How To Set Up A Sole Proprietorship In California

This form of business is the most simple one as the owner and the business entity are the same. It can only exist as long as the owner does as well. Given the “sole” in the name, the business only has the one owner, since multiple owners would result in a partnership, which has its own business forms. Since the owner and the business are one entity, the owner is personally liable for the company’s debts and liabilities. This can be incredibly risky; therefore, it is definitely advised for the owner to have the

appropriate insurance for the business. Furthermore, sole proprietorships are the easiest business entities to form, with one of the reasons being that the owner does not have to register with the California Secretary of State.

Setting Up A Sole Proprietorship

As stated previously, forming a sole proprietorship is not a difficult process. The owner must first create a name for their business. Contrary to some other forms of business entities, a sole proprietorship can have almost any name, as long as it is not too similar to another registered business’ name and not misleading. Moreover, if the name of the business is not the same as the legal name of the owner, then the owner must file a Fictitious Business Name Statement, which must also be published in a newspaper.

Once the previous steps have been accomplished, the business must acquire the necessary and applicable permits and licenses for the nature of the business. California has already specified which ones are mandatory for each type of business, and can be found by looking up the California Governor’s Office of Business and Economic Development CalGold website. Furthermore, if the business has more employees than just the owner, then the business must receive an Employer Identification Number. If there are no other employees, then the owner does not require the nine digit number.