When you register a business in California, the first decision a business owner must make is to decide which type of entity they want to establish. This is generally something you will want to discuss with your CPA as they are familiar with your taxes. Each type of business has pros and cons and there is no “right choice”.
In most instances, the form of business you choose will determine the amount of paperwork you have to file, the taxes you will be expected to pay and the personal liability you will bear in the business. When you register a business in California, there are a variety of types of entities that include: Sole Proprietorship, General Partnership, Limited Partnership, Limited Liability Company (LLC), Limited Liability Partnership (LLP) and Corporation. In California, most business registrations happen at the California Secretary of State unless you are choosing a sole proprietorship. Not looking to start a sole proprietorship? Use the links below to get more information about the other types of entities:
Registering a Sole Proprietorship
Ok, so you have decided to register a Sole Proprietorship. Now what? For starters, you need to research the name and make sure no one else is using it. Once you are sure the name is available, you would file a fictitious business name statement at the county clerk’s office in the city or county the business is located. In Sacramento the cost is currently $37 to register the name.
What’s the difference between a Fictitious Business Name and a “Doing Business As” name?
Nothing. It is the same thing, just different way of describing it. These terms are interchangeable. By registering your business name, you are now allowed to receive checks with the business name as the payee versus your personal name. This is the fastest and least expensive way to register a business in California.
What’s next after I file my Fictitious Business Name Statement?
You really have two things left to do. The first is to publish the Fictitious Business Name. The county clerk’s office generally has local publication pamphlets next to the counter. In Sacramento we can get them published for around $20, I would image it is pretty standard pricing across the state. The publishing should be done at least once a week for four consecutive weeks. The publishers are pretty familiar with this process which makes your job a little easier.
The next thing you would do is take the filed Fictitious Business Name Statement to the bank and open an account in the businesses name.
How long is my Fictitious Business Name good for?
In Sacramento the name is valid for 5 years. If you move you will want to make sure you stay up to date on the filing. They will mail a reminder, but often times the individual will forget about the statement and it becomes expired. You would have to complete the whole process again. When you renew the business name you will need to have it published again.
Sole Proprietorships and Taxes
There are only two things for certain, right? Death and taxes. You will want to put some money away each month to make sure at the end of the year you have the funds to pay your taxes. When you register a business in California you will have some new write offs. If you need assistance getting together your business income and expenses it is recommended you hire a bookkeeper. Click here to see how we can help you and make your year-end procedures run smoothly. Because this is the fastest and easiest way to register a business in California, it is also at the highest risk for audit. Keep your bookkeeping clean, your tax returns filed on time and your payments paid promptly.