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Starting a Consulting Business in California
The Secretary of State supports California businesses by registering business entities and processing millions of filings and records requests each year. There are several key steps to launching a business in the state of California. These steps will vary according to the type of business you intend to start and the county and city in which the business will be located. Oct 25, · How to Start a Business in California 1. Choose a Business Idea. Take time to explore and research ideas for your business. At this stage, take into 2. Decide on a Legal Structure. There also are special versions of some of these structures, such .
Once you decide to califfornia a business, a primary consideration is the type of business entity to form. Tax and liability issues, director and ownership concerns, as well as state and how to open a company in california obligations pertaining to the what is a mech mod of entity should be considered when making your determination.
Personal and personnel needs and the needs of your particular type of business should also be considered. The following is a brief overview of various business structures.
The information is intended to provide a basic understanding of the different business structures and is not intended to provide legal advice. Before you establish a business in the State of California, you should consult with a private attorney or tax advisor for advice about what type of business entity will meet your business needs, and what your legal obligations will be. A California corporation generally is a legal entity which exists separately from its owners.
While normally cokpany the owners from personal liability, taxes are levied on the corporation as well as on the shareholders. The sale of stocks or bonds can generate additional capital and the longevity of the corporation can continue past the death of the owners.
Legal Counsel should be consulted regarding the variety of options available. Forms for the most common types of Articles of Incorporation are available on our Forms, Samples and Fees webpage. You may use the form or prepare your own statutorily compliant document. A California LLC generally offers liability protection similar to that of a corporation but is taxed differently.
Domestic LLCs may be managed by one or more managers or one or more members. In addition to filing the applicable documents with the Secretary of State, an operating agreement among the members as to the affairs of the LLC and the conduct of its business is required. A California LP may provide limited liability for some partners.
There must be at least one general partner that acts as the controlling partner and one limited partner whose liability is normally limited to the amount of control or participation of the limited partner. A California GP must have two or more persons engaged in a business for what is the average daily cholesterol intake. Except as otherwise provided by law, all partners are liable jointly and severally for all obligations of the partnership unless agreed by the claimant.
Profits are taxed as personal income for the partners. Note: Registering a GP at the state level is optional. An LLP is a partnership that engages in the practice of public accountancy, the practice of law, the practice of architecture, the practice of engineering or the practice of land surveying, or provides services or facilities to a California registered LLP that practices public accountancy or cxlifornia, or to a foreign LLP.
An LLP is required to maintain certain levels of insurance as required by law. A sole proprietorship is set up to allow an individual to own and operate a business.
A sole proprietor has total control, receives opwn profits from and is responsible for taxes and liabilities of the business. Other state filings may caifornia required depending on the type of business. Please see our Frequently Asked Questions webpage for answers to the most frequently asked business entity questions. Corporation Limited Liability Company Limited Partnership General Partnership Limited Liability Tips of how to get pregnant Sole Proprietorship Frequently Asked Questions Before you establish a business in the State of California, you should consult with a private attorney or tax advisor for advice about what type of business entity will meet your business needs, and what your jow obligations will be.
Corporation A California corporation generally is a legal entity which exists separately from its owners. Califonria To Top Limited Liability Partnership LLP An LLP is a partnership that engages in the practice of public accountancy, the practice of law, the practice of architecture, the practice of engineering or the practice of land surveying, or provides services or facilities to a California registered LLP that practices public accountancy or law, or to a foreign LLP.
Back to Top Sole Proprietorship A sole proprietorship is set up to allow an individual to own and operate a business. Back to Top Frequently Asked Questions Please see our Frequently Asked Questions webpage for answers to the most frequently asked business entity questions. Call Us Receive Updates Sign up for e-updates. Write Us Agency Contacts.
Key legal issues to consider before you start a consulting business in California.
If you’re ready to form a corporation, file your Articles of Incorporation for a California corporation online, by mail, or in person, along with the $ filing fee ($ for in-person filings). Here are the four steps to form a corporation in California: Create a Name for Your California Corporation. An LLC must have the same classification for both California and federal tax purposes. Open an LLC. To register or organize an LLC in California, contact the Secretary of State (SOS): Website California Secretary of State Phone Mail California Secretary of State Document Filing Support PO Box Sacramento CA Dec 03, · 14 Steps to Starting a Nonprofit in California 1. Name Your Organization. What’s in a name? Well, that depends on what name you choose? Choosing a name for your 2. Select Your Corporate Structure. The next step in starting a nonprofit in California is choosing a corporate 3. Appoint Your Board.
By David M. Steingold , Contributing Author. Working as a consultant in California can be a flexible and profitable way to make a living. However, in order to succeed in starting a California consulting business, you need to keep in mind certain legal considerations.
These include choosing the most appropriate legal form for your business, obtaining licenses and permits, attending to health and safety, correctly handling tax issues, preparing policy statements and contracts, obtaining adequate insurance, and dealing with employees. In reading through the rest of this article, you should make allowances for your particular kind of consulting. To learn about other California business opportunities, see Nolo's section on Starting a Business in California.
Depending on the details of your particular consulting business, you might well be able to operate as a sole proprietorship or partnership. However, you should at least consider using a legal form that protects you from personal liability. In this regard, if you are a member of a recognized profession, you not only have more common options, such as a limited liability company or corporation, but also additional options, such as a professional corporation or professional limited liability company.
