Free Business Management and Law for Commercial Contractors Practice Questions

Sample Practice Questions

Try these 10 sample questions from the Business Management and Law for Commercial Contractors practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

1. 1A corporation wants an employee to serve as its primary qualifying party for South Carolina contractor work. What involvement must that employee have in the corporation?

   1. A. Serve only as the corporation's registered agent
   2. B. Work solely as an outside examination consultant
   3. C. Serve in management and be actively involved in management, supervision, and operations
   4. D. Own every outstanding share of the corporation

   Answer: C

   Explanation: S.C. Code § 40-11-230(B)(3) requires documentation that the person "serve in a management capacity for the applicant and are actively involved in management, supervision, and operations for the work undertaken by the applicant." The active management role, not registered-agent status or complete ownership, controls.

   Reference: Code of Laws - Title 40 - Chapter 11- - PROFESSIONS AND OCCUPATIONS — S.C. Code § 40-11-230(B)(3)

2. 2A firm offers to perform general contracting work with a total construction cost of $10,500 in South Carolina. What does the statutory cost threshold require?

   1. A. No license until the cost exceeds $25,000
   2. B. A license because the cost is greater than $10,000
   3. C. Registration only because the cost is below $15,000
   4. D. No credential unless the work is mechanical

   Answer: B

   Explanation: S.C. Code § 40-11-30 states that no person may contract without a license when "the total cost of construction is greater than ten thousand dollars for general contracting." The $10,500 offer crosses that threshold.

   Reference: Code of Laws - Title 40 - Chapter 11- - PROFESSIONS AND OCCUPATIONS — S.C. Code § 40-11-30

3. 3A contractor has fully performed the work required by its construction contract. What right follows under South Carolina's payment statute?

   1. A. Payment only after every subcontractor signs a release
   2. B. Payment only after the owner's lender disburses
   3. C. Payment from the party with whom the contractor contracted
   4. D. Payment only after the warranty period expires

   Answer: C

   Explanation: S.C. Code § 29-6-20 provides: "Performance by a contractor or subcontractor in accordance with the provisions of his contract entitles him to payment from the party with whom he contracts." Contract-compliant performance creates the payment entitlement.

   Reference: Code of Laws - Title 29 - Chapter 6- - MORTGAGES AND OTHER LIENS — S.C. Code § 29-6-20

4. 4A construction manager coordinates several prime contractors for a fee. Who retains control of each contractor's individual operations and manner of construction?

   1. A. The construction manager exclusively
   2. B. The design professional exclusively
   3. C. The prime contractors and design professionals
   4. D. The building official

   Answer: C

   Explanation: The § 40-11-20(6) definition has the construction manager supervise and coordinate "while allowing the design professionals and contractors to control individual operations and the manner of design and construction." Coordination does not transfer that operational control.

   Reference: Code of Laws - Title 40 - Chapter 11- - PROFESSIONS AND OCCUPATIONS — S.C. Code § 40-11-20(6)

5. 5Above what contract amount does South Carolina require bid security for competitive sealed bidding on a design-bid-build construction procurement?

   1. A. $50,000
   2. B. $100,000
   3. C. $200,000
   4. D. $500,000

   Answer: B

   Explanation: S.C. Code § 11-35-3030(1)(a) provides: "Bid security is required for all competitive sealed bidding for construction contracts in a design-bid-build procurement in excess of one hundred thousand dollars." The threshold is therefore contracts above $100,000.

   Reference: Code of Laws - Title 11 - Chapter 35- - PUBLIC FINANCE — S.C. Code § 11-35-3030(1)(a)

6. 6When hiring a construction employee, which wage information must a South Carolina employer communicate?

   1. A. Only the annual tax rate
   2. B. Normal hours and wages, payment time and place, and deductions
   3. C. Only the employee's overtime preference
   4. D. Only the project's estimated completion date

   Answer: B

   Explanation: S.C. Code § 41-10-30(A) requires notice of "the normal hours and wages agreed upon, the time and place of payment, and the deductions which will be made from the wages." These terms must be communicated at hiring.

   Reference: Code of Laws - Title 41 - Chapter 10- - LABOR AND EMPLOYMENT — S.C. Code § 41-10-30(A)

7. 7How does South Carolina contractor licensing law calculate working capital?

   1. A. Total assets minus total liabilities
   2. B. Current assets minus current liabilities
   3. C. Annual revenue minus direct labor
   4. D. Cash plus accounts receivable only

   Answer: B

   Explanation: S.C. Code § 40-11-20(28) states: "Working capital means the capital of a business calculated as the current assets minus the current liabilities." It is not net worth or annual profit.

   Reference: Code of Laws - Title 40 - Chapter 11- - PROFESSIONS AND OCCUPATIONS — S.C. Code § 40-11-20(28)

8. 8A South Carolina contractor has employees performing services in the state and is required to file a federal withholding return. What is the contractor's South Carolina withholding status?

   1. A. It is a withholding agent and must withhold South Carolina income tax
   2. B. It has no withholding duty until it employs 25 people
   3. C. It withholds only if each employee requests it
   4. D. It pays employee income tax from company funds without withholding

   Answer: A

   Explanation: The South Carolina Department of Revenue states: "Every employer that has an employee earning wages in South Carolina and who is required to file a Withholding return with the IRS is also a withholding agent in South Carolina." The contractor therefore must withhold state income tax.

   Reference: Withholding | SCDOR — South Carolina Withholding Tax Information Guide, Who Must Withhold

9. 9What licensing information must a South Carolina contractor include when recording a mechanic's lien?

   1. A. The contractor's license or registration number
   2. B. The project owner's driver's-license number
   3. C. The surety's tax return number
   4. D. The architect's professional seal number only

   Answer: A

   Explanation: S.C. Code § 29-5-15(A) states: "the contractor must record his contractor license number or registration number on the lien document when the lien document is filed."

   Reference: Code of Laws - Title 29 - Chapter 5- - MORTGAGES AND OTHER LIENS — S.C. Code § 29-5-15(A)

10. 10Which South Carolina construction activity generally requires coverage under the 2026 Construction General Permit?

    1. A. Only projects disturbing at least 10 acres
    2. B. Land disturbance of at least one acre, or less than one acre when part of a larger common plan that ultimately disturbs at least one acre
    3. C. Any indoor renovation with no land disturbance
    4. D. Only federal highway work

    Answer: B

    Explanation: Section 1.3.1.A covers "land disturbing activities of one acre or more" and projects under one acre when "part of a larger common plan of development or sale (LCP) that comprise of at least one acre of land disturbance." The described activity requires coverage.

    Reference: Scdes 2026 Cgp — 2026 Construction General Permit § 1.3.1.A