Obtaining a business license in the state of California is a straightforward affair. This is despite the fact that California is the third largest state in the United States and the eighth largest economy in the entire world. If you are thinking of starting a business, pay attention to the following tips and you will be well on your way to joining the many who own a California business entity:
Determine What Type Of Business You Will Have
Businesses can be structured differently depending on their purpose. The structure determines what forms are completed, what taxes are paid and what liability you may be subject to as an owner. Your business can be a sole proprietorship, a corporation, a limited liability partnership (LLP), a limited liability company (LLC), a general partnership or a limited partnership. A sole proprietorship, for instance, is owned by you alone, and you, not the business is taxed. If your business will have additional owners, a limited liability structure may be suitable. All LLPs and LLCs must be registered with the California Secretary of State. As an owner of a LLC or LLP, you will not be individually liable for the company’s debts and obligations.
Decide On a Business Name
Known as a Fictitious Business Name or a Doing-Business-As name, the business name can be one other than yours. This is only necessary if you do not care to include your personal name in the name of the entity. The best business names are those that are easy to remember and provide a hint as to the services provided. When selecting a business name, keep in mind that your choice may be unavailable because another business has the same name or one very similar to it. Therefore, it is best to have two to three other options. You should also take the time to research the business name database of the county in which you plan to register so that you can pick a name that is available and will not create confusion. In Amador County, for instance, searching the database costs $10 per name.
Complete the Appropriate Forms
Once you have determined your business structure and name, it is time to complete the necessary registration form. You must complete a fictitious business name statement form and submit it to the county clerk of the county in which the business will primarily operate. Each county has a unique form; access to all forms can be found below in the reference section. Keep in mind that you may be charged a filing fee, a fee for any additional owners and optional business names. After registering with county authorities, you must also register your business name with the California Secretary of State.
Apply For Necessary Permits
If your business will sell goods or services to the public, you must register for a seller’s permit. There is no processing fee as long as you are a state resident. If your business will have employees, you must complete additional forms for tax and business insurance purposes. There may be additional permits required depending on the type of business you are starting. The local county administrative office will have additional information on any permits your business needs. Alternatively, you can access CalGOLD, which is an online database that helps business owners determine the permits they need.
Register For Taxes
To operate a business, you must also register with the state and federal authorities for tax purposes. Registering with the federal Internal Revenue Service (IRS) entails the creation of a Federal Employer Identification Number, which can be completed online at the IRS website (irs.gov). With the state of California, you can obtain a tax account from the Board of Equalization (BOE). Tax registration can be completed in person at one of several BOE field offices or online via the BOE website (boe.ca.gov). Keep in mind that a sole proprietorship does not need to register for taxes. LLCs and LLPs must pay annual tax plus any additional taxes needed on the income earned by the business or its owners. Corporations must pay an annual franchise tax. In addition to business taxes, your business will have to pay employment taxes, including payroll tax, social security tax and Medicare tax. If your business has a seller’s permit, it will also have to pay sales tax to the state. The business will not have to provide sales taxes for the sale of certain food products, sales to the federal government, sales of prescription medicines and medical devices, and items paid for with food stamps.