Six Steps to Start a Sole Proprietorship in California

🔑A sole proprietorship is automatically established when you start a business as an individual owner.

💼Choosing an appropriate business name is vital and may require a DBA registration.

📝Obtaining an EIN (Employer Identification Number) is recommended, especially if you plan to hire employees or want to separate your personal and business finances.

💡Getting a business license and any necessary permits is crucial to comply with local regulations.

💳If you sell products or taxable services, you may need to apply for a sales tax permit and collect sales tax on your sales.

Do I need to register my business name?

—You don't need to register your legal name, but if you want to use a different name for marketing purposes, you may need to file a DBA registration.

Do I need an EIN for my sole proprietorship?

—Technically, you can use your personal social security number as the sole proprietorship's identification, but obtaining an EIN is recommended for separating personal and business finances and avoiding potential identity theft risks.

What permits and licenses do I need?

—The permits and licenses required depend on the type of business and its location. Generally, you will need a business license and may require additional permits for specific activities, such as serving alcohol or operating from a home.

Do I have to collect sales tax?

—Whether you need to collect sales tax depends on the products or services you sell and your state's regulations. Research your state's sales tax laws to determine if you need to obtain a sales tax permit and collect sales tax.

Can I use my personal bank account for my sole proprietorship?

—While it's technically allowed to use your personal bank account for your sole proprietorship, it's recommended to open a separate business bank account for easier tracking of income and expenses and to establish a clear separation between personal and business finances.

00:00A sole proprietorship is automatically established when you start a business as an individual owner.

00:53Choosing an appropriate business name is vital and may require a DBA registration.

01:35Obtaining an EIN (Employer Identification Number) is recommended, especially if you plan to hire employees or want to separate your personal and business finances.

03:14Getting a business license and any necessary permits is crucial to comply with local regulations.

04:17If you sell products or taxable services, you may need to apply for a sales tax permit and collect sales tax on your sales.