Business Regulation Compliance Chart

If that’s hard to see, here is a pdf version.  PDF Version (Seriously, we tried to put this on one sheet of paper, and we even left some stuff out.  But there is just too much regulation.)  We are not legal experts.  Please read terms of service for disclaimer.

The above chart illustrates the steps you will need to take to comply with regulations when you start up a basic company.  As you can see, most of your initial effort will be spent complying with government regulations.  We also have a section on Writing a Business Plan, which you may want to tackle first if your business needs funding.

First, have a well thought out idea.  Currently, there are no regulations on thoughts, but it is important to have a coherent idea of what you are attempting to accomplish before applying.  You may want to write out a business plan to see how things look on paper and do some budgeting.

Organize Your Business

You can always convert your business into a LLC, formal partnership, or corporation.  But it might be a good idea to get your business organized before your start investing a lot of money — especially if you are not the only one with an ownership stake.  We have put together a list of the types of business organization you have to choose from.  (Click her to learn about how to organize your business.)

Professional Licenses

The first diamond asks if you will need a professional license.  Many professions require a minimum amount of training, an exam before and fees to be paid before you can do business.

For instance, if you will be doing home repair or improvements valued at more than $500/job, the state would like you to have a contractor’s license.   More specific information about when a contractors license is needed.

If you will be selling real estate, appraising real estate or selling insurance products, you need a license from the state.  If you will be selling securities, you will need a license from the federal government’s FINRA agency.  If you want to do hair or repair automobiles you will need a special license from California’s Department of Consumer Affairs.

 

Choosing your Business Name

As can be seen in the chart, it is not clear whether it is better to choose your name before or after you choose a location.  You will have to put your business address on applications for a fictitious name statements and business permits applications, so it might make since to wait until you have a location.  On the other hand, it might take you a while to come up with a good name.  Why pay rent and utilities for that period of time?  And once you have a good name, you will want to lock it up ASAP so no one else starts using it before you begin doing business.

The first palace to start is to see if it has been registered with ICANN.  That’s the organization in charge of domain names.  Type your name into a browser and see if anything comes up.  For instance, if you sell shelving systems that go on walls, you might want to see if anyone is using the name Wall Mart.  Since a business pops up with that name, it would not be a good choice.

Alternatively, try a domain registration site like www.godaddy.com.  See if a version of your name has been registered.  If so, see if someone is actually using the name.  If the name is just being parked, you might be able to use a version of that domain name or try to buy the name form the owner.  For instance if myhipbusinessname.com is owned but no one is using it, you might be able to use myhipbusinessname.net or .info or .co …

People park domain names by buying them up and waiting for people to buy the domain name from them.  A good example is Nissan.  To get to the automaker’s website you need to go to NissanUSA.com because someone is using the name Nissan.com.  Nissan has been litigating for years over the name, and whoever registered it for $10/yr is apparently playing the price is right.

In today’s world, if you do not have a website people may not take your seriously.  So you might as well keep this in mind when thinking about a name.

If you think you have a good name, google it.  See if anyone else is using it, but does not have domain name with that website.  The next step is to visit the County Recorder’s office and check to see if anyone has registered it in the county.  https://efbn.ocgov.com/eFBNweb/default.aspx It is possible that someone does not have a web presence.  This is not a guarantee you can use the name.  For instance, Wall Mart does not have a name registered with the county, but if you open your Wall Mart store, our friends in Arkansas will not be happy.  Registering a name protects you from someone else using the same name after you have established a good business reputation.  It is important to search to see if your potential name is in use, because if your business could be confused with anther business, the existing business could take legal action to restrict you from using the name.  This could add up–new signs, stationary, and advertising driving customers to a business they cannot find.

Surf’s Up At this point you have a name that looks good to you.  Print out some sample signs on a sheet of paper and ask people what they think of it.  It may not be as good as it looks.  For instance, I had one friend who combined two words to come up with the name of her business.  After she explained it to me, it seemed like a good name and was catchy.  But people read the two words as one big word and did not see that it was made up of two words.  They assumed it was a Spanish word, and assumed the business was only catered to Hispanics.  The average Joe had no idea what her business was about.

If you are happy with your name, register it with the county here: https://efbn.ocgov.com/eFBNweb/default.aspx and register the domain name on a place like godaddy.com.  Once you have completed this form, you need to publish your new name with business address in a local newspaper for four weeks.

Two local newspapers that publish such notices are:

  • The Orange County Register 714-796-2209 Monday – Friday 8:00 am – 5:00 pm.
  • The Orange County News 714-894-2575 (OC News has a service that will also file your fictitious name with the county ask for Linda.)

There is no quickie web form because you nee to call and make sure you are publishing correctly and in the right area.  They will help you with getting the text of the ad legally correct.

