Does A Sole Proprietor Need To Register In California

If you are considering starting a new business in California, one of the showtime decisions you must make is what type of business organisation entity you lot desire to form. If y'all are the sole owner of the business, ane selection is a sole proprietorship.

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Establishing a sole proprietorship in California is generally a simpler procedure than forming a corporation or an LLC. Sole proprietorships practice not demand to register with the state. You may need to obtain certain business licenses and permits, file revenue enhancement and employer identification documents, and file a Fictitious Business concern Proper name Statement.

Before taking these steps, entrepreneurs should fully evaluate all options for forming their new businesses. While they are relatively easy to establish, other factors may make sole proprietorships unattractive.

1. Select a Name for Your Sole Proprietorship

Sole proprietorships exist under the owner'due south legal name, but often owners want to utilize a dissimilar name for business organisation purposes. Choosing an official concern name for marketing and advertizing purposes can assist the business concern owner expand their achieve and can help potential customers sympathise what types of products or services the business concern offers.

When considering what business concern name to use, you will demand to confirm that your desired name (or a shut variation of it) is not already in use past another business concern in California. The name you want to use must also not be misleading to the public. For example, adding "Inc." or "LLC" to your sole proprietorship's name would be misleading, as those imply that you've established a different type of legal entity.

The California Secretary of Land'south website provides more information and a tool for checking name availability. Entrepreneurs may likewise desire to check with the U.S. Patent and Trademark Office to brand sure another person or business has not trademarked the desired business name.

2. File a Fictitious Business Name Statement

When y'all have decided on a business name for your sole proprietorship, you must file a Fictitious Business Name Statement with and pay whatever required fees to the county where your business concern is principally located. You must also follow the county's requirements for publicizing your new business'south name.

3. Obtain Required Licenses and Permits

Depending on the nature of your sole proprietorship, yous may need to obtain one or more licenses or permits from the state and the counties or municipalities where you intend to carry business. These may include business licenses, professional or vocational licenses, occupancy permits, home occupancy permits, sales taxation permits, and more.

The California Governor's Office of Business and Economic Evolution's CalGOLD website is one resource that can help you determine what permits your business needs and aid y'all obtain them.

four. Obtain an Employer Identification Number and Insurance Coverage

Sole proprietorships are generally disregarded, or pass-through, entities for income taxation purposes. Nonetheless, you may need to obtain an employer identification number from the IRS likewise equally a state tax ID number under sure circumstances. Check with the tax authorities or with a California revenue enhancement professional to determine whether your sole proprietorship needs to accept this step.

You may also wish to consult with an insurance professional to determine whether yous need to purchase unemployment insurance, workers' compensation, professional liability coverage, or other types of insurance protection.

Sole proprietorships are by and large simple to establish. However, they practise non provide owners with any protection confronting liability. This means that the sole proprietor's personal assets are potentially at gamble if the business incurs financial obligations or liabilities.

A California-licensed business police chaser may be a valuable resource for helping entrepreneurs make up one's mind whether to establish a sole proprietorship or another blazon of business organisation entity.

This portion of the site is for advisory purposes but. The content is non legal advice. The statements and opinions are the expression of author, not LegalZoom, and accept not been evaluated by LegalZoom for accuracy, abyss, or changes in the law.