Friday, April 25, 2008

Follow the 5 First Steps When starting a new business in California

Blogs Step 1 through 5 outline the key STEPs and external Resources for the State of California Websites. There are many important decisions to make and many rules and procedures that must be addressed. While there is no single source for all filing requirements, the following Blogs/Step have been developed to assist you in starting your business.

Disclaimer: The information and links to various websites, including various non-governmental sites, are provided for your convenience. The information on this website is constantly updated, however, there may be omissions or additional requirements not represented here. This is unintentional and does not exempt any individual or institution from complying with the laws and regulations of the State of California and the federal government. Inclusion of links to other websites is not an endorsement of those sites by the State of California or the federal government.

Therefore, your start-up cost should include funds to discuss key issues with a laywer and professional tax expert.

Step 1 - Develop and COMPLETE a Business Plan

Step 1
It is helpful to begin with a business plan. A business plan is a blueprint of every aspect of your business. Sales, Marketing, Advertising, Promotion and Location are just some of the aspects of creating a plan. Click on the following link to the US Small Business Administration to find a tutorial on how to create a business plan. http://www.sba.gov/smallbusinessplanner/index.html

Yes you do need a Business Plan!

Step 2- Choose a Location

Step 2
If you would like help deciding on a location for your business, visit the California Business Investment Services (CalBIS) section of the California Labor & Workforce Development Agency website. CalBIS provides tailored site selection services for businesses, real-estate executives, and site selection consultants.
http://labor.ca.gov/calBIS/

Step 3 - Choose a business structure

Step 3
Select a business entity type from the following list for a brief overview of the principal types of legal business structures available in California. A legal representative and accountant should be consulted before making a determination as to the type of business entity to form.

Starting a Business in California http://www.sos.ca.gov/business/filings.htm

Once you decide to establish a business, a primary consideration is the type of business entity to form. Tax and liability issues, director and ownership concerns, as well as state and federal obligations pertaining to the type of entity should be considered when making your determination. Personal needs and the needs of your particular type of business should also be considered.

The following is a brief overview of various business structures. The information is intended to provide a basic understanding of the different business structures and is not intended to provide legal advice. It is strongly recommended you consult with a legal representative and accountant before making a determination as to the type of business entity to form:

1. Sole Proprietorship
2. Corporation
3. Limited Liability Company
4. Limited Partnership
5. General Partnership
6. Limited Liability Partnership

Sole Proprietorship
A sole proprietorship is set up to allow an individual to own and operate a business by him/herself. A sole proprietor has total control, receives all profits from and is responsible for taxes and liabilities of the business . If a sole proprietorship is formed with a name other than the individual's name (example: John Smiths Fishing Shop), a Fictitious Business Name Statement must be filed with the county where the principal place of business is located. To determine the applicable county agency where fictitious business names are filed, please refer to the list of California counties provided on the California State Association of Counties website. No formation documents are required to be filed with the Secretary of State. Other state filings may be required depending on the type of business.


Corporation
A domestic corporation (Articles of Incorporation) generally is a legal entity, which exists separately from its owners. While normally limiting the owners from personal liability, taxes are levied on the corporation as well as on the shareholders. The sale of stocks or bonds can generate additional capital and the longevity of the corporation can continue past the death of the owners. Legal Counsel should be consulted regarding the variety of options available for formulation.

Limited Liability Company
A domestic limited liability company (Domestic - LLC-1/Foreign - LLC-5) generally offers liability protection similar to that of a corporation but is taxed differently. Domestic limited liability companies may be managed by one or more managers or one or more members. In addition to filing the applicable documents with the Secretary of State, an operating agreement among the members as to the affairs of the limited liability company and the conduct of its business is required. The limited liability company does not file the operating agreement with the Secretary of State but maintains it at the office where the limited liability company's records are kept. Professional limited liability companies are restricted in California at this time.

Limited Partnership
A domestic limited partnership (Certificate of Partnership - LP-1) may provide limited liability for some partners. There must be at least one general partner that acts as the controlling partner while the liability of limited partners is normally limited to the amount of control or participation they have engaged in. General partners of a limited partnership have unlimited personal liability for the partnership's debts and obligation.
General Partnership

A general partnership (Statement of Partnership Authority - GP-1) must have two or more persons engaged in a business for profit. Except as otherwise provided by law, all partners are liable jointly and severally for all obligations of the partnership unless agreed by the claimant. Profits are taxed as personal income for the partners. Filing at the state level is optional.
Limited Liability Partnership

A limited liability partnership (Registration of Limited Liability Partnership - LLP-1) is a partnership that engages in the practice of public accountancy, the practice of law or the practice of architecture, or services related to accountancy or law. A limited liability partnership is required to maintain certain levels of insurance as required by law.

Step 4 - File your tax and employer identification documents

Step 4

Business Programs Division
Tax Information

Several agencies in the State of California administer a variety of taxes. While other state and local agencies may issue permits and assess fees or taxes, the following is a list of state agencies that can assist you in determining your tax obligations and provide you with information about tax reporting and taxpayer rights.

For additional assistance with the tax aspects of your business, you may wish to attend one of the Small Business Fairs sponsored by:
1. The State Board of Equalization
2. Internal Revenue Service
3. Franchise Tax Board
4. Employment Development Department.

The Franchise Tax Board (FTB) administers personal and corporate income and franchise taxes for the State of California. If you have further questions, you can contact the Franchise Tax Board from inside the United States at (800) 852-5711 or from outside the United States at (916) 845-6500 (not toll-free) and select option 5 for operator assistance.

The Internal Revenue Service (IRS) issues federal employer identification numbers and administers federal payroll taxes, including social security, Medicare, federal unemployment insurance and federal income tax withholding.
http://www.irs.gov/businesses/small/index.html

The State Board of Equalization (BOE) issues seller's permits and is responsible for the administration and collection of the states sales and use, fuel, alcohol, tobacco, and other special taxes and fees. The BOE plays a significant role in California property tax assessment and administration. The BOE also acts as the appellate body for franchise and personal income tax appeals. For more information, call 1-800-400-7115. http://www.boe.ca.gov/

The Employment Development Department (EDD) issues employer account numbers (sometimes called state employer identification numbers, SEINs, state ID numbers, or reserve account numbers) and administers California's payroll taxes, including Unemployment Insurance, Employment Training Tax, State Disability Insurance, and California Personal Income Tax withholding.
http://www.edd.ca.gov/taxind.htm

Step 5: Businesses licenses or permits - External Resources for the State of California Website

Step 5

Most businesses require licenses or permits in order to operate. Please click on each of the resources below to determine if your business requires any licenses or permits.

http://www.calgold.ca.gov/

To assist you in finding the appropriate permitting information for your business, the CalGOLD database provides links and contact information that direct you to agencies that administer and issue business permits, licenses and registration requirements from all levels of government.

The CalGold listings include descriptions of the requirements, the names, addresses, and telephone numbers of the agencies that administer those requirements and issue the permits and licenses, and in most cases a direct link to the agencies' Internet web pages

http://www.dca.ca.gov/