If you are planning to put up a small business in Orange County, California, there are a few things that you need to remember, in order to start your business the right way. One of these things is structuring your business setup.
Small Business Formation in Orange County, California
Are you thinking about putting up a small business in Orange County, California? If so, you’d better make sure go about it the right way. Here are the most important things to keep in mind:
What is a Sole Proprietorship?
When starting a business, you first need to decide what business structure you want your company to have. There are many types of business structures to choose from, and the most popular choices in California include partnerships, corporations, and limited liability companies. If you are starting your company by yourself, you don’t necessarily need to choose the business entity you want to be. Entrepreneurs who start their companies by themselves are automatically viewed by the government as sole proprietors. Basically, a sole proprietorship is a type of business structure wherein there is only one business owner.
You Must Keep Track of the Business’ Income and Expenses
When you start your business as a sole proprietor that simply means that you are one person who’s out in the business world to get an income flow to support yourself and your business activities. And since income will be coming in, the government expects that, every calendar year, you will account all of your income and expenses, and then pay taxes accordingly. The Internal Revenue Service thinks that it is important to collect taxes whenever money is earned.
Since the government obliges you to pay taxes, it is your responsibility as a sole proprietor to keep track of your business’ income, as well as all of the expenses made in running the business. The tax that you need to pay is the net difference between your earnings and your expenses. In other words, the Internal Revenue Service will collect taxes from your net profit.
Besides the Internal Revenue Service, other government entities will also jump in when you start a business, and you will need to pay your fair dues to them, too.
Know the City Regulations that Your Business Needs to Comply With
The moment you begin your business, you will need to comply with city regulations. Some people think that they can start any business, anywhere they want. But that is not necessarily true, because each city has its own set of regulations. It is important for all companies to be mindful of the licensing part of their business. And with that, a prudent business owner should check whether the business they intend to start will be licensed in the city that they plan to operate.
Most businesses are generally acceptable, but there are a number of businesses that will not be licensed by certain cities, under any circumstances. A marijuana dispensary, for example, will never be licensed in many states and cities. But there are a few cities that will allow this kind of business, as long as the business owner complies with the regimented procedures for the licensing of such business.
Besides checking whether your business can be licensed in a certain city, it is also your responsibility to find out whether it can be licensed in a specific location in the city. An automobile business, for example, is generally acceptable, but there are a few restrictions on where this kind of business can be operated in a city.
It is also a business owner’s responsibility to ensure that not just one, but all government agencies approve of the operation of a certain business in a specific location. If you are planning to have a car retail business, for example, the California Department of Motor Vehicles has a few requirements for running that kind of business, and to avoid having trouble with them, you have to comply with said requirements. A few of those requirements include having enough space allocated for parking vehicles and having a physical location for business operations.
Apply for a Tax Identification Number for Your Business
A business’ tax identification number is the equivalent of an individual’s social security number. In the past, business owners used their social security numbers when doing business transactions, but these days, a tax identification number is more often used. A tax identification number is preferred now more than a social security number when doing business transactions, because of the high incidence of identity theft and the misuse of social security numbers.
It is your responsibility as a business owner to contact the Internal Revenue Service and apply for your business’ tax identification number. Once you’ve obtained it, you can use that number to associate all of your company’s income, as well as expenses. You can also use your tax identification number when you file your tax return at the end of the year.
Your company will benefit a lot from having a tax identification number. One good thing about it is that many vendors ask for your tax identification number if you want to do business with them. This is so that they can get a tax write-off for products and services that they are selling. You can simply provide these vendors with your tax identification number, without revealing your social security number.
Choose a Fictitious Business Name for Your Company
A good business name is one of the essential factors that contribute to the success of a company. You can opt to give your company a fictitious business name. A fictitious business name is a name that does not contain your first name or last name.
To choose a fictitious business name for your company, go to the county where your business is located and check with the county recorder’s office the availability of that name. Once you’ve made sure that no other business is using that name, you can file an application for it with the county recorder’s office. The process of filing may take several weeks, because you also need to publish that chosen business name in a newspaper of general circulation.
There are times that,even when a county recorder’s office will allow the use of a fictitious business name, there might still be another company using that name somewhere else in California with trademark rights for it. To make sure that you do not use a name that is already being used, check for the fictitious business name’s availability with the county recorder’s office, the California Secretary State Website, and the US Patent & Trademark Office.
Seek Legal Counsel to Correctly Start Your Small Business in Orange County, California
To make sure that you correctly start your small business in Orange County, California, seek the help of a business lawyer. Andy Gale is one of the most trusted business attorneys in California. Call him today at +1 (714) 634-4838 for more information about his services.