Exam Cheat Sheet · Quick Reference
South Carolina Business Management and Law for Residential Builders
South Carolina · PSI Services Contractor
Verified, not estimated. Every figure below is drawn from the official exam structure we maintain — question counts, passing standard and topic weighting. Practice questions are grounded in the source law with statute citations. We omit any figure we can't verify rather than guess at it.
Total questions
50
Passing score
68%
Exam time
120 min
Administered by
PSI Services Contractor
Format
Reference materials allowed
South Carolina State Portion 50 questions
Business Management
2 Q · 4%
Business entity types and their characteristics (sole proprietorship, partnership, LLC, C corp, S corp)Liability exposure by business structureTaxation differences across business entity typesFormation and registration requirements with South Carolina Secretary of StateAdvantages and disadvantages of each business structureJoint ventures and their purpose in constructionBusiness naming requirements and name reservation in South CarolinaFinancial management, accounting methods, and bookkeeping fundamentals
Licensing Laws and Rules
2 Q · 4%
Purpose and scope of residential contractor licensing in South CarolinaSC Residential Builders Commission composition, appointment, and governanceLicense and registration requirements by contractor type (residential builder, specialty contractor, home inspector)Licensing application process, examination requirements, fees, and renewal schedulesSurety bond requirements by license/registration type and project dollar thresholdsDisciplinary actions, penalties, and grounds for license revocation or suspensionComplaint process against licensed and unlicensed contractorsNotice and Opportunity to Cure Construction Dwelling Defects Act requirements and procedures
Estimating and Bidding
8 Q · 16%
Quantity take-off method for estimating materials and laborDetermining and calculating labor costs including labor burdenOverhead calculation and markup for profit marginBid documents components and submission requirementsEthics in bidding including bid shopping, peddling, and riggingEstimating framework phases and task listingAlternative estimating methods including square-foot and unit-priceJob cost recording system and estimating pitfalls
Contracts and Agreements
7 Q · 14%
Four required elements of a binding contract (offer, acceptance, consideration, competent parties, legal purpose)Contract price types and payment terms (lump-sum, unit-price, cost-plus, progress payments, retainage, final payment)Breach of contract types, liquidated damages, and statute of limitationsTypes of construction contracting methods (single prime, design/build, construction management, turnkey, fast-track, multiple prime)Change orders and contract modifications (requirements, addenda vs. modifications, claims resolution)Alternative dispute resolution methods (negotiation, mediation, collaborative law, arbitration)Risk-limiting contract provisions (force majeure, indemnification, warranties, delay extensions, differing site conditions)Oral vs. written agreements and legal interpretation of contract language
Project Management
7 Q · 14%
Scheduling process: sequence of tasks, activity duration, contingency time, and float timeScheduling methods: calendar, bar chart, and critical path method (CPM)Project manager responsibilities and qualitiesProject supervisory team roles: superintendent, foreman, materials expediter, architect/owner's representativeProject life cycle phases: pre-construction, construction, and job closeoutTracking project progress: daily reports and status reportsBudget and cost controls: materials management, purchase orders, and cost overrunsValue engineering and quality assurance programs
Insurance and Bonding
5 Q · 10%
Types of insurance coverage for residential builders (property, liability, CGL, umbrella, automobile, workers' compensation)Surety bond types and their purposes (bid, performance, payment, maintenance, completion, fidelity, lien bonds)SC statutory bond requirements for residential builder and specialty contractor licensingMiller Act and Construction Industry Payment Protection Act bonding requirements for federal projectsSC Consolidated Procurement Code bond requirements for state public construction projectsQualifying for a surety bond and bond pricing/premiumsInsurance coverage requirements for subcontractorsCoverage gaps, overlaps, and risk management benefits of proper insurance and bonding
Safety Recordkeeping and Reporting
1 Q · 2%
OSHA Forms 300, 300A, and 301 — purpose and content of each formEmployer thresholds and exemptions for OSHA recordkeeping requirementsRecordable vs. non-recordable injuries and illnesses — general recording criteriaFirst aid definitions and treatments excluded from recordkeepingOSHA injury decision tree — step-by-step determination processRetention periods for OSHA injury/illness records, exposure records, and medical recordsReporting fatalities and multiple hospitalizations — timeframes and proceduresForm 300A annual summary — posting requirements and deadlines
Labor Laws and Employment Regulations
3 Q · 6%
Fair Labor Standards Act (FLSA) minimum wage and overtime requirementsNew hire reporting requirements in South CarolinaHiring minors for construction work: restrictions and prohibited tasksEmployee documentation requirements (Form I-9, W-4, employment application)Americans with Disabilities Act (ADA) employer obligationsSouth Carolina payment of wage laws and recordkeeping requirementsKey federal labor laws (FMLA, Title VII, ADEA, USERRA, and others)Workers' compensation and unemployment compensation requirements
Financial Management
4 Q · 8%
