California Business Laws: Owning Small Business In The Golden State

California is abundant in business of all sizes - from multi-million dollar corporations located in San Francisco and other parts of the state, to thousands of small businesses and successful chain retail stores, The Golden State is certainly one of the best places to be an entrepreneur. Whether you are looking to find investors to help with raising capital, or plan to put your own money down on a venture that you feel will work, the huge consumer base found all throughout California has turned endless business hopefuls into successful CEOs. Bustling with big business in any field you can think of, investors and investment firms of all sizes, and plenty of ideal locations for store owners of all types, the state of California may very well be the perfect place for you to turn your business dreams into a reality.

Local Permits And Licensing

Although you will also have to comply with state and national law, many details will be decided by the incorporated area of the city or county that your business will reside in. If you would like to learn more about the specific rules or regulations in any specific county or city, contact that particular areas business licensing office. Any city or county clerk's office can provide you with information and registration forms regarding property tax and various permits that will be required of your business. If you need guidance in the right direction, either of these local offices can be a great place to get your feet off the ground.

The government of the specific city or county that you reside in will be administering all of the property taxes and other fees. The property tax rate in California is levied by the total assessed value of your property with a 1% tax rate. An additional component that represents the bonded indebtedness for the particular district that your company will reside in is also applied, creating an average property tax rate of 1.1% throughout California.

• Real Property: Real property is only appraised in the event of a change of ownership or new construction in the immediate area. Using the rate of inflation as measured by the consumer price index, real property value is adjusted each year by 2% of the rate of inflation.
• Business Personal Property:  Every business must file an annual report to the county assessor's office giving detailed information regarding the value of all of their furniture, machinery, equipment, fixtures, and any other personal property of your business. Business personal property is taxed at a rate equivalent to the taxation rate of real property in that county. 

Any company that sells any form of tangible good or service will also require that a sales tax be applied. Any new business or any change in ownership will require that you apply to the Board Of Equalization for a sellers permit for each location you are currently operating. Statewide sales tax is 8.25%, with a possible increase to the total that will not exceed 8.85% after the application of additional local taxes.

California Board of Equalization Customer and Taxpayer Service P.O. Box 942879 Sacramento, CA 94279-0001 Toll-free within US: (800) 400-7115 Tel: (916) 445-6464 Fax: (916) 322-2015

The information provided to the left can be used to contact the California Board of Equalization (BOE) for additional information on receiving a sellers permit in California.

Preparing And Registering For Business Tax In California

If you operate your LLC, partnership, corporation, or any other form of business in California, you will usually be required to pay a business tax based on your annual income to the Franchise Tax Board (FTB). Although many sole proprietorships and other general partnerships are not required to pay any business income tax, if found applicable you will be forced to provide the income tax decided upon by the FTB and state law.

Any limited liability or limited partnership will be required to pay a flat $800 tax each year if they are organized in, conduct business in, or have registered with the secretary of state in California.

Limited liability companies (LLCs) that are owned by multiple people or registered as a partnership will have to pay a fee based on total income in addition to the state annual tax rate, while any LLC classified as a corporation will have to adhere to the state tax regulations given to corporations. This essentially meaning that your state tax and business income tax will have to be paid up front and in full for the first year, among a few other things discussed in the California corporation laws section below.