Trademarks

See our article on Trademarks, service marks and copyrights for more information.

If you start using a name that could be confused with a different name, the trademark owner may have the ability to stop you from using that name.  This can be very expensive.  For instance, our wall covering business called “Wall Mart” will have to pay for a new sign on their business, re-design their website and stationary, and re-do their advertising.  The biggest loss will be that their current customers will be confused.  They will assume the business has gone under and not return.  So it’s important to do a basic trade mark search before starting your business.

Tax Payer Identification Number (TIN)/Employer Identification Number (EIN)

Just to be clear, the tax language can get kind-of confusing.  What your accountant refers to as your TIN is also called a Tax Payer Identification Number.  Examples of TINs are your Social Security Number (SSN) and an Employer Identification Number (EIN).  The employer identification number is a type of tax payer identification number just like your social security number.  These are also referred to by the IRS as a Federal Tax Identification Numbers, and some people call them Tax IDs.

There is not law that says you cannot put all your business income on your personal tax returns, but many people feel it is a good idea to keep things separate.  It is absolutely necessary if your business is a separate legal entity such as a partnership or some type of corporation—even if you plan to have no employees.  Also, you may want to get a business bank account.  Most businesses choose to get a separate number for their business under their business name.  Think of your EIN as it as your businesses social security number, and remember you do not need to necessarily be an employer to get a EIN.  You will also need to get an EIN if you have set many types of retirement plans like a KEOGH or 401K, again even if you have no employees.

The IRS actually makes this easy to do, but be sure to copy the pdf document they give you and keep it in a safe place.

Currently the IRS link to apply for an EIN is here http://www.irs.gov/businesses/small/article/0,,id=97860,00.html if nothing comes up, that means they re-did their website.  Just search for Apply for an EIN on their website.  The IRS also has a nice pamphlet about EIN’s here http://www.irs.gov/pub/irs-pdf/p1635.pdf

 Get that great phone number.

We have found an article on OCSmallBusiness.com that shows you how you can get a good phone number for your business.  Don’t wait untill you have a location.  If you can get a good number, you can use a service like Vonage or Virgin America PaLow Plans (~$25/month) to park your number and then transfer that number to your location.  Don’t expect to get a good number overnight.

 

Home Business?

In years past many businesses that you can run successfully out of your home.  If a business image is not important, you might think about it.  The only problem is that every body has access to satellite mapping on the internet, and hence they will know you are doing business out of your house.  You cannot fool anyone these days even if you use you have people send it to the “North American Headquarters” c/o your name.

There are restrictions on what you can do out of your home.  Generally, any thing that has to do with retail customers going to your house, or anything that generates a lot of traffic will not be allowed.  Check with your Landlord, Home Owners Association, and your City to see if your business activity is allowed.  Another issue is that you don’t want customers stopping by to do returns during diner time.

Planning Check with your City

Check with your city to see if the business you are interested in is permitted in the location you are considering.  This is especially important if you are doing something new in a location.  This may not be an issue for instance, if you are renting an office in an office building or doing something similar to the previous tenant.  Call the city and ask for someone in Planning.  Describe your business and ask about Zoning.  Also ask about any special permits that are needed to open the type of business you are interested in.  For instance you need a special permit from the city if you will serve alcohol.  Feel free to ask the planner if that permit is hard to get.  There is a list of phone numbers to city planning departments below.

Depending on what type of business you are opening, you may have to go through a Law Enforcement Review to see if you qualify.  For instance, Pawn Shop owners generally have to go through this review.  But the list of businesses that require this type of review varies city by city.

Remember the people we have been referring to as planners (It is not know why they are not called regulators.) may be busy when you call and may misunderstand what you are trying to accomplish.  Chances are they will be unwilling/unable to give you any type of pre-approval in writing.  Be sure to get a government disapproval clause in your lease that allows you to terminate the lease within a reasonable period of time, maybe 90 days, if you are unable to get the necessary permits to operate your business.  Otherwise you could be paying rent for a couple of years on empty space.

Special Permits from the County of Orange and State Boards

The person in planning at your local city or a commercial real estate agent should be able to tell you what extra permits you need.  The following are just the most common examples.

The Orange County Health Department regulates the sale of Food and Beverages. Even if you are selling pre-packaged food, you need to get a health permit form the county.  Make sure the facility you are thinking about has what you need to get a health permit.  Generally, you need to have hot and cold running water, a mop sink, a bathroom … There are additional requirements for food storage, and many foods need to be refrigerated.  Make sure you have adequate electrical power coming into the suite for that.

