San Francisco is home to the sixth largest economy, with a GDP of $501 billion. Furthermore, small businesses in San Francisco experience a 2.6% annual revenue growth rate , compared to the average California city, which experiences a -0.76% annual revenue growth rate.
No matter how old or young you are, you can always start a small business! In San Francisco, small businesses with owners under the age of 35 generated $78,000 in first year revenue, and owners over the age of 55 generated $105,000.
Although starting a business might seem complicated, here’s what you need to know in order to start your own in San Francisco.
Step 1: Apply for a Federal Employer Identification Number (EIN)
An Employer Identification Number (EIN) is similar to a Social Security Number, but for your business. You need an EIN to file taxes, apply for business permits, open a bank account, get credit cards, and provide your contractors with a 1099.
To apply and register online for an EIN with the IRS, you can use the IRS EIN Assistant.
If you are not a U.S. citizen, you may need an Individual Taxpayer Identification Number (ITIN) instead. If you choose to run your business as a sole proprietor without employees, you may use your Social Security Number instead of an EIN.
Step 2: Apply for a California Payroll Tax Account Number
If you decide to hire employees for your business, you will need to obtain a Payroll Tax Account Number with the State of California in order to file and pay your payroll taxes.
Generally, a business is subject to state payroll taxes when over $100 in wages is paid in a calendar quarter to at least one employee. Wages include cash payments, commissions, bonuses, and non-cash payments (like meals and lodging) for services.
You can apply for a Payroll Tax Account Number here.
Step 3: Obtain a Seller’s Permit
A Seller’s Permit is required if you will sell any goods or products within California or if you will be a wholesaler of goods or products. For example, if you want to open up a hair salon and sell shampoo, you will need a Seller’s Permit.
You can register for a Seller’s Permit online with the California State Board of Equalization or in-person at a field office.
Step 4: Incorporate your business
If you decide to structure your business as a partnership, corporation, or limited liability (LLC), you will need to register or incorporate it with the California Secretary of State.
- For a limited partnership, you will need to file a Certificate of Limited Partnership
- For a general partnership, you will need to file a Statement of Partnership Authority
- For a limited liability partnership, you must first have registered as a general partnership. You will need to file an Application to Register a Limited Liability Partnership
- For a corporation, you will need to file Articles of Incorporation and a Statement of Information
- For an LLC, you will need to Articles of Organization and a Statement of Information
Step 5: Register your Fictitious Business Name
If you decide to open a business that does not use your personal first and last name, you will need to register your business name, also known as a fictitious business name (FBN). Be sure to verify that no one in Los Angeles County has your business name. If you choose to incorporate your business, you will also need to check that the name is available with the State of California.
Once you’ve verified that your FBN, you will register the name with the County of Los Angeles. To register, submit a Fictitious Business Name Statement and the accompanying filing fee either online or in-person.
After submitting your Fictitious Business Name Statement, you will need to advertise the name in a local newspaper for a minimum of four weeks. Here is a list of local newspapers in the county.
Step 6: Obtain a Business Registration Certificate from the SF Office of the Treasurer and Tax Collector
Within 15 days of starting your business, you must register with the SF Office of the Treasurer and Tax Collector. To register, you will need to complete the online application form, provide an e-signature via email and pay the registration fee. It’s important to note that the registration fee depends on your anticipated payroll expense and gross receipts. You can learn more about that here.
In order to register, you will need the following information:
- Business Name
- Business Tax ID
- Business Start Date
- Legal Structure
- Ownership Name(s) and Address(es)
- Location Information
- Estimated Payroll Expenses and Gross Receipts from SF
- Email Address
- Payment Information
Your business registration must be renewed each year by May 31st, and will be valid beginning July 1st until June 30th.
Step 7: Report your Business Property Statement
After registering with the Office of the Treasurer and Tax Collector, the Assessor-Recorder will automatically create an account for our business so that you can file your annual Business Property Statement. During the Spring, you will receive a notice to fill out the Business Property Statement, also known as Form 571-L.
On this form, you will report the full cost of all your supplies, equipment and fixtures at each business location as of December 31st of each year. Based on this value, you will pay a tax.
If you have any questions about the business registration process in San Francisco, the Office of Economic and Workforce Development has compiled a list of resources that discuss different types of small business assistance and women’s entrepreneurship programs. Don’t be daunted by this process because LawChamps is always ready to connect you with an experienced attorney that can help you. Click here to learn more.
This article is intended to convey generally useful information only and does not constitute legal advice. Any opinions expressed are solely those of the author, not LawChamps.
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