How to Start a Business in California
In this post, we're going to cover what you need to do to start a business in California.
1. Choose a name for your business
If you plan to establish an LLC or a corporation, you'll want to check that your name is distinguishable from other names of existing businesses that have already filed with the California Secretary of State.
You can check for name availability through a business entity name search, and can then reserve an available name for 60 days.
If your business is a sole proprietorship or partnership that uses a name different from the legal name of the business owner, you'll need to file a Fictitious Business Name Statement in the country clerk's office for your county.
Finally, if you plan to conduct business online, you'll want to register your business name as a domain name.
2. Choose the right type of business entity
There are 4 types of entities to choose from:
Sole proprietorship - In California, you don't need to file any organizational documents with the state.
Partnership - To create a general partnership, you also don't need to file any organizational documents with the state. This being said, all partnerships should have a written partnership agreement in place. For a limited liability partnership, you'll need to file a Registration with the California Secretary of State
LLC - These require the filing of Articles of Organization with the California Secretary of State. You'll also need to appoint an individual agent or corporate agent in California. While not required by law, it's also good to have an Operating Agreement to establish how your LLC will operate.
Corporation - Corporations require Articles of Incorporation, and you will need to appoint an individual agent or corporate agent. While not legally required, you should consider preparing bylaws to stablish your corporation's operating rules.
3. Register your business with the California Secretary of State
Once you've chosen the entity that's right for you, you'll need to register your business with the state.
This applies to limited liability partnerships, LLCs and Corporations.
4. Get your EIN Number (Federal Tax ID Number)
An Employer Identification Number is issued for the purpose of tax administration.
You can apply for an EIN from the IRS by submitting a Form SS-4. This can be done online, by phone, by mail, or by fax.
Online filing is the fastest and simplest method available. You must complete the application in one session, so make sure you have the information you need before getting started.
5. Open a business bank account
A business account is important to ensure you stay legally compliant and protected. Once you've completed your necessary filings and have selected a bank, opening a business bank account is easy.
You should open a business bank account as soon as you start accepting or spending money on behalf of your business. This will ensure you stay compliant and protected.
If you plan to accept and process payments online, you will also want to setup a payment processor with a merchant service provider. This can be through your bank, or you can shop around for lower rates with other providers.
6. Get any necessary business licenses or permits
Doing business in California might mean that you need to get a business license, permit, or certificate to operate.
Additional licenses might be required depending on the work you do. California varies by occupation and the location of your business, but you will likely need to get a business operating license from your city or county.
Check with your city and county government for where your business is located to determine their specific requirements.
7. Register for taxes
California Department of Tax and Fee Administration offers many online services to make registering for taxes easy.
The first step is signing up to begin the enrollment process. Once this is done, you can then file or view a return, make payments, update information, file appeals, request relief or an extension, and manage multiple locations as needed.
