Starting a Business in California
California is one of the largest economies within the United States and home to over 4 million businesses. It would be wise for a company to incorporate there, as it is home to some of largest companies in North America. The Golden State can be a great place for a new company to prosper if you take advantage of its benefits. Financial opportunities are available to California businesses if you know where to look. You can take advantage of a number of incentives to help your business expand and grow. Incentives are given in the form of tax credits and exemptions, financing and loans, bonds, and utilities.
STEPS TO STARTING A BUSINESS IN CALIFORNIAOnce you have done a California corporation search and setup a company with the California Secretary of State, you can apply online for a BOE Seller’s Permit. If you haven’t done so already, you can also find the procedure of how to obtain an EIN. In order to meet your compliance obligations and avoid costly penalties, you will have to get Business Licenses you need to operate legally. After starting a business in California, there are a number of other things that can be done. Once you find office space, you will want to post your California business license in a conspicuous place. You can also find a California sales tax rate using a sales tax calculator. Depending on the type of business you are running and where you are located you may have to collect and pay sales tax. If you meet these requirements, your sales tax returns would be governed and directed by the California Department of Tax and Fee Administration (CDTFA) and California Board of Equalization. After you have completed your other administrative obligations, you can begin looking into the quality programs offered in California. The following is a list of some of these major incentives that California offers to help a business on its journey:
- The California New Employment Credit allows companies to hire full time employees within specific geographic locations.
- The California Competes Tax Credit is a credit available to all qualified companies in California. There must be a net benefit to the state for any businesses selected to receive credits. Credits are awarded ranging from $20,000-$20,000,000.
- The California Sales and Use Tax Exemption for agriculture is a partial exemption from the Sales and Use Tax levied on farm equipment and other agriculture machinery as well as their components.
- The Advanced Transportation and Manufacturing Sales and Use Tax Exemption is a complete exemption from Sales and Use Tax for manufacturing companies that use advanced transportation as well as incorporate alternative energy practices into their business model.
- Another exemption available to manufacturing companies is the Sales and Use Tax Exemption for Manufacturing. This is a partial exemption of Sales and Use Tax for the purchasing and leasing of equipment used in the manufacturing process as well as for the equipment that is used for research and development activities.
- The Timber Harvesting Sales and Use Tax Exemption is another partial exemption from Sales and Use Tax. Equipment and machinery, as well as their components, that is used in the off road operations of commercial timber harvesting is exempt. A seller’s permit is required for the resale certificate needed for the exemption.
- The California Teleproduction Exemption is a partial exemption of Sales and Use Tax. Equipment and machinery, as well as their components, that is used in teleproduction or post production service operations is exempt.
- California offers various financing and loan incentives to its businesses. The California Capital Access Program allows businesses that would otherwise have problems with funding to receive capital loans from lenders. Another similar loan program is the California Small Business Loan Guarantee Program. This program allows lenders to provide capital at a lower risk to companies who otherwise might not qualify without the guarantee. The Jumpstart Loan Guarantee Program gives loans to low income individuals located in impoverished communities. The California Infrastructure and Economic Development Bank Export Financing Program is another loan guarantee program. It is designed to help small businesses who sell merchandise to their customers outside the US secure loans.
- California has some bond and utilities programs to help foster growth for companies. Industrial Development Bonds are offered to private companies for financing of processing and manufacturing facilities. Beginning Farmer Bonds are offered to eligible farming businesses in order to finance qualified purchase or improvement of agricultural land financing of equipment. The Economic Development Rate Program is a utility program that gives specific discounts on utilities for businesses that are in need of high energy loads.