Mississippi - Law and Business Management Exam

Key Concepts

When a License Is Required

Commercial Contractors (§ 31-3-1): Any prime contractor, subcontractor, or sub-subcontractor performing erection, building, construction, reconstruction, repair, maintenance, or related work on any public or private project exceeding $50,000 per job must hold a commercial contractor's license (Certificate of Responsibility).

Residential Contractors (§§ 73-59-1 – 73-59-3): - Residential Builder: New construction not more than 3 floors in height, cost exceeds $50,000 - Residential Remodeler: Improvements to an existing residence exceeding $10,000 - Residential Subcontractors: Electrical, plumbing, mechanical, and HVAC subs are required to be licensed regardless of dollar amount - Residential Solar Contractor: Any person installing, modifying, maintaining, or repairing thermal/photovoltaic solar energy systems

Exemptions

Key Concepts

Bid Documents A competitive bid package includes: invitation to bid, bid instructions, bid forms (bid sheet, bid schedule, bidder's questionnaire, copy of contract), and supplements (property survey, soil analysis). Submitting incorrect or incomplete information renders a bidder unresponsive. An addendum is issued when changes are made before bid due date — it becomes part of the bid documents and ultimately part of the contract. Review all addenda; they may change your pricing or your decision to bid entirely.

Legal Requirement: It is unlawful to submit a bid, enter into a contract, or engage in contracting without a certificate of responsibility. (MCA 31-3-21)

Key Concepts

Who Can File a Lien (§ 85-7-403) - Contractors, subcontractors, and materialmen furnishing materials for real estate improvement - Registered architects and professional engineers furnishing plans, drawings, designs, or engineering services - Registered land surveyors performing surveying services - Contractors must be properly licensed — lien rights are limited to licensed contractors; proof of licensure must be provided upon request - No liens against the State of Mississippi or its municipalities for public works

Filing a Claim of Lien - Must be filed in the office of the clerk of the chancery court in the county where the property is located - Must be filed within 90 days after the claimant's last work, labor, services, or materials provided - The claim of lien must…

Key Concepts

Accounting Methods - Cash method: Revenue and expenses recorded when cash is received or paid. Simpler, but can distort true financial position. - Accrual method: Revenue and expenses recorded when earned or incurred, regardless of cash movement. More accurate for long-term projects.

Contract Accounting Methods - Completed contract method: Revenue and expenses recognized only when the contract is fully complete. Defers tax liability but creates uneven income reporting. - Percentage of completion method: Revenue recognized proportionally as work progresses, based on costs incurred vs. total estimated costs. Required for most long-term construction contracts over a threshold. - Cost comparison method: Tracks actual costs against estimated costs to monitor job profitability.

10% of exam | ~5 questions

Key Concepts

Employer Identification Number (EIN)

• Required for any business with employees, partnerships, corporations, and S-corps. Sole proprietors with no employees may use their SSN, but an EIN is recommended.
• Obtain via IRS Form SS-4 (online at IRS.gov, by mail, fax, or phone). Free to obtain directly from the IRS.

Federal Tax Forms by Business Entity

Key Concepts

Fair Labor Standards Act (FLSA)

• Federal minimum wage applies; Mississippi has no state minimum wage law, so the federal rate controls.
• Overtime required at 1.5x regular rate for hours worked over 40 in a workweek.
• Applies to non-exempt employees; construction workers are generally covered.

Child Labor Laws (Construction-Specific)

• Mississippi follows U.S. Department of Labor guidelines for hiring minors.
• Ages 14–15: Only permitted to perform office, clerical, or sales work in construction — NOT on the jobsite doing construction tasks.
• Ages 16+: May work on construction sites but are prohibited from hazardous tasks (e.g., roofing, excavation, operating power-driven woodworking machines, wrecking/demolition, operating hoisting machines, driving motor vehicles on the job) — unless classified as apprentices as defined…

Key Concepts

Scheduling Methods

• Calendar: Simple date-based scheduling; identifies start/finish dates for tasks.
• Bar Chart (Gantt Chart): Visual timeline showing tasks as horizontal bars; easy to read but doesn't show task dependencies well.
• Critical Path Method (CPM): Network-based scheduling that identifies the longest sequence of dependent tasks (the critical path). Any delay on the critical path delays the entire project. Tasks off the critical path have float time.

Scheduling Process Terms

• Sequence of tasks: Logical order in which activities must occur (dependencies).
• Activity duration: Estimated time to complete each task.
• Float time (slack): Amount of time a non-critical task can be delayed without delaying the project finish. Critical path tasks have zero float.
• Contingency time: Buffer time…

Topic weight: 6 questions, 12% of exam

Key Concepts

Required Elements of a Binding Contract

A valid contract requires all five elements: 1. Offer — a definite proposal to enter into an agreement 2. Acceptance — unqualified agreement to the exact terms of the offer 3. Consideration — something of value exchanged by both parties (money, services, goods) 4. Competent parties — parties must be of legal age, sound mind, and legally authorized to contract 5. Legal purpose — the contract's subject matter must be lawful

A counter-offer rejects the original offer and creates a new one.

Key Concepts

Sole Proprietorship

• Simplest form; no formal registration required to operate (trade name filing may be needed)
• Owner has unlimited personal liability for all business debts
• Business income reported directly on owner's personal tax return (Schedule C)
• No continuity — dissolves upon owner's death or incapacity

General Partnership

• Formed by agreement (written or oral) between two or more persons
• All partners share unlimited personal liability for partnership debts and actions of co-partners
• No state filing required to form, but a partnership agreement is strongly recommended
• Dissolved by death, withdrawal of a partner, or mutual agreement

Key Concepts

Risk Management Fundamentals

Risk assessment requires evaluating two factors: probability of loss occurring AND consequences if loss occurs. A high-probability/low-loss risk is handled differently than a low-probability/high-loss risk. Benefits of good risk management: lower premiums, reduced chance of being sued, improved chance of prevailing in a lawsuit.

Types of Insurance Coverage

• Property Insurance: Covers buildings, equipment, machinery, inventory, computers, leased equipment. Buy specific-risk or broad-based ("all-risk") policies.
• All-Risk Builders' Risk: Covers property under construction — machinery, equipment, materials, supplies, fixtures becoming part of the structure. Does NOT cover major construction defects, poor workmanship, faulty design, or contractor's tools (get separate coverage). Construction must be in progress for coverage to apply.
• Commercial General Liability (CGL): Covers premises/operations, products/completed operations, contractual…

5 questions | 10% of exam weight

Key Concepts

OSHA Recordkeeping (Forms 300, 300A, 301)

• Form 300 – Log of Work-Related Injuries and Illnesses; maintained throughout the year
• Form 300A – Summary of injuries/illnesses; must be posted February 1 – April 30 each year, even if no incidents occurred
• Form 301 – Incident Report; completed within 7 calendar days of a recordable incident
• Employers with 10 or fewer employees in low-hazard industries are generally exempt from routine recordkeeping
• Fatalities must be reported to OSHA within 8 hours; hospitalizations, amputations, or loss of an eye within 24 hours