All things business: LA edition
The idea of starting something you are unfamiliar with is sometimes frightening. Taking the first step to starting something new is the hardest. So take a small one. One at a time. You can always wait for the perfect time, which will probably take forever to come, or you can leap in with both feet and take on experiences and challenges as they come. To ease your anxiety a bit, I’ve created a short checklist to guide you through some basic yet critical steps when starting your business.
- Start with some type of plan
- LA Business Resources: Office of Finance, ComplYant: mytaxreminders.com, City of LA Business Startup Guide, CDTFA
- Filed your fictitious business name
- Virtual address (for privacy reasons)
- File a new Business Tax Registration Certificate
- File an LLC with the Secretary of State
- Apply for a Seller’s Permit
- File your statement of information
How to get started with your business in LA
The first piece of advice I would give is to just get started. Get the hardest part over with. You may not know the ins and outs of what you are trying to do, but as long as you have an idea, you can start with some sort of plan. Take the idea you have and start market research; determine your competitors, pricing, or possible manufacturers.
Use resources available to guide you along the way
There are several great resources that offer you guidance in starting your business.
Los Angeles Office of Finance: The division that is responsible for collection of various taxes and issuing permits and licenses.
LA Business Portal: A website sponsored by different government agencies in LA to help you launch your business the correct way.
ComplYant: A cloud-based platform that offers small business owners and entrepreneurs a stress-free approach to managing their business taxes.
File a fictitious business name statement
You should file a statement if you are doing business for profit and not using the surname of the company name. You must file a statement in each county where the principal place of business condition is met.
Obtain virtual address
When you file to start a business, this information is public record. If you use your home address, the public will have access to your home. For that reason, I recommend obtaining a virtual address that you can use on your business documents.
Obtain a business tax registration certificate
Each person looking to do business or is doing business in the City of Los Angeles must obtain a Business Tax Registration Certificate. This certificate is obtained through the LA Office of Finance.
Single-member businesses are sole proprietorships by default when they first start operating and do not file incorporation documentation. A sole proprietorship, apart from liability, has the same benefits as a single-member limited liability company. While you are able to effectively operate a business as a sole proprietorship, once you start obtaining certain assets or business accounts, you will need to file incorporation documents with the Secretary of State.
An EIN is an Employer Identification Number, also known as a Federal Identification Number, similar to your social security number. This number is used to identify your business when signing important documents. You are not required to obtain an EIN unless you have employees, are buying a business, operate a corporation or a partnership, or other requirements listed on the IRS website.
Those who sell goods (tangible items), unless, of course, you’re selling in an air carrier, are required to obtain a seller’s permit. A seller’s permit allows you to sell goods and collect the tax. The tax collected is not the owner's income. The tax is required to be remitted to the required government agency. You can obtain a seller’s permit and view if your business requires any other specialty license on the CDFTA website.
Other business specifics can determine your license and permit requirements
What is required to legitimately operate your business varies by the type of business you are operating. For each business you operate, you may be required to obtain different licenses, permits, or other certificates. Use the resources provided in this short guide to assist you in determining what is appropriate for your business.
Ro’s Tax Tip: Becoming compliant is a necessary task for all business owners.
Keep track of deadlines
Part of keeping your new business compliant will be meeting deadlines for your required business licenses and taxes. It also helps to have an effective strategy to handle your taxes, so your annual filing won’t be so stressful. Whatever system works for you, be consistent. Having a plan for how you’ll follow the routine requirements for your business can help you avoid fines and penalties and set you up for success.