Post-License Mistakes That Cost Thousands: Don't Make These After You Pass
You passed the exams. You got your license. You're officially a California contractor. Congratulations!
Now don't screw it up.
Every year, hundreds of newly licensed contractors make expensive mistakes in their first 12 months—mistakes that cost them thousands of dollars, months of lost work, or even their licenses.
This post covers the most common (and most expensive) post-license mistakes, so you can avoid them.
The 10 Costliest Post-License Mistakes
1Letting Your Bond Lapse
💰 Cost: License Suspension + $200 Reinstatement + Weeks of Lost WorkYour bond is typically valid for 1-3 years. When it expires, you need to renew it. Many contractors forget, and their bond lapses.
- Your license automatically suspends 30 days after bond cancellation
- You cannot legally work as a contractor while suspended
- Any contracts you sign while suspended are unenforceable
- You must pay reinstatement fees and get a new bond
- Process takes 4-6 weeks minimum
How to Avoid:
- Set calendar reminders 60 days before your bond expires
- Renew early—don't wait until the last minute
- Ask your surety company to email renewal notices
- Check your CSLB license status online monthly
2Forgetting to Renew Your License
💰 Cost: $200 Renewal + $85 Delinquency + Lost ProjectsCalifornia contractor licenses expire every two years on your birth month. Miss the deadline, and you're working unlicensed.
- License expires automatically on your birth date
- You cannot bid or perform work with an expired license
- Late renewal adds $85 delinquency fee
- If expired more than 5 years, you lose the license entirely
How to Avoid:
- CSLB mails renewal notices 60 days before expiration—watch for it
- Renew online at CSLB website (easiest option)
- Set two calendar alerts: 90 days before and 30 days before your birth month
- Renew early if you'll be traveling during your birth month
3Taking Illegal Down Payments
💰 Cost: $5,000-15,000 Fines + License Suspension + Criminal ChargesCalifornia has strict rules about how much you can collect upfront. Many new contractors don't know the limits and violate the law on their first few jobs.
- Maximum down payment: Lesser of 10% or $1,000 (with exceptions for materials)
- Violating this is a crime, not just a civil violation
- Clients can sue you and file complaints with CSLB
- CSLB can suspend or revoke your license
- You may have to return the illegal deposit PLUS pay fines
How to Avoid:
- Learn the down payment limits for your classification
- Use proper contract language explaining payment terms
- Get proper receipts and invoices for materials purchases
- When in doubt, take less upfront and bill as you go
4Not Using Written Contracts
💰 Cost: Unenforceable Agreements + Lost Payments + Legal FeesCalifornia requires written contracts for jobs over $500. Many contractors skip them on "small jobs" or with "trusted clients."
- Without a written contract, you may not be able to collect payment
- Clients can claim you agreed to different terms
- You can't file a mechanics lien without a written agreement
- CSLB violations if contract requirements aren't met
- Legal disputes become he-said/she-said
How to Avoid:
- Use written contracts for EVERY job over $500 (no exceptions)
- Include all required contract elements (license number, change order info, etc.)
- Get signatures before work begins
- Use proper contract templates—generic contracts may not comply
5Bidding Outside Your Classification
💰 Cost: Project Rejection + Lost Opportunities + Potential License DisciplineYour license classification determines what work you can legally bid on and perform. New contractors often don't understand the limits.
- Bids on jobs outside your classification are automatically disqualified
- Contracts signed outside your scope are unenforceable
- You can't collect payment for work outside your classification
- CSLB can discipline you for exceeding license scope
- Insurance may not cover you if you're working outside your classification
How to Avoid:
- Know exactly what your classification covers
- Read the CSLB classification descriptions carefully
- For grey-area work, get a written opinion from CSLB
- Consider getting additional classifications if you regularly do related work
Just Got Licensed? Need Post-License Guidance?
We help newly licensed contractors avoid these expensive mistakes.
Contact Us6Failing to Pay Workers' Compensation
💰 Cost: $10,000+ Fines + License Suspension + Criminal PenaltiesIf you have employees, you must maintain workers' compensation insurance. Some contractors let it lapse or never get it at all.
