Tax Issues for California Start-Ups
Registering to Pay Taxes
Once you have officially obtained the necessary licenses and permits for your business, you will be responsible for notifying Uncle Sam. In many cases, you can simply contact a central tax agency, which in turn will get you started with the appropriate forms and filing requirements. Once your business is listed in their databases, you may receive periodic inquiries about your business or forms that you must complete to comply with state or federal laws, or both. The main taxes you will need to be aware of include:
- Estimated federal and state individual income taxes,
- Estimated federal and state corporate income taxes,
- A sales and use tax, and
- Property taxes.
The California State Board of Equalization (SBE) is the primary revenue agency for the state. It has field offices located throughout the state to provide information and assistance regarding California taxes. Several free publications may help you plan for your business, including:
- Your California Seller' s Permit, Pamphlet 73
- Sales and Use Tax Laws, Publication 1
- List of Publications, Pamphlet 77
Pamphlet 77 is a brochure available from the Document Design and Control Unit of SBE that lists the tax schedules, calendars, reports, tax laws and regulations, and newsletters available to small businesses. Pamphlet 77 and other SBE publications may be obtained from the nearest SBE field office.
The California Franchise Tax Board (FTB) is the agency that administers the programs for personal income and corporate franchise taxes.
Get an Employer Identification Number
Unless you form a sole proprietorship, you must obtain an employer identification number (EIN), even if you do not have employees. The first registration you should make is to file Form SS-4, Application for Employer Identification Number, with the federal government. You will receive an employer identification number that you will need in many cases to complete other registrations. It is somewhat similar to your personal Social Security number, only it relates to your business.
You can obtain Form SS-4 from your local IRS office or your accountant. Once you have the form, you can apply for an EIN either by mail or by telephone. If you want an EIN immediately, call the Tele-TIN phone number for the service center for your state. If you are not in a hurry, you can apply for your EIN through the mail. Keep in mind, you will need to complete Form SS-4 at least four to five weeks before you will need your EIN.
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