If you want to sell alcoholic beverages you run into a chicken/egg problem.  Sale of alcohol is governed by the state of California’s DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL also known as the ABC Board.  http://www.abc.ca.gov .  If you don’t have a license, you cannot just apply for one.  You need to be entered in a drawing because there are more requests for licenses than are allocated by law.  To be successful in the drawing, you need to have the exact name you will be using and a lease agreement which will expire no sooner than two years.  But just because you can apply for a license from the state doesn’t mean that your city will allow you to sell alcohol.  You need a business permit from your city and generally a special or conditional permit on top of that.  A way around this is to purchase a business that already has a permit to sell alcohol.

City Permits

Note, your local city assigns street address, but the US post offices assigns city designations for mailing addresses.  Thus, the address may not accurately indicate your local jurisdiction.  For instance, a building with an Anaheim address may be administered by the county; or a building with a Newport Beach address may actually be in Costa Mesa.  Ask about jurisdiction or look the buildings address on map view on Yahoo Maps which shows cities by color variations.

 

Aliso Viejo Planning Department (949) 425-2525 City permit information http://www.cityofalisoviejo.com/businesses/new_business_info.php

 

Anahiem Planning Department  (714) 765-5139 on line form http://www.anaheim.net/planning/bl_holiday/bl_application.pdf online Zoning Form http://www.anaheim.net/planning/bl_holiday/business_location.pdf

 

Brea Planning Department (714) 990-7686 on line form www.cityofbrea.net  Go to Our Services –> Permits 

 

Buena Park www.buenapark.com/Modules/ShowDocument.aspx?documentid=4066  You will need to contact the e Planning Division for approval at (714) 562-3620.

 

Costa Mesa Planning (714) 754-523 on line form http://www.ci.costa-mesa.ca.us/docs/busapp.pdf (Their link does not work.  Business Permit application no longer on line)

Cypress Planning Department (714) 229-6712  on line application http://www.ci.cypress.ca.us/online_forms/business_license_app.pdf

 

Dana Point Planning Department 949-248-3512 online application http://www.danapoint.org/index.aspx?page=155

 

Fountain Valley Planning Department (714)593-4425  more info http://www.fountainvalley.org/businesses/newbusiness/businesslicensereq.php

 

Fullerton Planning Department (714) 738-6531  on line form http://www.cityoffullerton.com/civica/filebank/blobdload.asp?BlobID=2078

 

Garden GrovePlanning Department (714) 741-5312

 

Huntington Beach Planning Department (714) 536-5267 on line form http://www.huntingtonbeachca.gov/files/users/finance/standard_bus_lic_application.pdf

 

Irvine Planning Department (949) 724-6310  on line form http://www.ci.irvine.ca.us/civica/filebank/blobdload.asp?BlobID=8124

 

La Habra (562) 905-9700 Ask for the planning department.

 

La Palma Planning Department (714) 690-3334 on line application http://www.cityoflapalma.org/DocumentView.aspx?DID=284

 

Laguna Beach Planning Department (949) 947-0766 on line application http://www.lagunabeachcity.net/civica/filebank/blobdload.asp?BlobID=5234  (Editor’s note, they have an unstable web address, so this link might not work.)

 

Laguna Hills Planning (949) 707-2650

 

Laguna Woods Contact the City  (949) 639-0500 They do not seem to have a formal planning department.

 

Lake ForestContact the city and ask for planning at (949) 461-3567.

 

Los Alamitos Planning Department  (562) 431-3538 on line application http://cityoflosalamitos.org/?page_id=65

 

Mission ViejoThey only seem to need permits for filming.  But you still need to check with the planning department at (949) 470-3053

 

Newport BeachPlanning Department (949)644-320

 

Orange, city of e-mail their planners regarding zoning and business permits at lbradburn@cityoforange.org ; sblackiston@cityoforange.org .  Online form http://www.cityoforange.org/civica/filebank/blobdload.asp?BlobID=5682

Orange County “County Areas” “Islands” “Unincorporated Areas”–areas of the county that are not in a city.  There are a lot of these.  The area might be as small as a single lot or as big as Rossmore.  Rossmoor, and Anaheim Islands are two such examples.   You will need to get your permits with the county offices in Santa Ana.  Planning (714) 667-8888

PlacentiaPlanning Department (714) 993-8124

Rancho Santa Maragrita Planning 949.635.1800  They do not require a business permit except for filming.

San ClementePlanning (949) 361-6166 Information site http://san-clemente.org/sc/standard.aspx?pageid=169

San Juan CapistranoPlanning (949) 493-1171 Online form http://www.sanjuancapistrano.org/Modules/ShowDocument.aspx?documentid=1615

Santa AnaPlanning 714) 647-5804 information site http://www.ci.santa-ana.ca.us/finance/FI-BusLic-LocatedinSantaAna.asp  Editor’s Note,  while some other cities are making it as easy to get a business permit as it is to order a book on Amazon, this city is going back to the old ways of doing things.  They no longer has their application online.  You need to pick one up at their Business Tax Office, 20 Civic Center Plaza – Ross Annex 1st Floor, Santa Ana, CA 92701.  They would like to pre-screen applicants, so you need to call them and discuss your particular business plan at (714) 647-5447.  They will also mail you an application if you talk to them over the phone.    Link to their on-line business info page.

