissued to a corporation only when the individual licensee owns 51% or more of the corporate voting stock and specified CSLB conditions are met; otherwise the corporation applies for a new license number.
Official source: California Legislative Information