In many cases, consulting work may not seem particularly dangerous, and situations involving personal liability may seem unlikely. However, if at any point you are responsible for the handling of valuable information, physical property, or perhaps even individual people, you could be at risk of something being damaged or lost, or someone being injured. This might occur at your own business location or it might occur elsewhere—but, in any case, you would want the business, not you personally, to be responsible for any liability.
Learn more about choosing a business structure. Even if you operate as a sole proprietor, you should consider obtaining a federal tax ID number, known formally as an Employer Identification Number EIN ; for other forms of business, an EIN is a requirement.
The process is easy and can be completed online at the IRS website. Even the most limited consulting business may need a license from a state or local government office. This may be something as simple as a doing-business-as DBA certificate, or it may be something more significant.
In addition, there are various occupations and professions for which California requires state licensing, certification, or registration. These include not only traditional professions such as physicians, lawyers, dentists, and accountants, but also occupations such as barbers, cosmetologists, real estate agents and brokers, and insurance agents and brokers.
Further information is available in the licenses section of the CA. This generally is more likely to be an issue if you are thinking of operating the business out of your home and you live in a clearly residential, as opposed to commercial, area. Even if the business is permissible under the local zoning ordinance, you may be required to obtain a compliance certificate from the local zoning authority.
In short, your best bet is to investigate zoning regulations before you open for business. For office-based consultants, health and safety is not likely to be a primary concern. Your tax situation will vary depending on the legal form of your business corporation, professional limited liability company, partnership. Even with a sole proprietorship, you need to attach a separate schedule Schedule C to your personal income tax return. In more complicated arrangements, such as an S Corporation or a multimember LLC, you will generally have to work with entirely different tax forms.
If you previously are used to working as an employee, this added level of complexity can be confusing, at least at first; in which case, the services of a good accountant may be a worthwhile investment. Consultants are typically self-employed.
This form will be provided to you at the end of the year by those clients who are paying you for your services. While there can be some exceptions depending on the legal form of your business, you should also be aware that generally, as a self-employed individual, you personally will be subject to the federal self-employment tax.
With this additional tax obligation comes the requirement that you make quarterly estimated tax payments. One other matter that is often grouped with tax issues is your status as an independent contractor. Finally, if you run your consulting business out of your home, you may be able to claim a deduction for business use of your home. Details about how to figure the deduction can be found in IRS Publication Even if you will work mainly out of your own office, you will at least want adequate premises liability insurance, just in case a client or other business-related visitor slips and falls or is otherwise injured at your business location.
You will also want adequate property coverage for your physical business equipment; insurance for loss of your own business data is also worth considering.
And, depending on your area of expertise, you should also seriously consider — or may even be required to have — professional liability insurance. If you will work in situations that are more clearly physically dangerous, you should also look more closely at insurance that covers personal injury — both to yourself, and, as necessary, to others. Similarly, if you will be driving between various job sites, you should make sure you have appropriate vehicle insurance.
You may well find that, to get the best information and best coverage, you will need to work with several different insurance agents with different areas of expertise. Try to find agents who have previous experience writing policies in the areas relevant to your business. For example, if you will be consulting on hazardous chemicals, try to find an agent who knows something about coverage for hazardous substances. For more information, see Nolo's article on Obtaining Business Insurance.
While you do not want to unduly limit what you can offer to potential clients, it still may be in your own interest to formulate and provide in advance—and in writing—at least general policies regarding how you work. If you have a website, you should consider posting your policies there. Regardless of whether you have a website, you may want to create a printed document containing general policy information that you give to each of your clients before you reach any agreements and begin work.
General policy elements could vary widely depending on what kind of consulting you are involved in. They might include billing issues whether you bill by the job or by the hour; any minimum charges or minimum hourly billing increments; how you charge for travel time; whether you bill bi-weekly, monthly, or only at the end of a project , how you deal with payments do you take retainers; do you expect monthly or other periodic payments , and who pays for certain expenses such as special equipment, airfare, or hotels.
At least as important as general policies, however, are the specific agreements you reach with each individual client. Ideally, these will take the form of contracts for service and will spell out in detail a range of matters, including those already mentioned billing, payments, expenses as well as the details of the work you are expected to perform. If the services involved will be completed in less than a year the contract need not be in writing; however, most consultants would not take the risk of providing services without first getting a written, signed agreement.
In fact, you should consider drafting—or having a lawyer draft—a standard contract that you can modify for individual clients. To the extent you will have employees, you should inform yourself about basic employment law issues such as illegal discrimination, workers compensation, and how to handle the hiring process. With regard to hiring in particular, learn how to:.
Also, many key employment laws are administered through the Department of Labor, and there are a variety of informative webpages within the Department of Labor website. The information provided on this site is not legal advice, does not constitute a lawyer referral service, and no attorney-client or confidential relationship is or will be formed by use of the site.
Key legal issues to consider before you start a consulting business in California. Choosing the Business Entity Depending on the details of your particular consulting business, you might well be able to operate as a sole proprietorship or partnership. Health and Safety For office-based consultants, health and safety is not likely to be a primary concern.
Tax Matters Your tax situation will vary depending on the legal form of your business corporation, professional limited liability company, partnership. Employees To the extent you will have employees, you should inform yourself about basic employment law issues such as illegal discrimination, workers compensation, and how to handle the hiring process.
With regard to hiring in particular, learn how to: create a useful job application that does not include illegal questions check references or make other preemployment inquiries — again without violating privacy laws or otherwise seeking illegal information, and ask interview questions that are both useful and legally permissible. Business Formation. Choosing a Business Structure.
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