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Small Business Concerns for the California-Based Entrepreneur

 

California enjoys a booming economy fueled in part by major industries like entertainment, technology and agriculture, but there are also countless small businesses contributing as well. That said, the state is known for being a fairly difficult place to operate in, and businesses are taxed notably higher than in many other states.

If you are registering and incorporating your small business in California, here are some state-specific things you’ll need to know:

Business Name/Purpose Restrictions

There are some noteworthy restrictions regarding California business names. First, the company’s name must include the correct corporate identifier listed with the name, such as “Corporation,” “Incorporated” or an abbreviation.

Furthermore, the business name may not contain the words “bank,” “trust,” or “trustee.” It may also not include the words “insurer” or “insurance company” or any other terms that suggest the business issues insurance policies and assumes insurance risks.

There are also certain business types that must be formed as a “Professional Corporation,” or “PC.” These businesses are:

  • Accounting
  • Acupuncture
  • Architecture
  • Chiropractic
  • Clinical social work
  • Dentistry
  • Law
  • Marriage, family and child counseling
  • Medicine
  • Speech-language pathology and audiology
  • Nursing
  • Optometry
  • Osteopathy
  • Pharmacy
  • Physical therapy
  • Physician assistants
  • Podiatry
  • Psychology
  • Shorthand court reporters

California Registration Requirements

There are also some state forms that must be completed in addition to whichever forms you are filing with the federal government. This may take some time, as California is known as one of the slower states for processing registrations, but you can speed up the process by hand-delivering the paperwork at a field office, for an added fee.

In addition, if you are registering your small business in California, here are the specific filing requirements you must follow:

When Forming an LLC

  • File Form LLC-1(Articles of Organization) with the California Secretary of State LLC Division.
  • After the forms are filed and approved, you must then organize the LLC by holding an “Organizational Meeting.” This is when you are expected to receive contributions from members, issue member certificates and adopt the company operating agreement.

When Incorporating

  • File form ARTS-GS(Articles of Incorporation) with the California Secretary of State Corporation Division.
  • Conduct an “Organizational Meeting” where you’ll determine ownership percentages for each shareholder. You should also use the meeting to go over tasks like opening a company bank account, paying back pre-incorporation expenses, electing S-Corporation status, etc.
  • If you decide to elect S-Corporation status, you must file IRS Form 2553.

Filing a DBA

The forms required for a “Doing Business As” or “DBA” name must be filed with your respective county. First, contact your local County Recorder to confirm specifically which forms must be submitted, as well as what the touchpoints are in the submission process. Here are some typical steps:

  • Obtain and file the correct forms with your county in order to register your DBA. You may be able to search the DBA name and register online, or you may need to submit a notarized form.
  • Publish an official notice in an approved newspaper (as defined by your county). You must publish the notice once a week for four consecutive weeks. Upon the fourth publication, the newspaper will send you a Proof of Publication.
  • File the Proof of Publication with the County Clerk’s Office within 30 days of the fourth publication.

File for Business Licenses and Permits

Once you’ve registered your business name, you’ll need to obtain a business license for the company, which authorizes you to conduct business in your city or county. This process also usually involves registering for state taxes and permits, which the city may require amid the business licensing procedure.

For more information on California business licensing, visit the CalGold portal, provided by the Governor’s Office of Business and Economic Development.

***Are you prepared to file your own small business taxes? Call us today at (818) 242-4888 or schedule your free 30-minute consult now. Robert Hall & Associates is a leading small business tax preparer and consultant serving Glendale, Burbank, Pasadena and the Greater Los Angeles area. Our team of enrolled agents can guide you through the business tax filing process and advise you on locating and gathering the documentation you will need.

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