How do you handle the costs for license, registration and bond fees ? Do you add them to the cost of the job ? Do you try and average them across all jobs for the year ?

I personally add them to the job that requires them.

Here is why I am asking. I bid a job, was told by the GC we are doing the job BUT the customer has made revisions to the drawings, resulting in less work. The GC wants me to register with the village (which requires license, bond, reg.) to the tune of $200.00.

Since I don't have a contract on the job yet I sent him a C/O for the $200.00. He replied that NONE of his subs ever charge HIM for these costs. I replied that the other subs are probably including the costs but not breaking them out separately. According to him they are a cost of doing business (for me). He said he is paying for me to work in the village for the next year and if I get another job in the village he has paid for me to work. I replied what if I don't get another job. I have then lost $200.00 on your job.....

The GC said they average the costs of all the bond, reg's, etc. for the year and spread them out across all jobs. Not exactly sure how that would work due to a varying work load.

I usually bill the permit for the actual job to the GC but the registation and bond fees are my cost to do business in that municipality. That GC probably had to pay licensing and bonding fees to that municiplaity too. That's my view anyway, its an indirect job expense.

How about this fun fact: In the State of Ohio, we have to pay a Commercial Activity Tax at a minimum of $150.00 per year. The state's almost precise wording says that this is a tax we have to pay for having the priviledge of operating a business in Ohio. A priviledge...wow.




[This message has been edited by Happi_Man (edited 02-09-2007).]

1) Any cost directly associated with that job only is billed to that job, like the permit.

2)Any costs for license, insurance or whatever that applies to all work done by your company are covered as an overhead expense. (It’s should be part of your markup).

3) Not sure what “The Village” is but if they require some form of bond or fee to do business there, and you want to do work there, then you need to take care of it as part of your overhead.

5) You can not get a change order unless you have a contract, if they change the plans pre-contract then give them a new proposal.

6) DO NOT pull a permit for a specific job unless you have a contract.

[This message has been edited by ITO (edited 02-09-2007).]

Ito,

The village is the municipality in which the work will be performed. They require an electrical contractor to supply them (the village) with a surety bond in the amount of $10,000.00 which costs me $50.00. The bond is only good for work performed within that municipality. The village also requires a $150.00 registration fee from me in order to perform electrical work within the village. This registration typically lasts for one year although some municipalities expire all registrations on Dec.31 regardless of when it was purchased.

My electrical license and insurance are figured into my overhead. I see the bond and registration fees as a direct cost to the job, same as if I needed to rent a piece of equipment for the job.

"How about this fun fact: In the State of Ohio, we have to pay a Commercial Activity Tax at a minimum of $150.00 per year. The state's almost precise wording says that this is a tax we have to pay for having the priviledge of operating a business in Ohio. A priviledge...wow."

Well that's cheap try New Jersey, $550 every year, we have to pay for having the priviledge of operating a business in New Jersey.

We had those local fees years ago, then back in the 60's when state licensing came in, the local fees were made illegal, a good reason to lobby for state licensing.



[This message has been edited by LK (edited 02-09-2007).]

LK,

From what I have heard, the proposal for state licensing of electricians in Illinois has been presented to the Illinois General Assembly and they keep turning it down.

Don't know why. There are so many villages, cities, towns, etc that offer licensing. Some tests are 20 questions and some are 300 hundred.

Sparky,

If that will be your only job in that municipality then yes add it to the bid, but if you will do (or intend to do) more work there then cove it in overhead. It’s really not something you can get a change for and you probably don’t want to talk to your client about it or you will get into the same conversation you already have had with him about this. Just make sure it is covered one way or another. If there are deductive changes comming then keep $250 from one of the changes and cover it that way.

Unless you have a contract there is nothing really to do about it, if your client insists you get it now, ask for a “letter of intent” or better yet a contract, then go take care of your fees.


[This message has been edited by ITO (edited 02-09-2007).]

What I do is print out a copy of this: (I got from this site)

I give it to the GC and tell them I am not legally obliged to pay those fees. They are more than welcome to argue with the village, I won't. I pay (1) license, (1) registration, and (1) bond to my hometown as overhead because that is the one that validates my license.

The fact that the GC says none of his other trades bill the job tells me he is either lying (most likely), inexperienced, or does all his work in the same village and uses the same subs that are already paid up.

I have this entered as a line item in Quickbooks as permit disclaimer


Last time I had a guy (a long time ago) give me this line I told him if I got another job in the next year I'd mail him a check for half the fee. At least he had a sense of humor and got the point.

Every GC I work for understands this fee is billed to the job.


[This message has been edited by Jps1006 (edited 02-09-2007).]

I have used this successfully in two villages. One claimed no knowledge of this law and the other said, "Yes, we are aware of it and since you mentioned it we can't charge you."

I had one village tell me I can argue the fee but by the time the village makes it decision the job would have been completed a LONG time ago... In other words, just pay the fee.

If you state in the proposal that none of those fees are included, then it's not yours to argue, let the homeowner or GC fight them. If they want you to include those fees in your contract, then no problem, let the owner or GC pay them through you.

ITO does a good job of dividing these expenses. I figure it as a wash. The GC is bringing you work without advertising expense. The GC or homeowner is paying for the permit. The other expenses are overhead.

I can only think of three departments in my limited territory that require registration fees, and one that I pay the license and insurance for. The total of all these Licence, Registration, and Bond fees is less than $1,000 per year.

However, if I'm working in a new area I call the building department and ask the following:

Do you have a Registration Fee?
Do you have a Bond requirement?
What Code are you on and do you have any ammendments?
What do you want to see for a grounding system? (I ask this because the response varies from unprotected conductor to bonded and tagged RMC).

I use this information to formulate the bid, but I'd never show it as a line item or an extra with a Contract Proposal.

Dave

Had this situation been with a different GC I wouldn't have bothered with the C/O. I believe this GC would have me register and then have me re-bid the new drawings. If he felt my price was too high he would have no problem sending the drawings out to the two other EC's that he uses.

If one of the other bids came in lower he would then call me and say I need to lower my bid or he would have no 'choice' but to award the job to the other guy. At this point I would ask for a refund of my reg/bond fees and I know I wouldn't receive it.

I explained this possible scenario to the GC's project manager and he understood and signed the C/O.

I had another job in the past w/ this same GC that was being done w/out permit. The job got shut down and he requested that all subs register w/ the village to the tune of $175.00. I did and he refused to pay me for the fees. This is why I insisted on the C/O for this current project.