Set up a Sole Proprietorship in California

Updated on Friday 19th February 2021

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A sole proprietorship is the simplest business form available in California and it can be established by both local and foreign businessmen. The regulations for starting a sole proprietorship in California can be entirely explained by one of our USA company formation agents. We can help entrepreneurs enjoy a fast start on the market by handling a wide range of business-related aspects. We present to you the main characteristics of a sole trader in California.
 

Main conditions for starting a sole proprietorship in California
 

The registration of a sole proprietorship in California is straightforward due to the lack of complexity for the entire process. Here is how you can set up a sole proprietorship in California, helped by one of our company formation specialists in USA:
 
  1. The first step is to choose a business name by making a verification in the first place, with the Secretary of State in California. It is not permitted to use the same name as the one of an existing business in California.
  2. The application for licenses and permits is made with the California Governor’s Office of Business and Development. The institution offers information about the available permits and licenses, plus other business conditions.
  3. The EIN is the Employer Identification Number that shows the business is registered for taxation. The Internal Revenue Service issues the EIN if all the documents are accepted. If you do not have employees, you can be verified with the social security number, as EIN is not required.
  4. The sole proprietorship requires opening a business bank account in California for future financial activities. It is best to separate the personal bank account from the ones of the sole trader.
 

Can I hire employees for my sole proprietorship in California?
 

Yes, if you would like to hire staff for your sole proprietorship in California, you must register with the California Employment Development Department or EDD as it is known. There are certain taxes to be paid for employees, so if you would like to know more in this direction, you can discuss to one of our company formation representatives in USA.
 

Considering a general liability insurance for your business in California
 

A new business in California or anywhere in USA requires attention right from the start, especially from overseas investors or young entrepreneurs. A sole proprietorship in California should be protected with a general liability insurance policy that covers potential business risks. Unanticipated incidents, debts, and obligations are normal in the business environment, however, nobody would want to face such problems. This is why a general liability insurance policy plays a major role, a form of financial protection for businesses. Need more details about starting a sole proprietorship in California? We suggest you send your inquiries to our specialists.
 

What is a fictitious business name?
 

In California, “Doing business as” is known as a fictitious name and it is used by sole traders who do not want to activate under the personal name. Specific documents must be filled if you select this option, plus a verification with the California State Association of Counties is required. Please discuss with our specialists for more details.
 

Making investments in California

 
California is one of the most prolific states in USA, home to more than 39 million citizens, also known as the Golden State, due to the high opportunities offered, culture, entertainment, innovation, and more. There are already thousands of foreign companies already thriving in California, in sectors like real estate, tourism, IT, entertainment, and more. San Francisco, Los Angeles, San Diego, Santa Monica, Santa Barbara, Palm Springs, Pana County, Malibu, and Beverly Hills are quite representative cities and districts for California and solid business destinations for international investors who want to enjoy huge profits in this American state. Here are some interesting facts and figures that highlight the business direction and economy of USA:
 
  • More than USD 9,465 billion represented the total FDI stock for USA in 2019.
  • Most of the FDIs are directed to the manufacturing sector in USA, with more than 40% rate being registered in 2018.
  • USA ranked 6th out of 190 economies in the world in terms of ease of doing business, according to the 2020 Doing Business report.
     
Interested in starting a sole proprietorship in California? We invite you to contact our team of company formation agents in USA and find out more about the company registration in USA.