If you intend to set up a new business in California, one of the first decisions that you have to figure out is to choose the right business entity under which you are going to run your future business. If you are the only owner of your business, we suggest that you consider a Sole proprietorship as an option, since it is one of the easiest ways to form your business. The main benefit of a Sole proprietorship is that it does not require registering with the state. All you are required to do is to have several business licenses and permits at hand, file tax and employer identification documents, along with a Fictitious Business Name Statement.
However, before implementing the above-mentioned steps, you should be aware of all the advantages and disadvantages provided by this business entity. Today, we are going to tell you the main steps that you have to implement in order to set up a Sole proprietorship in California.
Choosing a Name!
Before launching the process of creating a Sole proprietorship entity, you should keep in mind that a Sole proprietorship should exist under the owner’s legal name; however, in most cases, owners want to use a different name for their business. Keep in mind that the entire success of your business depends on a carefully-chosen business name. That’s because your official business name can help you in fulfilling important aspects such as marketing and advertising, thereby enhancing your business and helping customers be aware of your business’s main purposes.
However, before choosing a name for your sole proprietorship entity, you should figure out whether there are any businesses with the same name in California. You can visit California’s Secretary of State’s website where you can easily check the existence of your business.
Filing a Fictitious Business Name Statement!
Once you have figured out which business name you want to choose for your Sole proprietorship, you have to file a Factitious Business Name Statement and pay all the necessary fees required by the county where your business is located. Additionally, you have to abide by the county’s requirements concerning using your business’s name.
Obtaining Permits and Licenses
Based on the type of your Sole proprietorship business, you are required to obtain several licenses and permits from the state or the county where you are going to launch your business. Generally, this list includes the following documents:
- Business Licenses
- Professional and Vocational Licenses
- Occupancy Permits
- Home Occupancy Permits
- Sales Tax Permits
Getting an Employer Identification Number AND Insurance Coverage!
As a rule, Sole proprietorships are passed-through entities for income tax purposes. But, here, you have to obtain an employer identification number and a state tax ID number.
However, before jumping into this process, we advise you to consult a professional tax authority or a tax professional in order to understand whether your proprietorship is required to implement the above-mentioned steps or not. Additionally, do not forget to consult an insurance expert to figure out whether you are required to obtain unemployment insurance or other types of insurance protection for your business. If you really want to start your business in California, you can read this blog which will guide you in this process. Better yet, you can simply message us at Prestige Auditors!
In light of the above-mentioned, you can see that the process of obtaining a Sole proprietorship is quite simple. However, it does not provide business owners with protection against liability; hence, the Sole proprietor’s personal assets are not fully protected and are under risk in case the business incurs financial obligations.
Do you intend to create a Sole Proprietorship in California, or maybe you need an LLC to sell online and need professional advice from legal attorneys who will help you protect your personal assets from covering your business’s debts? Contact Prestige Auditor’s team and we will help you form your business by choosing the best business entity which suits your business more. Additionally, we can help you use the advantages of all possible tax deductions which can help you avoid paying additional taxes both on professional and personal levels. For more information, you can visit Prestige Auditor’s website and find the entire list of services provided by our team.