Starting a business is a major endeavor, and each state has its own laws and regulations on what a person needs to do to get it up and running. In the state of California, there are several steps a person must take to get a business license and some things to keep in mind when setting out to start the business itself. Here are the steps involved in registering a business license in California, as well as some helpful ideas to make things easier.
Develop a business plan
Before you set out to register for a business license in California, you should have a complete business plan lined up to ensure that the business endeavor is a successful one. A business plan is a blueprint for everything that will help a company run successfully. Starting a business without one is a sure sign that there could be unseen speed bumps down the line. Luckily, there are plenty of places to find help when setting up a business plan, including the Small Business Association, which has a nice guide to both starting and managing a business plan.
Finding a location for the business
It is very important to understand the zoning laws of the various communities in California before starting to register for a business license. You must ensure the city allows a specific business in the location you have secured. This is also important for people with a home business, because some areas that are zoned as residential neighborhoods may disallow home businesses in those areas. This information can usually be obtained by calling the local planning offices in the city your business is set to operate.
Choose a business structure
The next step is to determine what type of business license is needed. There are six types of business entities:
- Corporation – A corporation is a legal entity that exists separate from the owners and often has stockholders.
- Limited Liability Corporation (LLC) – An LLC provides limited liability for owners and is very popular for small businesses.
- Limited Partnership – A limited partnership has a majority owner and a limited partner, with the general partner having all the liability.
- General Partnership – A general partnership is one in which the owners are separately liable for the business.
- Limited Liability Partnership (LLP) – An LLP has specific businesses that fall under this structure.
- Sole Proprietorship – A sole proprietorship has one owner with all responsibilities for liabilities of the company.
More information about which business structure is right for you can be found at IRS.gov.
File tax and employer identification documents
The next step is to file tax information. There are several agencies in California that deal with different tax structures. Here is a look at who to contact for different tax obligations:
- The Franchise Tax Board deals with both corporate and personal income and franchise taxes.
- The State Board of Equalization deals with both seller’s permits and property tax assessment, and the collection of sales tax for things like tobacco, alcohol, fuel and more.
- The Employment Development Department deals with franchises, security regulations, financial and investment services, commercial and consumer financial lending, off-exchange commodities, and residential mortgage lending.
- The California Tax Service Center will help anyone with all forms of taxes, including income, payroll, sales and use taxes.
Of course, the IRS is also important to contact when it comes to all employer federal ID numbers, payroll and income taxes, and all federal withholding. This is also where the Employer ID Numbers (EINs) and Tax Information for Retirement Plans are dealt with.
Obtain a license or permit
The final step is to get the license or permit to legally operate the business in California. First, determine if the business needs a permit to operate by heading over to the CalGOLD website and searching for the type of business and city or county of operation to determine which, if any, permit is needed. Next, head to the California Department of Consumer Affairs website to fill out and obtain the license itself.
For more tips and inspiration for small business owners, visit Small Business Pulse Los Angeles.