Seal BeachPlanning  (562) 431-2527 ext 1310

Stanton From what we understand, large application packages, lengthy approval processes, and hassels over sign permits are a thing of the past.  Stanton’s new city manager is much more business friendly and recognizes the need for the city to be business friendly to compete with surrounding cities.   If you are just renting space that has previously been used for the same type of business, the application is short and approval is fast.  See the City’s website for online applications.  www.ci.stanton.ca.us

Tustin Planning Department 714) 573-3140 Online form http://www.tustinca.org/departments/finance/businesslicense/BusinessLicenseApplication2010.pdf

Villa ParkPlanning (714) 998-1500 Online Form http://www.villapark.org/forms/businesslicenseapplication.pdf

Westminster Phone Planning (714) 548-3258  Email: planning@ci.westminster.ca.us

 

Yorba LindaPlanning (714)961-7130 aelias@yorba-linda.org

 

Resale Permit

You need to get a resale permit form a state agency called the Board of Equalization (BOE) for purpose of paying sales tax to the state.  (I have lived in the state all my life and don’t know why it isn’t called the Revenue Board or Tax Board.  I am sure there is a good reason.  California’s other state taxing authority also has an odd name the Franchise Tax Board (FTB) which has nothing to do with business Franchises.) There are two advantages to getting the permit.  (1).  It’s required.  The Board of Equalization does not like it when you do not pay your tax and there could be legal consequences.  You may also need it to get a city permit.  (2) You will receive a reseller’s certificate.  You can use this when purchasing items that you intend to resell.  You will not have to pay sales tax on the stuff you buy because the state only taxes final sales.

 

The State Board of Equalization has two easy ways of obtaining this.

  • You can go to their office in Irvine and fill out a form.

California State Board of Equalization (BOE)

16715 Von Karman Avenue, Suite 200

Irvine, CA 92606

(949) 440-3473

  • Or you can download the form and send it in.

The form can be found here:  http://www.boe.ca.gov/pdf/boe400spa.pdf  (Editor’s note: as of June 2012 this form had been taken down fromBOE’s site.  We won’t ask why.  If the link does not work, you may need to pick one up at the BOE office. )  A reader noted the workbook and form in pdf form are available from non BOE sites by searching in google for BOE-400-SPA.  For example the city of Belmont has it up at http://www.ci.beaumont.ca.us/DocumentCenter/Home/View/407   It’s a pdf form you can type in your info and then print.

Okay, now that you have your Seller’s Permit aka Resale Permit, you need to keep track of your sales.  If you work Farmers Markets or Swap Meets or have other points of sale you need to pay in based on where the sale took place.  But each part of the state is different.  School Districts, Special Districts such as the Sewer District, Water District … and Cities may add on to the local sales tax.  And these tax rates can change every three months or so.  When we checked, Alta had a tax rate of 7.25% and 9.25 in Avalon.  Click her to find a link to the latest sales tax rates http://www.boe.ca.gov/sutax/pam71.htm

Helpful Hint  If you are math challenged or just don’t like counting pennies, you can just price things in dollars.  Just say tax is included.  To figure out what was “sales” and what was “sales tax,” take your total sales amount.  Suppose your tax rate is 8.25%.  Multiply what you sold by 1/(1.0825) = that is you sales amount.  Next multiply your sales amount by the sales tax rate 8.25%.   Example Wipe Out Surf Sold $10,000 of surf products.  If we multiply $10,000 x  1/(1.0825) we get $9,237.88 in “sales” and  $9,237.88 x 0.0825 = $762.12 in sales tax.  To make sure the numbers are correct, they should add up to the amount of money Wipe Out Surf took in $9,237.88 + $762.12 = $10,000.   

EDD State of California Employer Number

If you have regular employees, you need to get an Employer Number from the EDD.  The EDD or Employment Development Department is a state agency that a lot of people haven’t heard of.  Often it is referred to as the Unemployment Office or Disability Office.  It is one of our state’s largest departments.  Their goal is to manage the state government’s unemployment insurance system, disability insurance system, and help people who are officially unemployed find jobs.

You need their number so you can pay payroll tax into the system to support their programs.

You will need to have an EIN from the IRS before you can apply for this number.  Information about obtaining a EDD Employment Number is here http://www.edd.ca.gov/payroll_taxes/am_i_required_to_register_as_an_employer.htm

Worker’s Comp

This pays workers when they are injured on the job.  Although the state has a hand in this insurance market, it is sold by insurance companies through insurance agents.  See the section on insurance for more info.

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