SBE News

Capitol Connection #1015

Responsible Managing Officer (RMO),  Joint Ventures in Nevada, Worker’s Comp Requirements

By Shauna Krause, President, Capitol Services, Inc.

Shauna Krause, writer of Capitol ConnectionThe ‘long’ and ‘short’ of it in this edition of the Capitol Connection. We ‘own’ the answer for a ‘multi-tasking’ RMO to get us started. ‘Re-stock’ for another Qualifier and help a NV General come to terms with his ‘venture’…

Q: I’m purchasing a company that will need to get a CA Contractor’s License. I will be hiring an RMO (Responsible Managing Officer) who currently has his own personal license. He wants to be able to continue operating his business while also helping me start my company. As I understand it, he is required to hold 20% equity in my corporation. Apart from the mutual understanding between the RMO and my corporation, is there anything that needs to be filed either with the CSLB or the IRS showing that he owns 20% of my company? Secondly, how long do I need to keep the RMO on my license before I can Qualify the license myself without needing to take the exams?

A: You are correct in that for your RMO to maintain two Active licenses at the same time he would need to own at least 20% of your company. It is simply a question on the application asking what percentage of ownership the RMO has. You do not need to submit any further proof, such as Stock certificates, to the CSLB.

I am not a tax advisor or familiar with whether you need submit anything to the IRS with regards to ownership as we don’t deal with that agency. A CPA or Attorney will likely be of greater assistance in that answer.

B&P Code section 7065.1 allows for an individual to replace the existing Qualifier on a license with a request to Waive the exams if they have been listed as an Officer for five out of the last seven years. This also applies to individuals who have been employed by the corporation or LLC in a supervisory capacity for five out of the previous seven years.

Q: The President of our corporation is currently the Responsible Managing Officer (RMO) on our license and he is retiring and transferring his shares of the corporation to me. I’ve always worked in the office side of the business so I won’t qualify to be the RMO. We currently don’t have any employees and I need to hire someone to replace my partner, but I don’t want to have to start paying for Worker Compensation insurance. If I decide to elect the new Qualifier as an Officer (RMO), is the RMO required to have a percentage of ownership? If he doesn’t have any ownership, does that trigger the need for Worker Comp?

A: No, an RMO is not required to have any ownership in the company. With zero ownership, he/she can only Qualify one Active license.

Ownership does not play a role in the need for Worker’s Compensation insurance. Worker’s Comp is only required for companies that have employees.

Q: Can we form a Joint Venture in Nevada with another contractor if we have a “B-2” (Residential and Small Commercial) and the other contractor has a “B” (General Building) license, or do both contractors need to have the same classification?

A: No, both contractors do not need to have the same classification to form a Joint Venture in Nevada.

While knowledge is power, knowing where to go for the answers is half the battle. Get expert assistance immediately when you call 866-443-0657, email, or write us at Capitol Services, Inc., 1225 8th St. Ste. 500, Sacramento, CA 95814. Research past columns at