how to start a small business in california legal and finalcial aspects

HOW TO START A SMALL BUSINESS IN CALIFORNIA

LEGAL AND FINALCIAL ASPECTS

ARE YOU PLANNING TO DO A BUSINESS IN USA?

• You may:• Finance Start-Up • Buy a Business • Buy a Franchise

Finance Start-Up FOLLOW 10 STEPS:

• Step 1: Research and Plan Your Business

• Step 2 Get Business Training and Expert Advice

• Step 3 Select a Customer-Friendly Location

Step 4 Finance Your Business

• Federal, state and local governments offer a wide range of financing programs.

• Low interest loans- Government/SBA backed loan from any commercial bank.

• Venture capital- Cash investment from Small Business Investment Companies (SBIC) in business such as expanding child care centers; creating energy efficient technology; and developing marketing campaigns for tourism

Step 5 Select a Business Name

• Use your own Name or• Fictitious Name or Trade Name- File a

Statement with the County Recorder-Clerk's Office.

• Use unique name, Check with the Secretary of State for a name different of others.

Step 6- What Legal Structure you want

• Sole Proprietorship• Partnership• Corporation• S Corporation• Limited Liability Company (LLC)• Cooperative

Sole Proprietorship

A business owned and managed by one individual who is personally liable for all business debts and obligations.

Don’t need to Register with the Secretary of the State.

• You should have a legal partnership agreement.

# General Partnerships- profits, liability, and management duties are divided equally among partners unless provided otherwise.

Partnership

Partnership

# Limited Partnerships- One of more partners may have limited liability as well as limited input with management decisions.

• pay to the Franchise Tax Board an annual minimum tax of $800.00.

Partnership

• # Limited Liability Partnership(LLP)-

Joint Ventures act as general partnership only for a limited period of time or for a single project.

Corporation

It may be either Stock or Close corporation.

Advantage:• Limited Liability• Ability to Generate Capital• Corporate Tax Treatment• Attractive to Potential Employees

Corporation

• Disadvantages:Double TaxingAdditional PaperworkTime and Money

To Register, File Articles of Incorporation to the State.

S Corporation

• A special type of corporation created through an IRS tax election.

• can avoid double taxation.• It has no more than 100 shareholders, has only

one class of stock.• Its only shareholders are individuals, estates,

exempt organizations under Section 401(a) or 501(c)(3) etc.

• A domestic nonprofit LLC can get tax exemption.

Limited Liability Company (LLC)

• A hybrid legal structure that provides the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership

• LLCs are not taxed as a separate business entity. Members are taxed for their profit.

• May be for profit or not for profit LLC.

Cooperative

• A business or organization that is owned by and operated for the benefit of those using its services.

• Profits and earnings are distributed among the members, also known as user-owners.

• Such as Credit union, Consumer cooperative corporation etc

Step 7 Get an Employer Identification Number (EIN)

Before hiring employees, you must get an EIN, also known as a federal tax identification number from the U.S. Internal Revenue Service.

Step 8 Register for State Taxes

• Required to register for one or more tax-specific identification numbers, licenses or permits, including income tax withholding, sales and use tax (seller's permit) etc.

9th Step Obtain Business Licenses and Permits

• To determine what business needs what license, go to-

• http://www.calgold.ca.govFor e.g. To do a business of the Travel

Agency/Agent that sells or arranges air and/or sea transportation in the State of California must register as a Seller of Travel from the Office of the Attorney General

Step 10 Employer Responsibilities

• Obtain an Employer Identification Number (EIN)• Set up Records for Withholding Taxes• Federal Income Tax Withholding (Form W-4)• Federal Wage and Tax Statement (Form W-2)• Employee Eligibility Verification (Form I-9)• Register with Your States New Hire Reporting

Program • Obtain Workers' Compensation Insurance• File Your Taxes etc.

Buy a Franchise I.E. SUBWAY BUSINESS

• A legal and commercial relationship between FRANCHISER, the owner of a trademark, service mark, trade name, or advertising symbol and THE FRANCHISEE, an individual or group wishing to use that identification in a business.

Go to http://sbdcnet.org/SBIC/franchise.phpTo see what type of franchise business available.

THE END

• THANK YOU ALL.