2.3 Professionals, Fixed Assets & Bonding

2.3 Professionals, Fixed Assets & Bonding

Once the entity exists and the license scope is honest, Area A still tests whether you hire the right professionals, park the trucks in the right place, and understand how sureties underwrite performance and payment bonds. The 2026 B&F list that supports this section is the Contractors Manual 2025, Builder's Guide to Accounting (2001), Chapter 455 F.S. (2025), and the AIA documents A201-2017, A401-2017, and A701-2018.

Accountant versus attorney — different specialties

Use a certified public accountant (CPA) for the financial system the exam and the surety both expect: chart of accounts, job-cost ledgers, percentage-of-completion worksheets from Builder's Guide to Accounting, payroll and Circular E withholding (in the Contractors Manual 2025), Florida sales and use tax returns, federal Forms 1040, 1065, 1120, and 1120-S, and the compiled or reviewed financial statements a surety will demand. The CPA also packages the credit-report and financial-responsibility file that CILB 6-G and 6-H require, including the FICO-derived 660 screen in Rule 61G4-15.006.

Use a construction attorney for entity formation and operating agreements that do not contradict the QA affidavits in F.S. 489.119(2)(b), for review of AIA A201-2017 (General Conditions of the Contract for Construction), AIA A401-2017 (Standard Form of Agreement Between Contractor and Subcontractor), and AIA A701-2018 (Instructions to Bidders), for Chapter 713 construction-lien procedure and F.S. 255.05 bond-claim procedure, for employment versus independent-contractor classification, and for CILB disciplinary defense. An attorney who “does some taxes” is not a substitute for a CPA on percentage-of-completion revenue. A CPA who “looks over contracts” is not a substitute for counsel on an A201 indemnification or additional-insured clause.

Other specialists you will see on this exam: a surety producer (not the same person as your general-liability agent), a property-and-casualty agent who can issue a CILB-compliant certificate of insurance, and, when you designate one, an FRO who is underwritten at least as strictly as a qualifying agent. F.S. 489.1195(1)(d) directs the board to adopt FRO qualifications including net worth, cash, and bonding requirements at least as extensive as those for QAs. Do not invent a dollar FRO bond; the statute sends you to board rule rather than a single published HVAC figure.

Insurance types the surety and CILB both look at

CILB licensing insurance is the floor, not the bid. Rule 61G4-15.003 requires air-conditioning contractors — Class A and Class B alike — to maintain $100,000 public liability and $25,000 property damage for the life of an active certificate or registration. The Certificate of Insurance must name the insured exactly as the qualified business, including any fictitious name, and must list the certificate holder as State of Florida, Department of Business and Professional Regulation, the Construction Industry Licensing Board. Workers’ compensation is required under Chapter 440, or a valid exemption. DBPR’s certified air-conditioning application instructions require workers’ compensation coverage or an exemption within 30 days of license issuance. A lapse in required liability coverage is a board-rule violation, not a bookkeeping footnote.

Those CILB numbers will not satisfy a hospital, school board, or national-account specification that demands $1 million per occurrence commercial general liability, additional-insured status, waiver of subrogation, and completed-operations coverage. Surety underwriters treat insurance as evidence of risk transfer. Coverages they expect to see, even when CILB does not list them as license minimums:

• Commercial general liability (CGL), including products and completed operations. A failed braze that floods a condominium two years later is a completed-operations claim, not a premises slip-and-fall.
• Workers’ compensation and employer’s liability for every non-exempt employee.
• Commercial auto for service vans, crane trucks, and hired/non-owned exposure.
• Inland marine / contractors’ equipment for recovery machines, vacuum pumps, and portable lifts.
• Installation floater for equipment in transit or sitting on an unfinished roof.
• Umbrella or excess liability on larger commercial and public work.

Surety is a three-party promise, not two-party insurance. The principal (your HVAC company) and the surety promise the obligee (owner) that the work will be performed and that labor and material claimants will be paid. Unlike insurance, the principal indemnifies the surety. A bond claim is a debt the contractor is expected to repay. That is why underwriting looks like a credit decision.

Bonding underwriting — performance and payment bonds

The classic screens are character, capacity, and capital:

• Character. Credit — the same 660 FICO conversation CILB already had — claims history, prior defaults, and whether the QA actually supervises rather than rents the license.
• Capacity. License class (Class B cannot bond a 40-ton system the firm is not allowed to contract), backlog versus crew size, equipment, and experience with that project type.
• Capital. Working capital, net worth, bank lines, and whether under-billed jobs are eating cash. This is why the business-plan financials in section 2.2 are exam-relevant.

