Incorporating in California is the first step to fully launch your business, and let me congratulate you on that. Going through the process, I’m sure that you encountered challenges and difficulties,you’ve worked hard to overcome them and successfully complete the process.
Starting a business in California is a long process, and when I mean “long”, I’m trying to tell you that it doesn’t just stop after you’re done with the incorporation process. Your California startup still needs to comply with numerous requirements and legal procedures.
In this article, I’ll discuss the list of things that you need to do after incorporating, other than writing a solid business plan. After reading this article, I hope that I’ll fully be able to answer your question on how to start a business in California, because this guide is part of that.
An Employer Identification Number (EIN) is similar to an individual’s Social Security Number. The state of California requires all businesses to get an EIN. By having an EIN, the state government will be able to track your taxes and business activities.
Whether you’re hiring employees or not, you’re required to obtain an EIN for your California small business – no business is exempted from this requirement. Before you work on other requirements, this should be your top priority.
If you don’t have an EIN, you’ll not be able to open a business bank account or file for your tax returns. You will also be illegally running your business in California without an EIN. You can get the EIN at the Internal Revenue Service without any fees, it’s completely free.
Everyday, thousands of entrepreneurs start their business all over the US, and it is impossible not to have similar business names. When you incorporate your business in California, your business name is automatically protected within the state, meaning, no other company can use your name.
But it’s a different story when you talk about the other 50 states. If you want to protect your business name in all states, you need to register for a trademark. In this way, no other business can apply for the same business name as yours.
A business bank account is important for three reasons: to avoid combining your personal and business’s finances, to establish your business as an independent entity and to be able to accept checks and payments under your official business name.
You can only open a business bank account if you have an EIN, so you need to obtain the latter first. If you were operating under sole proprietorship before and had a business bank account, you need to close your old account and open a new one.
Since you’re already in the process of opening a business bank account, it would be best if you also apply for a business credit card. This will allow you to keep track of expenses efficiently, and build your business’s credit history.
Incorporating your business is not enough, you have to obtain the necessary permits and licenses before you can fully operate. Permits and licenses vary from one business to another, which is why you may need to visit your city hall to ask for the specifics regarding your business type.
Failure to comply with this requirement may bar you from operating your business. It may lead to fines and sanctions as well. Start your business on the right foot by filing for business licenses and permits.
Consulting a tax advisor is not a mandatory requirement in the state of California, but it’s best that you do so. As a new entrepreneur you’ll not be able to fully grasp tax regulations so you need to have someone who can explain it to you. By doing so, you’ll be able to know what your obligations are.
Tax period is really stressful, most specially if you have no idea on the documents that you need to prepare, but by consulting a tax advisor, you’ll have a clear idea of how tax filing is done. Aside from this, you’ll also learn if you’re eligible to take advantage of tax deductions and benefits.
Although these requirements may need your time and effort, they are fairly easy to obtain and you can even do the processing yourself. If you’re not so confident, you can seek help from accountants, lawyers and other business professionals. Get all the help that you need so you’ll avoid mistakes.
Lastly, you have to understand what you need to do to stay compliant. There may be annual requirements that need to be filed, so you have to learn what they are. Once you finish these legal obligations, you’re now ready to launch your California small business. Best of luck!