How to Set Up a Sole Proprietorship in California

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In California, a sole proprietorship is the most basic type of business structure. The owner receives all of the profits and is responsible for all the taxes. The owner has complete control over the company. This form of business is an excellent choice for people who want to be their own boss without forming a corporation.

Name your business. You can use your legal name or create a name. If you pick a name other than your legal name, it qualifies as a fictitious business name and you must register it with the county in which you will do business. (“Billy Joe’s Market” would be a fictitious name, for example, but “Billy Joe” would not if that's your legal name.) The California State Association of Counties website has links to county websites.

Contact your city government to apply for a business license. In California, sole proprietorships are generally under the authority of the local municipality. The CalGold website has information on licenses and permits including who to contact for forms or to ask detailed questions.

Contact the city or county to inquire about zoning laws. This will help you insure that your sole proprietorship meets zoning ordinances and can legally operate within the city or county.

Apply for a seller’s license. California taxes most goods and services. You need a seller’s license, also called a seller’s permit, to legally collect sales tax. The form is available at the California State Board of Equalization website. It also has information on collecting sales tax and paying the state. Fill out the form and file it in person at one of the field offices, listed on the website, or mail it.

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