Start with the Foundation:
Legal, Licenses, and Liability
This post is all about the foundation — your legal, licensing, and liability documents. They’re the first things agencies check before considering you for a contract. Days 2 and 3 of my free 7-Day Government Readiness Plan show you exactly how to get these in order fast — so you’re ready before your next opportunity. Download the Plan on the Resources Page, along with other free tools to keep you contract-ready.
Why the Basics Can Make or Break You
What's the one thing that can disqualify a skilled business from a government contract, no matter how competitive their bid is? It's not their price, their past performance, or their team. It's often something as simple as a lapsed license or an expired insurance certificate. Before you invest energy in finding opportunities or fine-tuning your pricing, you need to be solid on three key pillars: Legal, Licenses, and Liability.
Why Your Foundation Matters
Think of your business foundation like the frame of a house. You can decorate the inside, stage the rooms, and invite buyers to tour — but if the frame is cracked, the deal’s off.
In government contracting, that “frame” is:
Your legal structure and good standing status.
The correct and current licenses to perform your work.
Adequate insurance to protect both you and your client.
Without these, your bid will never make it past the first screening.
Sample Certificate of Insurance and Los Angeles Business Tax Registration Certificate on desk — compliance documents agencies check first.
Pillar 1: Legal Structure & Status
Before you can even consider bidding, your business structure must be solid and in good standing. Agencies and primes want to ensure that you’re properly registered, compliant with state regulations, and able to provide documentation quickly.
Choose the right structure for your business
Sole Proprietor: Simple to set up, but offers no liability protection.
LLC: Flexible and offers liability protection — a common choice for small contractors.
Corporation: May be best for larger operations or those seeking certain tax advantages.
Stay in good standing
For Corporations:
File your Statement of Information with the California Secretary of State on time.
Keep your business address, owners, and officers updated in state records.
Request and keep a Certificate of Good Standing, as agencies sometimes ask for it before awarding a contract.
For LLCs:
File your Statement of Information with the California Secretary of State every two years.
Keep your registered agent current.
Update state records whenever there are changes to members or the business address.
For Sole Proprietors:
Keep your business name (Fictitious Business Name/DBA) active with the county.
Renew your DBA before expiration.
Keep your city or county business license current.
Have your essential documents ready
Articles of Incorporation/Organization.
Operating Agreement or Bylaws.
EIN confirmation letter.
Mini-Checklist — Legal Status Health Check
My business structure fits my operations and liability needs.
My Statement of Information is current with the California Secretary of State.
My Certificate of Good Standing is less than 90 days old.
I can produce my core legal documents within 5 minutes.
Pillar 2: Licenses & Permits
Once your legal structure is in order, the next step is making sure your licenses and permits are active and visible. Expired or missing licenses are one of the easiest ways to get cut from consideration before your bid is even reviewed.
Industry-Specific Licenses
Maintain the correct classification under the California State License Board (CSLB) for your trade.
Hold a valid CSLB contractor’s license if you perform construction work.
Register with the Department of Industrial Relations (DIR) and renew annually if you work on public works projects.
Maintain state licensing for professional services such as architecture, engineering, or surveying.
Business Licenses
Obtain and keep your City Business Tax Registration Certificate (BTRC) in Los Angeles or the equivalent in your city.
Maintain a valid county business license, if required.
Obtain a Seller’s Permit if you sell tangible goods in California, even if you primarily provide services.
Renewal & Verification
Track all license and permit expiration dates in your compliance calendar.
Use public portals (e.g., CSLB License Check) to verify that your licenses show as “Active.”
Mini-Checklist — License & Permit Health Check
I have all industry-specific licenses required for my work.
My city and county business licenses are current.
All expiration dates are in my compliance calendar.
My license status shows “Active” in public databases.
Don’t let missing paperwork slow you down. My free 7-Day Government Readiness Plan walks you through locating, updating, and storing critical licenses, insurance, and other documents so you’re ready when bids drop.
👉 Find it on the Resources Page, along with other free tools to keep you contract-ready.
Pillar 3: Liability & Risk Protection
Even if your legal paperwork and licenses are perfect, you won’t get far without proper insurance coverage. Liability protection shows agencies and primes that you can take on risk — and that you won’t put them at risk if something goes wrong.
Core business insurance
General Liability Insurance: Protects against claims of property damage or injury.
Workers’ Compensation: Required if you have employees, sometimes even if you hire subs.
Professional Liability (E&O): For errors or omissions in professional services.
Commercial Auto Insurance: Required if you use a vehicle for business purposes.
Contract-specific coverage
Larger contracts may require an umbrella policy to increase your coverage limits.
Some primes or agencies require you to add them as Additional Insured on your policy.
Certificates of Insurance (COI)
Keep current COIs on file for each type of coverage.
Know how to request an updated COI with the correct language for a specific job.
Mini-Checklist — Liability Protection Health Check
I have general liability, workers’ comp (if required), and any trade-specific insurance.
I can update my COI within 24 hours of a request.
My coverage limits meet or exceed the requirements of my target agencies/primes.
Common Pitfalls to Avoid
Overlooking corporate compliance: Agencies may reject a bid if you’re not in good standing with the state. Even if the agency doesn’t check until award, a prime contractor’s prequalification process will — and they can cut you from consideration before you ever get to submit a bid.
Using slightly different business names across your registrations and licenses.
Letting a license or insurance policy lapse mid-contract.
Forgetting to update your official records when you change addresses, officers, or ownership.
Assuming your LLC or corporation protects you if you’re not meeting compliance requirements.
Failing to keep your corporation or LLC in good standing can lead to bid rejection or prequalification removal.
Missing compliance checkpoints, as agencies verify before award and primes prequalify before inviting bids.
Expired licenses or outdated insurance certificates are one of the top reasons bids get rejected — before they’re ever reviewed.
Simple Systems to Stay on Track
Create a compliance binder (digital or paper) that contains:
Legal docs
Licenses and permits
Insurance policies and Certificates of Insurance (COIs)
Set a recurring reminder 60 days before renewals are due.
Do a quarterly status check in public databases: CSLB, Secretary of State, and [Your City] business-license portal. Confirm status = Active, renewals paid, and no compliance flags.
Final Takeaway
A strong foundation isn’t glamorous, but it’s non-negotiable. Without it, you can’t compete — and you certainly can’t win. Establish these three pillars and maintain them, and you’ll be well-equipped to build the rest of your business with confidence.
Your Next Step
Start building your foundation today with my free 7-Day Government Readiness Plan — your day-by-day roadmap to:
organizing your compliance
targeting the right buyers
making first agency or prime contacts
👉Grab it on the Resources Page, along with more free tools specifically designed for small businesses in the Greater LA area. Then, when GovCon Ready in 90 Days launches this fall, you’ll have the systems and confidence to take your government contracting strategy to the next level.
Let’s get your house in order—because readiness is your best strategy.
– Stephanie
About Stephanie:
Stephanie Clark-Ochoa is a Government Procurement Strategist and founder of Clark-Ochoa Business Services. Through Help 4 LA Subs, she provides practical tools and insights to help micro and small businesses in the Greater Los Angeles area become government-ready and thrive in public contracting.
Disclaimer: This post is for informational purposes only and does not constitute legal, financial, or professional advice. Please consult a qualified advisor before making decisions specific to your business.
🔜 Next Week on the Blog: Once your legal and compliance foundation is set, the next step is making sure you’re licensed where you actually do business. Here’s the catch: most subcontractors don’t perform work in the same city where their office is located. And in Los Angeles and Orange County, many cities require you to purchase a business license as a condition of the contract. That’s exactly what I’ll cover in next week’s post.