Bookkeeping practices and the accounting cycleFinancial statements: balance sheet, income statement, and statement of cash flowsFinancial ratios and analysis: liquidity, debt, profitability, and activity ratiosCash management: accounts receivable, progress payments, and cash flowContract accounting methods: completed contract, percentage of completion, and cost comparisonMethods of accounting: cash vs. accrualEquipment records, depreciation methods: straight-line and accelerated (MACRS)Payroll accounting: gross pay, deductions, net pay, and payroll journal
Tax Laws
5 Q · 10%
Employer Identification Number (EIN) requirements and application methodsFederal employment taxes: FICA, FUTA, and income tax withholdingDeposit schedules and requirements for federal payroll taxesPenalties for late or incorrect tax depositsForm 1099-MISC reporting for independent contractor paymentsSouth Carolina state business income tax by entity typeSouth Carolina sales and use tax obligationsSouth Carolina state unemployment tax and withholding requirements
Liens
3 Q · 6%
Definition and purpose of mechanics' liens in South CarolinaParties entitled to file a mechanics' lienNotice of Project Commencement requirements and filing proceduresNotice to owner by subcontractors and suppliers without direct owner contractDissolution of lien for failure to serve statement within 90-day deadlineTime limit for filing lien foreclosure petition (six-month rule)Collecting on a lien: lawsuit contents, monetary awards, and proration among multiple lienorsBonding around a lien, Notice of Non-Responsibility, and sale of land to satisfy a lien
Environmental Laws and Regulations
3 Q · 6%
Federal and South Carolina environmental laws applicable to construction (Clean Water Act, Clean Air Act, Endangered Species Act, NEPA, NHPA)U.S. EPA and SC DHEC roles, permits, and compliance requirementsAsbestos identification, inspection, notification, and project classification requirementsClean Water Act NPDES stormwater permits and construction site runoff thresholdsSedimentation and erosion control measures on construction sitesHazardous and non-hazardous solid waste identification, notification, and disposal requirementsLead exposure regulations, Lead PRE rule, certified renovator requirements, and notification obligationsHazardous substances and underground storage tank (UST) identification and notification procedures
Key Distinctions
Cash MethodvsAccrual Method
Cash method records income when received and expenses when paid, while accrual method recognizes income when earned and expenses when incurred regardless of cash flow.
NASCLA Contractors Guide — SC Residential Builders, 8th Edition, Page 14-6Bid PeddlingvsBid Shopping
Bid peddling is initiated by a subcontractor approaching the GC after award to offer a lower price, while bid shopping is initiated by the GC soliciting lower prices from other subcontractors.
NASCLA Contractors Guide, Chapter 7 (Bidding and Estimating)Named Peril Builders' Risk InsurancevsAll-Risk Builders' Risk Insurance
Named peril policies cover only the specific perils listed, while all-risk policies cover all perils not specifically excluded.
Chapter 4 — Named Peril Builders' Risk Insurance sectionCompletion BondvsPerformance Bond
A completion bond assures financial backers the project will be completed on time, while a performance bond guarantees the contractor will complete the contract within its terms for the owner's benefit.
Chapter 4 — Types of Bonds sectionArbitrationvsMediation
Arbitration uses a third-party who renders a legally binding decision, while mediation involves negotiation toward a settlement without a binding ruling.
NASCLA Contractors Guide, Chapter 8 — Alternative Dispute ResolutionLump-Sum ContractvsCost-Plus Contract
A lump-sum contract sets a fixed total price with the contractor bearing all cost risk, while a cost-plus contract reimburses actual labor and material costs plus a markup for overhead and profit.
NASCLA Contractors Guide, Chapter 8 — Lump-Sum ContractMaterial BreachvsImmaterial (Partial) Breach
A material breach is a serious violation that may void the contract and lead to litigation, while an immaterial breach is less serious and typically only entitles the injured party to sue for damages without terminating the contract.
Chapter 8 — Breach of ContractSquare-Foot MethodvsQuantity Take-Off Method
The square-foot method multiplies square footage by a unit cost for a quick estimate but ignores project-specific details, while the quantity take-off method individually estimates every unit of material and labor for greater accuracy.
NASCLA Contractors Guide, Chapter 7 (Bidding and Estimating)C CorporationvsLLC
A C Corporation is subject to double taxation (profits taxed at corporate level and dividends taxed to shareholders), while an LLC avoids double taxation through pass-through taxation and ownership is expressed as memberships rather than shares.
NASCLA Contractors Guide — SC Residential Builders, 8th Edition, Page 2-3Erosion Control MeasurevsSediment Control Measure
Erosion control measures (e.g., mulch and vegetation) permanently stabilize site soil to prevent erosion at the source, while sediment control measures (e.g., silt fences, hay bales) are placed at the down-gradient side to capture already-disturbed soil.
NASCLA Contractors Guide, Chapter 12 — Sedimentation and Erosion Control Measures sectionJoint VenturevsPartnership
A joint venture is a project-specific arrangement between two or more companies that dissolves after the project, while a partnership is an ongoing business relationship.
NASCLA Contractors Guide — SC Residential Builders, 8th Edition, Page 2-6Critical Path Method (CPM)vsBar Chart (Calendar) Scheduling
CPM graphically illustrates interdependent relationships between construction tasks, while bar chart scheduling does not show these interdependencies.
