Starting a new business is an exciting milestone. You\u2019re likely thinking about the opportunities ahead \u2014 the freedom, the impact you\u2019ll create, and the potential for growth.<\/p>\n
But alongside that excitement comes a practical step: getting your business properly registered and set up within your state.<\/p>\n
The good news is that setting up a business in California doesn\u2019t have to be complicated.<\/p>\n
We\u2019ll cover all the 7 steps that you need to follow on how to register a business in California, to get it running as quickly as possible.<\/p>\n
Before you register your business in California, you\u2019ll need to decide what exactly you\u2019re registering. Businesses come in all sorts of shapes and sizes, and you\u2019ll need to choose a legal structure that fits your business and its goals.<\/p>\n
Two of the most popular options are registering an LLC<\/a> or as an S Corporation (commonly referred to as an S corp). When it comes to small business, people often refer to a decision between forming an LLC and an S corp, but these are actually two separate classifications: an LLC is a type of business entity, and an S corp is a type of tax classification. To register as an S Corporation, you would first need to form a corporation and then classify it as an S corp.<\/p>\n LLCs are advantageous because they separate your personal finances and liabilities from your business. That means that if someone sues your business into bankruptcy, only your business will go bankrupt, and your personal finances and belongings will be unaffected. Profits are taxed on a pass-through basis, meaning that they are passed on to the owners, who then pay personal<\/em> income tax on them \u2014 the business itself doesn\u2019t pay any taxes.<\/p>\n Some businesses will prefer to register as a corporation because it can provide tax advantages. In an S corp, the same limited liability and pass-through advantages apply, but owners don\u2019t have to pay the 15.3% self-employment tax like an LLC owner<\/a> would need to. On the other hand, to run an S Corporation you will need to run your business like a corporation, which means electing officers, holding board meetings, etc., even if you\u2019re the only person on the board.<\/p>\n Other options you may want to consider are:<\/p>\n Next, you\u2019ll need to decide what you want to name your business. However, keep in mind that your original registered name and the name you advertise your business as don\u2019t necessarily need to be the same \u2014 if you ever look at a business\u2019s terms of service, you\u2019ll see that many have legal names that are completely different from what you know them as. That\u2019s often because they register a separate DBA for their business.<\/p>\n So, don\u2019t spend too long on this. Plus, you can always change your business name later if you need to.<\/p>\n In some cases, you\u2019ll need to ensure you have your business registered federally before you register it with the state. This applies only if you plan to hire employees<\/a> other than yourself.<\/p>\n If you don\u2019t have plans to hire employees, then you can skip this step and move on to the next one. However, if you do want to bring on employees, you\u2019ll need to get a FEIN (Federal Employer Identification Number).<\/p>\n\n
Step 2: Choose a Name<\/h3>\n
Step 3: Register With the IRS<\/h3>\n
Step 4: Register With the Secretary of State<\/h3>\n