- $10,000 minimum fine for each employee not covered
- CSLB suspends your license immediately
- Stop Orders prevent you from working
- You're personally liable for any employee injuries
- Criminal misdemeanor charges possible
How to Avoid:
- Get workers' comp before hiring anyone
- Keep your policy current—never let it lapse
- File proper exemptions if you truly have no employees
- Remember: 1099 contractors may legally be employees
- Update your CSLB records if your insurance changes
7Not Updating Your Business Address
💰 Cost: Missed CSLB Notices + License Suspension + $100 FeeCSLB sends critical notices to your address of record. Move without updating it, and you'll miss renewal notices, bond expiration warnings, and compliance notifications.
- You miss renewal notices and your license expires
- You miss bond cancellation notices and your license suspends
- CSLB complaints go unaddressed (automatic violations)
- $100 fine for each notification you must update
How to Avoid:
- Update your address within 90 days of moving (it's the law)
- Use a permanent business address, not a home you might move from
- Consider using a business mailbox or answering service
- Check your CSLB online profile regularly to ensure info is current
8Ignoring Mechanics Lien Deadlines
💰 Cost: Lost Payment Rights Worth ThousandsYou have legal protection to get paid for your work—but only if you follow the deadlines. Miss them, and you lose your rights.
- Miss the 20-day preliminary notice = lose lien rights for early work
- Miss the 90-day lien filing deadline = lose all payment protection
- Miss the 90-day enforcement deadline = your lien expires
- You're left with no leverage to collect what you're owed
How to Avoid:
- Send preliminary notices on EVERY job where you're a sub or supplier
- Track completion dates and filing deadlines for every project
- Don't rely on memory—use a calendar system
- Know the difference between 30, 60, and 90-day deadlines
9Not Disclosing Your License Number Properly
💰 Cost: $700-1,000 Fine Per ViolationCalifornia requires your license number on all advertising, vehicles, contracts, and business documents. Many contractors forget or don't know the requirements.
- $700-1,000 fine for each advertising violation
- Contracts without your license number may be unenforceable
- Can't pull permits without proper license disclosure
- CSLB investigations if complaints are filed
How to Avoid:
- Put your license number on: business cards, website, vehicles, ads, contracts, bids, invoices
- Use proper format: "Contractor's License #123456"
- Make it visible and readable (specific size requirements for vehicles)
- Include it in email signatures and social media profiles
10Adding Partners/RMEs Without Notifying CSLB
💰 Cost: License Suspension + Fines + Months of ProcessingYour license lists specific personnel (owners, qualifying individuals, RMEs). Change your business structure without updating CSLB, and you're in violation.
- Your license is invalid if personnel changes aren't filed
- Cannot legally work until CSLB processes the changes
- Processing takes 6-12 weeks
- May need additional bonds for new RMEs
- Fines and penalties for operating with invalid license
How to Avoid:
- File personnel changes BEFORE they take effect
- Understand what changes require CSLB notification
- Budget 8-12 weeks for processing when adding RMEs
- Get additional bonds in place before filing changes
Your First-Year Compliance Checklist
Monthly Tasks
- Check your license status online
- Verify your bond is active
- Review workers' comp policy status
- Track preliminary notice and lien deadlines
Every Project
- Use a written contract (if over $500)
- Include license number on all documents
- Send preliminary notice within 20 days (if you're a sub)
- Follow down payment limits
- Stay within your classification
Annually
- Renew your license (every 2 years, birth month)
- Renew your bond
- Renew workers' comp insurance
- Review and update business practices
- Complete any required continuing education
Remember: These aren't suggestions—they're legal requirements. Violating them can cost you your license, your business, and your reputation.
The CSLB doesn't care if you "forgot" or "didn't know." Ignorance isn't a defense. Learn the rules and follow them.
The Bottom Line
You worked hard to get your license. Don't lose it through preventable mistakes.
The contractors who thrive long-term are the ones who:
- Stay on top of renewals and deadlines
- Use proper contracts and documentation
- Maintain required insurance and bonds
- Work within their classification
- Treat their license like the valuable asset it is
Your license is worth tens of thousands of dollars per year in earning potential. Protect it.
You got licensed. Now stay licensed.