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WEST VIRGINIA BUSINESS & LAW CONTRACTOR
TEST ACTUAL QUESTIONS AND ANSWERS LATEST
UPDATE THIS YEAR
WEST VIRGINIA BUSINESS & LAW CONTRACTOR EXAM
Question 1
A contractor who has been operating as a sole proprietorship for 10 years is considering converting to a
Limited Liability Company (LLC) in West Virginia. What is the primary advantage that an LLC would
provide that a sole proprietorship does not?
A) The ability to be taxed as a C-corporation only
B) Pass-through taxation combined with limited personal liability for business debts
C) Exemption from obtaining a Business Registration Tax Number (BRTN)
D) The right to perform work without a contractor license if the project value is less than $5,000
Answer: B
Rationale: An LLC offers pass-through taxation, meaning profits are taxed only at the member level
(avoiding double taxation), while also shielding owners from personal liability for business debts. Sole
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proprietors have unlimited personal liability. The other options are incorrect: an LLC can elect corporate
taxation but is not required to; a BRTN is still required; and the $1,000 licensing threshold applies
regardless of entity type.
Question 2
A homeowner in Charleston hires a contractor to build a new deck at a total contract price of $2,500.
The contractor does not hold a West Virginia contractor license. Under the West Virginia Contractor
Licensing Act, which statement is correct?
A) The contractor may legally perform the work because the amount is less than $5,000.
B) The contractor is required to hold a license because the project value is $1,000 or more.
C) The contractor may obtain a license after the work is completed to avoid penalties.
D) Only the owner is subject to penalties for hiring an unlicensed contractor.
Answer: B
Rationale: WV Code requires a contractor license for any construction work valued at $1,000 or more
(including labor and materials). The $2,500 project clearly exceeds the $1,000 threshold, and the
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contractor must be licensed before performing the work. Licensing cannot be obtained retroactively,
and the contractor is subject to penalties, not the owner.
Question 3
A contractor is preparing a bid for a public school construction project in Kanawha County. Which
document must be included with the bid to ensure it is not disqualified?
A) A certificate of completion of the OSHA 10-hour training for all future employees
B) A wage bond in the amount of four weeks of payroll
C) The contractor’s West Virginia license number on the bid envelope and on the bid form
D) A notarized statement that the contractor has never been sued
Answer: C
Rationale: WV Code §21-11-11 requires that any prospective vendor (contractor) include the
contractor’s license number on its bid. Failure to include the license number results in automatic
disqualification of the bid. The other items may be required at other stages but are not the immediate
disqualification criterion.
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Question 4
An out-of-state contractor who has never worked in West Virginia wins a $150,000 contract to build a
commercial warehouse in Morgantown. The contractor has not been actively engaged in construction in
West Virginia for the past five years. What bond must the contractor obtain before commencing work?
A) A performance bond equal to 100% of the contract price
B) A wage bond covering four weeks of full-production payroll
C) A non-resident contractor sales and use tax bond of $10,000
D) Both a wage bond and a non-resident contractor bond
Answer: D
Rationale: A contractor who has not been actively engaged in construction in West Virginia for the past
five consecutive years must obtain a wage bond covering four weeks of full-production payroll.
Additionally, non-resident contractors must post a surety bond ranging from $1,000 to $50,000 for sales
and use tax purposes, based on the contract’s gross value and tax compliance history. Both bonds are
required in this scenario.
WEST VIRGINIA BUSINESS & LAW CONTRACTOR
TEST ACTUAL QUESTIONS AND ANSWERS LATEST
UPDATE THIS YEAR
WEST VIRGINIA BUSINESS & LAW CONTRACTOR EXAM
Question 1
A contractor who has been operating as a sole proprietorship for 10 years is considering converting to a
Limited Liability Company (LLC) in West Virginia. What is the primary advantage that an LLC would
provide that a sole proprietorship does not?
A) The ability to be taxed as a C-corporation only
B) Pass-through taxation combined with limited personal liability for business debts
C) Exemption from obtaining a Business Registration Tax Number (BRTN)
D) The right to perform work without a contractor license if the project value is less than $5,000
Answer: B
Rationale: An LLC offers pass-through taxation, meaning profits are taxed only at the member level
(avoiding double taxation), while also shielding owners from personal liability for business debts. Sole
, Page 2 of 238
proprietors have unlimited personal liability. The other options are incorrect: an LLC can elect corporate
taxation but is not required to; a BRTN is still required; and the $1,000 licensing threshold applies
regardless of entity type.
Question 2
A homeowner in Charleston hires a contractor to build a new deck at a total contract price of $2,500.
The contractor does not hold a West Virginia contractor license. Under the West Virginia Contractor
Licensing Act, which statement is correct?
A) The contractor may legally perform the work because the amount is less than $5,000.
B) The contractor is required to hold a license because the project value is $1,000 or more.
C) The contractor may obtain a license after the work is completed to avoid penalties.
D) Only the owner is subject to penalties for hiring an unlicensed contractor.
Answer: B
Rationale: WV Code requires a contractor license for any construction work valued at $1,000 or more
(including labor and materials). The $2,500 project clearly exceeds the $1,000 threshold, and the
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contractor must be licensed before performing the work. Licensing cannot be obtained retroactively,
and the contractor is subject to penalties, not the owner.
Question 3
A contractor is preparing a bid for a public school construction project in Kanawha County. Which
document must be included with the bid to ensure it is not disqualified?
A) A certificate of completion of the OSHA 10-hour training for all future employees
B) A wage bond in the amount of four weeks of payroll
C) The contractor’s West Virginia license number on the bid envelope and on the bid form
D) A notarized statement that the contractor has never been sued
Answer: C
Rationale: WV Code §21-11-11 requires that any prospective vendor (contractor) include the
contractor’s license number on its bid. Failure to include the license number results in automatic
disqualification of the bid. The other items may be required at other stages but are not the immediate
disqualification criterion.
, Page 4 of 238
Question 4
An out-of-state contractor who has never worked in West Virginia wins a $150,000 contract to build a
commercial warehouse in Morgantown. The contractor has not been actively engaged in construction in
West Virginia for the past five years. What bond must the contractor obtain before commencing work?
A) A performance bond equal to 100% of the contract price
B) A wage bond covering four weeks of full-production payroll
C) A non-resident contractor sales and use tax bond of $10,000
D) Both a wage bond and a non-resident contractor bond
Answer: D
Rationale: A contractor who has not been actively engaged in construction in West Virginia for the past
five consecutive years must obtain a wage bond covering four weeks of full-production payroll.
Additionally, non-resident contractors must post a surety bond ranging from $1,000 to $50,000 for sales
and use tax purposes, based on the contract’s gross value and tax compliance history. Both bonds are
required in this scenario.
