Looking for how to start a home business in California? Then here you will find the complete guide on starting a successful home business in California.
- 1 Requirements to start a home business in California, United States
- 2 Steps for How to Start a Home Business in California
- 2.1 Choose the name of the company.
- 2.2 Prepare and submit articles of incorporation forms.
- 2.3 Appoint a registered agent.
- 2.4 Set aside a book for your corporate records.
- 2.5 Prepare business statutes.
- 2.6 Name your Corporate Directors.
- 2.7 Hold your first Board of Directors meeting.
- 2.8 Issuance of shares.
- 2.9 Comply with California tax requirements.
- 2.10 Additional taxes.
- 2.11 Comply with other tax and regulatory requirements.
- 2.12 File an information statement.
- 2.13 Foreign corporations doing business in California
- 2.14 Costs to start a home business in California
Requirements to start a home business in California, United States
In order for you to process the opening of your business in the county of California USA, you must go to the page of http://www.calgold.ca.gov, this web page corresponds to the administration of the state of California and from there you can carry out the Search by city and type of business you want to open, the search will return contact details such as telephones for the questions and queries you want to make.
The state of California in the USA is the cradle of new business. Entrepreneurial enthusiasm is felt in most cities of the golden state, however, before seeing your business operating, the first thing you have to do is process the licenses for your business.
Steps for How to Start a Home Business in California
Here is what you need to know to start a home business in California.
Choose the name of the company.
Your business name must not be the same or similar to an existing name on file with the California Secretary of State. Your company name may include the words ” Corporation “, ” Incorporated ” or ” Limited ” or the abbreviation for either.
You can request a free preliminary review to verify name availability. To do this, you must send a Name Availability Consultation Letter to the California Secretary of State’s Office in Sacramento by mail. Email inquiries are not accepted.
A name can be reserved for 60 days by filing a name reservation request form with the Secretary of State and paying a $ 10 fee. The form must be mailed or delivered in person.
Prepare and submit articles of incorporation forms.
To legally create your business, you must file Articles of Incorporation forms with the California Secretary of State. The forms must include the name of the company, the purpose, the name and the address of your representative agent (not a mailbox address). It must also include the number of shares that the company is authorized to issue. All forms must include the address and post office box of the company. The filing fee is $ 100 dollars. Forms must be mailed or in person.
Appoint a registered agent.
A registered agent is a person or company that agrees to receive legal documents on behalf of the company in case of being sued. A company cannot serve as its own registered agent. Before being appointed, the agent must agree to receive the process service on behalf of your company.
The agent may be: (1) a person residing in California, or (2) a corporate agent who has filed with the Secretary of State a certificate pursuant to Section 1505 of the California Corporation Code ( Certificate Pursuant to Section 1515 , California Corporations Code ) . The agent must have a physical address in California, not a post office box. Small corporations often appoint a director or officer to act as the initial agent. The Secretary of State maintains a list of private providers that can act as the registered agent.
Set aside a book for your corporate records.
In this book you will keep all the important documents of your company, including the minutes of the meetings of directors and shareholders, share certificates and receipts of share certificates. Keep your corporate record book in your company’s main office. You can use a three-ring binder, or you can purchase a special corporate registration kit.
Prepare business statutes.
Bylaws are an internal corporate document that establishes the basic rules for the operation of your company. These statutes are not presented to the State. Your company is not legally required to have corporate statutes, but you must adopt them because (1) they establish the operating rules for your business and (2) they help banks, creditors, the IRS, and others to recognize that your company is legitimate.
Name your Corporate Directors.
The incorporator (the person who signed the article forms), must appoint the corporate directors who will serve on the board of directors until the first annual meeting of shareholders (when the members of the board who will serve for the next term are elected by the shareholders). The incorporator must complete the form “Declaration of the incorporator” that contains the names and addresses of the corporate directors. Likewise, it is the task of the incorporator to sign the declaration and place a copy in the corporate record book. The statement does not need to be filed with the State.
Hold your first Board of Directors meeting.
