Starting a California Business
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If you’re starting a California business, there are a number of things that can help speed up your filings and ensure that you don’t make rookie mistakes. The following information applies to all entities.
Selecting a Name
When selecting a name for your California business, it is important to understand that there are state laws that apply to the kind of name you can register. For starters, you can’t register a name that is already in use by another company. To see if the name you want to use is already in use, you can do a California business name search.
California businesses must have a corporate identifier. For example, an LLC must use an identifier such as LLC, Limited Liability Company, L.L.C., etc. You cannot register an LLC or corporation without a corporate identifier.
Finally, if you are not quite ready to form your California business but you know what name you want to use, you can file a California Name Reservation. Name reservations are good for 60 days.
Expediting a Filing
Many California filings can be filed online, and online filings are generally processed more quickly than mailed or faxed filings. However, some entrepreneurs are truly in a hurry, and in these cases you can use California expedited filing options.
Expedite options are only available in-person. You cannot expedite an online, mailed or faxed filing.
Unfortunately, California’s expedite options are complicated. Same-day and 24-hour expedite options are available for $750 and $350, respectively. Four-hour expedite is available, but only if your filing has already been submitted and processed for preclearing.
Preclearance is a process that reviews your filing and certifies that it is properly filled-out. If you submit a filing for preclearance, the Secretary of State will not correct any errors, but they will return your filing with the errors marked so that you can make the proper corrections.
Obtaining an EIN
When you start a California business you will almost certainly need an Employer Identification Number (EIN). Your federal EIN is obtained through the Internal Revenue Service (IRS). You can apply for the EIN yourself through the IRS website (the application is free), or you can hire someone to prepare and file the application for you.
If you are ordering our business formation service, you can select our EIN service for $50.
Your EIN is similar to a Social Security Number. It is used by the IRS to identify your California business for federal tax purposes. It is necessary for nearly every business, although there are a few exceptions.
Many business owners are interested in starting S-corporations because they have heard about certain tax advantages. It is important to understand that you cannot “form an S-corporation”. An S-corp is a tax status granted by the IRS. You can file for an S-corp election no matter what kind of business you have: LLC, corporation, etc.
While your entity type does not matter for an S-corp election, the IRS does have specific criteria for companies looking to change their tax status. If your business fulfills all of the criteria, then you can make the election. If not, then you are not qualified for S-corp status.