The time required for a California business to be formed will mostly depend upon the Secretary of State’s (SOS) office. Many states process filings promptly and efficiently, but since you’re dealing with a government entity there is no guarantee of timely service. Also, some business structures take more or less time to create. Below is a general breakdown for the most popular business structures and what is required for each in California. The short answer is: most businesses take around 4-6 weeks to create, but this can vary widely due to their complexity. Current COVID restrictions are also slowing down the process

As always, this is a rough guide to get you familiar with general principles. Before moving forward, it’s often necessary or, at least, profoundly beneficial to work with an attorney.

Steps Applicable to All Business Types (Usually)

All the categories of businesses in California are often required to take the following steps in their formation. The requirements usually apply, but there are still circumstances where they are unnecessary for particular businesses.

1. Register a Fictitious Business Name: If you’re doing business as something other than your name, you have to apply with the state for an FBN. In this some cases, this may not be necessary. For greater details, review our blog here

2. Deal with zoning regulations based on the location of your business. 

3. Obtain specialty licenses and permits (if necessary). 

4. Complete ongoing Secretary of State filing requirements (Statements of Information)

5. Open a business bank account.

Any business with employees and taxed as a separate entity from the owner (not a sole proprietorship) will also need to:

6. Obtain an EIN Number (Employer Identification Number also called a Federal Tax identification number), and establish workers’compensation

7. File Tax Information and obtain necessary ID numbers (FTB, CDTFA, EDD, IRS, BOE

Sole Proprietorship Details

This is the simplest form of business to establish. A sole proprietorship is an unincorporated business owned and run by one individual with no distinction between the business and the owner. The owner is entitled to all profits and is responsible for all the business’s debts, losses and liabilities. A sole proprietorship doesn’t have to file with the SOS, or obtain an EIN. The owner and business are also taxed as one in the same, removing the need for various tax IDs and information. 
Partnerships

In California a general partnership does not need to file any organizational documents with the state. It’s not legally required, but it is very strongly suggested that a partnership have a formal partnership agreement. An LLP (Limited Liability Partnership), however, does require registration with the California SOS.

LLC (Limited Liability Corporations) & Corporations

These kinds of businesses are the most complex and will take the longest time to create. For an LLC you must file Articles of Organization with the California SOS, whereas a corporation must file Articles of Incorporation with the California SOS. For both a corporation and LLC you will also need to appoint an agent for the service of process. S Corporations must also file IRS Form 2553, Election by a Small Business Corporation, with the IRS. 


Begin Your Business Right

While it may be tempting to go it alone when forming your business, the long-term consequences of an unprotected or poorly structured business are devastating. We can help you get started on the right foot and remove future difficulties with our expertise and experience in this area of law. For further questions or to discuss your situation, contact us at 714.456.9118 or send us an email at info@voneschlaw.com.

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