In addition to fulfilling local requirements for doing business in Pacifica, business owners must also make sure they fulfill certain state requirements.
If you intend to sell or lease goods, you will likely need a seller's permit, which is also called a "resale number." Contact the California State Board of Equalization to determine if your business needs a seller's permit and if so, what kind of information you'll need to give to the board. In preparation to apply for a seller's permit, you should:
- prepare at least a preliminary business plan before contacting the board
- have a proposed location in mind for your business
- have a personal financial statement
There is no fee for a seller's permit. But you may be required to post a security deposit to ensure payment of state sales tax. Tax returns will be mailed to you. File them with the board of equalization as directed. The board will automatically register you with the Employment Development Department (EDD) if you have employees and have not previously registered with EDD.
You'll pay a penalty if the board discovers you're operating without a seller's permit. You'll also have to pay back taxes and will find it difficult to get bank financing because many banks ask for verification that you're current on your taxes.
California State Board of Equalization
121 Spear Street
San Francisco, CA 94105
Many businesses don't require a state license. To determine whether you need one contact the California Department of Commerce Office of Small Business. If you do need a state license, note that more than 40 bureaus handle licensing for specific types of businesses. Telephone numbers of the various bureaus should be listed in the white pages of the telephone book under State Government Offices and may be accessed online.
Contact the bureau in charge of licensing your type of business and ask that an application be sent to you. Fees vary from $40 to $100. A written or oral examination is required for some professions before a license can be issued. Some licenses have educational or experience requirements.
If a complaint is received about your business, the county district attorney or state attorney general's office will investigate. If it's found that your business is not licensed and should be, you'll be in violation of the law. You'll be fined and possibly prosecuted.
California Department of Commerce Office of Small Business
112 L Street, Suite 600
Sacramento, CA 95814
Worker's Compensation Insurance
All employers are required to carry worker's compensation insurance. It covers your employee(s) for work-related injuries. To get an insurance policy, go to any insurance company that issues worker's compensation insurance or to the State Compensation Insurance Fund.
If an employee is hurt on the job or gets a work-related injury and files a claim with the state, you're responsible for all costs associated with that claim. Also, if you do not carry worker's compensation insurance, the California Labor Commission can charge you a penalty or even close your business.
California Department of Industrial Relations
30 Van Ness Avenue
San Francisco, CA
There are specific state requirements for taxes and insurance regarding an employee. As an employer, you must comply with the requirements. Register with the Employment Development Department (EDD) within 15 days after paying more than $100 in wages per calendar quarter to an employee.
According to the U.S. Internal Revenue Service, an employee is "Anyone who performs services that can be controlled by an employer." This means that if you're a "home worker" such as a maid or cook, you're an employee. If you're in business for yourself, you're not an employee.
The following requirements apply only if you hire employees:
If you have already applied to the state board of equalization for a state sales tax permit, your application to EDD has been made.
- Withholding State Disability Insurance - Covers employees for non-occupational illness and/or injury
- Withholding State Personal Income Tax - Based on the number of deductions your employees request on IRS Form W-4 (you need to withhold a portion of the employees' wages and send these funds to the state on a quarterly basis)
- State Unemployment Insurance - Covers employees for periods of unemployment which are not their fault, such as a business slowdown or seasonality (your employer tax rate depends upon your business's previous employment history)
- Employment Training Tax - A contribution is taken from your quarterly unemployment tax for an employee training program that can be used by an employer to retrain employees
If it is discovered that you do not withhold state disability insurance and state personal income tax from the pay checks of your employee(s), you will be responsible for paying these costs yourself, along with penalties and charges for late payments.
Employment Development Department
951 Mariners Island Boulevard, Suite 310
San Mateo, CA 94404