The first meeting of your company’s board of directors should be held so that directors can appoint corporate officers, adopt bylaws, select a corporate bank, authorize the issue of shares, establish the corporation’s fiscal year, and adopt an official certificate of shares and corporate seal. The actions of the directors must be recorded in corporate minutes prepared by the incorporator or by any of the directors. In addition, if the company will be Type S, the directors must approve the election of the S corporation status. Generally, it is necessary to prepare the minutes of this meeting within the next two weeks and send all the directors to sign it. .
Although not legally required in most states, small businesses generally issue paper share certificates. Place the name and contact information of each shareholder in the company’s stock transfer ledger.
A portion of the shares in your company is considered as collateral under state and federal securities laws that regulate the offering and sale of corporate shares. However, the federal government and all states exempt most small businesses from these laws. For example, federal law exempts “private offers” an unannounced sale to a limited number of people (generally 35 or less). Most states have enacted their own versions of this SEC exemption.
Comply with California tax requirements.
All local and foreign companies doing business in California must pay California taxes to the California Franchise Tax Board .
Annual minimum tax. An annual minimum tax of $ 800 must be paid during the first quarter of each accounting period, whether the company is active, operates at a loss or does not do business. For new companies that qualify or join the Secretary of State, the tax is measured based on their income from the first year and is subject to the estimation requirements. For all subsequent years, the minimum tax is $ 800.
Every business with income above certain levels must pay an additional fee based on its total annual income.
Declaration procedures. Regular businesses must file California Form 100, Corporation Franchise or Income Tax Declaration, by the 15th day of the third month after the close of their fiscal year. Companies that have chosen to pay taxes as S corporations file Form 100S, California S Corporation Franchise or Income Tax Return. For details and forms, visit the California Franchise Tax Board website.
Comply with other tax and regulatory requirements.
Other tax and regulatory requirements include:
EIN. Your business must obtain a Federal Employer Identification Number (EIN). You can obtain an EIN by completing the application online on the IRS website . There is no filing fee.
Filing of S Corporation. If the company wants to choose the status of S corporation for tax purposes, it must file Form 2553 for Small Businesses (signed by all shareholders). The form must be submitted within two months and 15 days after the beginning of the corporation’s first fiscal year.
Commercial licenses. Depending on your type of business and location, your company may need to obtain other state and local business licenses. You can verify this information here .
California Department of Employment Development. Every business in California is subject to state payroll tax requirements if it pays wages of more than $ 100 in any calendar quarter. This rule applies even if a company operates without employees, except for the corporate president. The California Department of Employment Development issues employer account numbers (sometimes called state employer identification numbers or SEINs) and administers California payroll taxes, including Unemployment Insurance, Job Training Tax, Insurance State Disability and California Income Tax Withholding. For more details, see the EDD website .
File an information statement.
Every company in California and a foreign corporation registered in California must file a Statement of Information with the Secretary of State:
- within 90 days of filing the Articles of Incorporation Forms, and
- each year thereafter, during the applicable filing period (filing period is the calendar month during which the original Articles of Incorporation Forms were filed and the preceding five calendar months).
Businesses in California must file Form SI-200 . Foreign companies file form SI-350 . Both can be completed and consigned online and printed to be mailed or delivered in person. The filing fee is $ 25 dollars.
Foreign corporations doing business in California
To do business in California, all companies formed out of state must register with the Secretary of State. Foreign companies must designate a registered agent for process service physically located in California. To register, submit the Declaration and Appointment by Foreign Corporation Form . The form can be sent by post or delivered in person. Effective January 1, 2013, when you register to do business in California, you must provide the address of your company’s California main business office, if you have one. The filing fee is $ 100 dollars.
If the name of the foreign corporation is not available for use in California, the company must operate under a false name, a name that will not be the true corporate name. Write this assumed name on the return.
The completed form must be accompanied by a certificate of good reputation from the state of origin of the foreign company, dated no later than six months before the declaration is filed.
Costs to start a home business in California
The cost of a business license varies depending on who issues it and, in many cases, the business activity.
Owners have to renew their licenses annually, and it is essential that they renew them on time to avoid late fees.
Most licenses expire at the end of the fiscal year, September 30, employers need to renew their license in person, by mail or by phone before then.