NASCLA Contractors Guide, Chapter 9 — Critical Path Method sectionKey Terms
SC Residential Builders Commission Composition SC Residential Home Builders Licensing Law, Section 40-59-10(A)
Per Section 40-59-10(A), the Commission is composed of eight persons appointed by the Governor with the advice and consent of the Senate.
SC Residential Specialty Contractor Classification Limit SC Residential Builders Commission Regulations and Section 40-59-240(A)
Per Section 40-59-240(A), a specialty contractor registration may not cover more than three classifications; those seeking more must obtain a full residential builder's license.
SC Notice and Opportunity to Cure — Pre-Suit Notice Requirement SC Residential Home Builders Licensing Law, Section 40-59-840(A)
Per Section 40-59-840(A), a homeowner must serve a written notice of claim on the contractor at least 90 days before filing a court action for a construction defect.
SC Notice and Opportunity to Cure — Contractor Response Period SC Residential Home Builders Licensing Law, Section 40-59-850(A)
Per Section 40-59-850(A), a contractor has 30 days from service of the notice of claim to inspect, offer to remedy, offer to settle, or deny the claim; failure to respond is deemed a denial.
SC Penalty for Unlicensed Residential Building SC Residential Home Builders Licensing Law, Section 40-59-30(A)
Per Section 40-59-30(A), contracting without a license is a misdemeanor punishable by a fine of $500 to $10,000 or imprisonment of not less than 30 days, or both.
SC Specialty Contractor Surety Bond Requirement SC Residential Builders Commission Regulations, Section 106-2
Per Regulation 106-2, when a licensed residential specialty contractor's (electrician, HVAC, or plumber) job cost exceeds $5,000, a surety bond of not less than $10,000 must be obtained.
SC Corporate Income Tax Rate NASCLA Contractors Guide — SC Residential Builders, 8th Edition, Page 15-7
Per NASCLA Contractors Guide Page 15-7, South Carolina taxes C corporations at a rate of 5 percent, using federal taxable income as the base.
SC Initial Corporation License Tax NASCLA Contractors Guide — SC Residential Builders, 8th Edition, Page 15-7
Per NASCLA Contractors Guide Page 15-7, the initial corporation license tax is $25, paid at the time of incorporation or qualification with the SC Secretary of State.
SC LLC Tax Treatment NASCLA Contractors Guide — SC Residential Builders, 8th Edition, Page 15-7
Per NASCLA Contractors Guide Page 15-7, South Carolina treats an LLC for income tax purposes the same as its federal tax treatment (partnership or corporate, depending on federal classification).
Working Capital NASCLA Contractors Guide — SC Residential Builders, 8th Edition, Page 14-3
Current Assets minus Current Liabilities; measures a company's liquidity and may be reviewed by licensing agencies to determine license limitations.
Labor Burden NASCLA Contractors Guide, Chapter 7 (Bidding and Estimating)
The additional costs beyond base wages (Medicare/Social Security, unemployment insurance, workers' compensation, liability insurance, and benefits) that add approximately 30 percent to base labor cost.
Liquidated Damages NASCLA Contractors Guide, Chapter 8 — Breach of Contract
A predetermined per-day monetary assessment specified in the contract for late completion; calculated as the daily rate multiplied by the number of days late, and an owner who claims liquidated damages cannot also sue for actual damages.
Addendum NASCLA Contractors Guide, Chapter 7 (Bidding and Estimating)
A document issued to communicate changes to a bid package before the submission deadline; it becomes part of the bid documents and ultimately part of the contract.
Contingency NASCLA Contractors Guide, Chapter 7 (Bidding and Estimating) — Add Contingencies section
A percentage added to a construction estimate to protect the contractor against unanticipated problems or conditions; generally based on the risk level of the project.
MasterFormat NASCLA Contractors Guide, Chapter 7 (Bidding and Estimating) — Estimating Checklist section
A classification system published by the Construction Specifications Institute that groups numbers and job tasks by major construction activities; used as a checklist when building an estimating framework.
Bid Rigging NASCLA Contractors Guide, Chapter 7 (Bidding and Estimating) — Ethics in Bidding section
A form of collusion where contractors coordinate their bids to fix the award outcome of a project; forbidden by some state statutes on public projects.
Formulas to Know
Working Capital
Current Assets - Current Liabilities = Working CapitalLabor Cost per Task
Required Labor Hours per Task × Labor Rate = Labor Cost per TaskUnit Price Total Cost
Unit Price × Total Units (e.g., sq ft) = Total Task CostTotal Bid Price (when overhead % is known)
Direct Costs ÷ (1 - Total Overhead %) = Total Bid PriceLiquidated Damages
Per-Day Rate × Number of Days Late = Total Liquidated DamagesLabor Burden Total
Base Labor Cost × 1.30 ≈ Total Labor Cost (burden adds ~30%)Square-Foot Estimate
Square Footage × Cost per Square Foot = Estimated Project Cost