California: home to sun, surf, sand, and that’s right, many a small business.
Getting your business set up in the Golden State is easier than you may think. And if you’re hiring your first employee, you’ll need to get registered before you hand them their first paycheck.
Need help with California state tax registration for your business? Our partners at CorpNet can help.
Now, every state has a different registration process, as they each have their own payroll tax laws and state agencies. While it’s best to consult your legal advisor to guide you through the process, we’ll walk you through registering your business in California right here, step-by-step.
Step 1: Dig up your IRS paperwork
If you’re getting ready to register with the state, that means you’ve probably done a lot of the heavy lifting to get your business off the ground.
Make sure you have your Federal Employer Identification Number (FEIN), business type, and legal business name squared away before you begin, as you’ll need all of these to register with the state.
Don’t have those yet? Then click those nifty links above to get everything before moving to the next step.
Step 2: Register your DBA (if you want a DBA)
Want to do business with a name other than your corporation’s legal name? That’s known as a DBA, or “doing business as” another name.
For example, your legal name might be The Sandwich Shop, Inc, but you actually want to do business as “You Cheddar Believe It.” That second name (and excellent cheese pun) is your DBA.
To register your DBA in California, search and reserve a name online with the Secretary of State.
Make sure the name and spelling you want are available before you actually register. Also, keep in mind that the name you choose cannot be too close to another company already doing business in California. For example, if a sandwich shop already operates as “You Cheddar Believe That,” your desired name won’t cut it.
(Quick note: Reserving your name online doesn’t mean you’ve registered it. There are still a few more steps before your DBA is actually registered.)
Next up, you need to file a Fictitious Name Statement form, which you can obtain and submit through your local county clerk’s office. There’s also a price tag: You’ll need to pay an accompanying fee when filing the form, which varies county by county.
And last, tell the world!
That’s right, you have to publish a notice of your DBA in a registration in a newspaper in your company’s principal place of business once per week for four weeks. You can usually get a list of pre-approved newspapers from your clerk’s office. Just be sure that the publication of your choice files an affidavit with the county clerk after it’s published your snazzy new name.
Q: Gross Pay vs. Net Pay: What’s the Difference Between Them?Finances and Taxes
Step 3: Register with the Secretary of State (SoS)
The next step is to file the form (see below) for your particular business type with the Secretary of State.
There are separate registration forms for each business type (Corporation, LLC, Limited Partnership, General Partnership, and Limited Liability Partnership) and the good news is you only have to do one of them.
Check out the SoS website to download the form that applies to your company type. It’s a smart idea to read the specific document used for your company type closely for full instructions and any applicable fees.
The SoS also recommends checking with “private legal counsel” (read: a lawyer) before submitting your documents to make sure everything is completely accurate. Even if you feel confident, this is where you’ll want to double- and maybe triple-check that all the details in your stack of paperwork are totally accurate. Anything submitted incorrectly will just be sent right back to you for you to fix.
Once you’ve submitted everything and the information is deemed correct by the state, the SoS will assign you an SoS account number.
Step 4: Check if you need a license or permit
Some industries require special licenses or permits in order to legally operate your business in California, like a restaurant or a preschool. The city, county, and state can be a real stickler for these permits, so it’s important you have all your ducks in a row.
Check out the California Gold Standard for Permit Assistance website to see what, if any, permits you need to get. And then head on over to California Department of Consumer Affairs website to obtain the specific licenses or permits you need. Each of those has their own processes, so be sure to read the directions carefully.
Step 5: Register with the Employment Development Department (EDD)
At this point you should have all the info you need in place to register for small business payroll with the EDD, including your business’s:
- Business type
- Legal name
- SoS account number
Depending on your type of business, the registration requirements may vary (the when and the how). Here is a link to the requirements for each employer type:
- Commercial Employers-Individual Owners, Co-Ownerships, General Partnerships
- Commercial Employers-Corporations, Limited Liability Company (LLC), Limited Liability Partnerships (LLP), Limited Partners (LP)
- Employers of Household Workers
- Non-Profit Employers
- Agricultural Employers
- Church and Religious Order Employers
- Disability Insurance Elective Coverage (DIEC)
- Public Entity Employers
- Employers Depositing Only Personal Income Tax (PIT Only) Withholding (Including Payers of Pensions and Annuities)
- Public School Employers
- Indian Tribe Employers
With all this in hand, head to the EDD’s website and enter all that nifty info you just acquired. In return, the EDD will assign you an account number, called a SEIN number, which is unique to your business so that you can file and pay your state payroll taxes.
What about your federal taxes? Your FEIN covers all your federal payroll taxes. The EDD will also assign your business an unemployment insurance tax rate, which is a state-specific tax whose rates can change depending on your business’ employment history. For example, if lots of your former employees file a claim to collect unemployment insurance, your tax rate might rise. And one last note: Some cities and counties in California require you to register for payroll as well. So be sure to double-check.
|Calculating paychecks for employees? We’ll do the math for you with our California paycheck and payroll calculator.|
And you’re done!
Feel like you have stacks of important paperwork and account numbers stacking up on your desk? You’re not the only one. Countless business owners have gone through the same process, and all you really have to do is take it a single step at a time. Your future Californian employees will appreciate your efforts. Hang loose!
Ready for the next steps in growing your new venture? Check out our guide to starting a business.