Bond types the B&F exam clusters with establishing the business:

• Bid bond. Assures the owner that if you are awarded the job you will sign the contract and furnish performance and payment bonds. AIA A701-2018 Instructions to Bidders is the 2026 reference that often specifies the bid-security form and time limits.
• Performance bond. Assures completion in the time and manner prescribed in the contract. On public work, F.S. 255.05(1)(g) sets the amount of the bond at the contract price, with a special rule only for contracts in excess of $250 million when a full-price bond is not reasonably available.
• Payment bond. Assures payment to persons defined in F.S. 713.01 who furnish labor, services, or materials. On public projects, 255.05 combines performance and payment in the statutory public construction bond form.

Sourced Florida public-bond thresholds — do not substitute other numbers:

• When the work is done for the state and the contract is $100,000 or less, no payment and performance bond is required (F.S. 255.05(1)(d)).
• For a county, city, political subdivision, or public authority, the awarding official may exempt a contract that is $200,000 or less.
• The Secretary of Management Services may delegate to state agencies the authority to exempt contracts more than $100,000 but less than $200,000.

Private owners may still require bonds on any size job. Chapter 713 payment bonds (F.S. 713.23) are a separate private-work device tested in the lien-law chapter. Rule 61G4-15.003 does not impose a statutory HVAC “license bond” amount. Do not invent one on the exam. General contractors and building contractors have higher CILB liability minimums ($300,000 / $50,000) than air-conditioning contractors; do not borrow those figures for HVAC.

AIA A201-2017 allocates bonded-work duties between owner and contractor in the general conditions; AIA A401-2017 is the subcontract form a bonded prime will push onto an HVAC subcontractor, often requiring the sub to furnish its own bonds or to name the prime and owner as obligees. Read those documents as operations documents, not as literature.

Lease versus purchase of location and fixed assets

Leasing a shop, warehouse, or vehicle preserves cash and working capital — the same working capital the surety scores. Rent is generally a deductible overhead expense. Disadvantages: no equity, landlord use restrictions (refrigerant storage, after-hours emergency dispatch, truck parking), and rent that resets after a hurricane when every contractor on the Gulf Coast is looking for warehouse space.

Purchasing builds equity, allows depreciation of the building and of tools and trucks, and gives control of hours and yard layout. Disadvantages: a large down payment, property tax, roof and mechanical maintenance on your own building, flood and wind insurance in Florida, and location lock-in if the market shifts from new construction to service.

Equipment follows the same logic. A recovery machine used every day is a candidate to buy. A 70-foot boom used four times a year is a candidate to rent. The cash-flow statement in the business plan must show the payment, whether it is rent or a note. Buying a box truck on a five-year note to “save rent” is a bad trade if it drops working capital below the surety’s unpublished (to you) comfort line and you then cannot bid the school job that required the truck.

Advantages and disadvantages of business location

Zoning, local business tax receipts, and whether the address on the CILB file matches the Sunbiz principal address are exam-level details. A surety that cannot find your shop will not extend a bond line. Chapter 455 still expects the licensed professional to have a traceable place of practice; a virtual mailbox is not a sheet-metal shop.

Florida HVAC scenario

Tampa Bay Comfort, LLC is Class A certified and qualified by one primary QA. The firm wants school-board mechanical work. The invitation to bid, using AIA A701-2018, requires a bid bond and, if awarded, a F.S. 255.05 performance and payment bond in the amount of the contract. The company’s CILB file shows $100,000 public liability and $25,000 property damage. The school board specifies $1 million CGL. The surety’s underwriter asks for an interim balance sheet, a work-in-progress schedule, and evidence the QA — not a silent investor — still has final approval authority on contracts and checks (F.S. 489.119(2)(b)). The CPA produces job-cost and cash-flow statements. The attorney reviews A201 indemnification and the 255.05 bond form. The shop is a leased flex bay in an industrial park with condenser storage — a location that helps capacity (space, zoning, after-hours dispatch) more than it helps walk-in retail, which is the right tradeoff for public work.

The company does not “save money” by staying at CILB-minimum insurance. Without commercial limits there is no bond, and without the bond there is no school job. If the contract with the state is $100,000 or less, 255.05(1)(d) would not require a public payment and performance bond — but the invitation to bid can still demand one, and the surety will still underwrite character, capacity, and capital before issuing it.