Registering a new business name for an organization or entity in the State of California is not that complicated, however there are few considerations you need to make before starting the registration process.
In this article we will take a look at these considerations and then show you how to register a business name in California.
Table of Contents
What Type of Entity to Register
Before registering a business name in California you need to decide on what type of entity you will be registering.
There are various entity types, however when starting out a small business you would usually either register your business as a sole proprietor (or the Partnership equivalent, if you’re starting the business with another person), or as a limited liability company (LLC).
This is an important consideration, because when starting out, you want to make sure that you are registering the right entity type for your business needs and your personal security.
A lot of people start their venture as a Sole Proprietor or Partnership, and this is fine. However, it would be best to consult an attorney who can guide you on the best choice for your type of business.
In general I typically recommend an LLC, even for small businesses that are just starting out, for various reasons.
By registering your business as a limited liability company (LLC), you are giving yourself personal liability protection. With an LLC, shareholders of the company are typically only liable for the debts and obligations of the LLC, to the extent of the capital they contributed towards the business.
On the other hand, in a Sole Proprietorship or Partnership, the owners of the business are personally liable for all of the debts and obligations of the business.
Additionally, an LLC can provide flexibility in terms of management and ownership structure. This can be useful for businesses with more than one owner or where you want to separate the management of the business from the ownership.
So, while a sole proprietorship is a simpler and less costly option for starting a business, an LLC does provide greater personal liability protection and flexibility. It’s important to take into account these factors when determining the best entity type for your business in California.
Registering a Sole Proprietor or Partnership in California?
If you register your business as a sole proprietor or partnership and you want to use a business name other than your own name, then you will need to file a DBA, which is short for ‘Doing-Business-As’.
As the name suggests, the DBA specifies under which brand name you will be conducting your business. For instance if your name is Robert Smith, but you decide to open a business under the name of ‘Billy Bob Plumbing Services’ then you will need to file a DBA.
On the other hand, if you’re doing your business as Robert Smith Plumbing, then you don’t need a DBA because it’s your personal name which you are using.
A DBA registration, is also referred to as a Fictitious Business Name Statement and all it does is inform the general public that you are going to be doing business under another name than your personal name.
So keep in mind that even though you are hiding behind a fictitious business name, the DBA itself does not protect you in any way, shape or form.
What is the Process for Filing a DBA in California?
The first thing you need to do is pick a unique name for your business that hasn’t already been taken. Obviously you can’t just pick somebody else’s business name.
You can check business name availability in California by doing a business search on the CA Secretary of State Business Website.
Also there are certain rules you need to follow when choosing the business name. You can find a list of the California naming rules in the California Code of Regulations.
Once you have chosen the name, you need to file the appropriate DBA forms. These are also referred to as a ‘Fictitious Business Name statement’ or ‘Assumed Business Name Statement’.
In California, a DBA (Doing Business As) must be filed at the county level. So, you will need to file a DBA in the county where your business is located, or in the county where you plan to conduct business.
So, for example, if you plan to conduct your business operations in Los Angeles, then you must file the Fictitious Business Name statement with the LA County.
You can usually download the Fictitious Business Name statement from the County’s official website and the form would look something like this.
You can find a convenient list of all online business registration forms, for every County, on the California Governor’s official Business & Economic Development website.
It is important to remember that there is a deadline, which is usually 40 days from the date of starting your business, in which to file a ‘Fictitious Business Name Statement’.
Make sure to make a few copies of the original form, as this will be requested by the county officer, will be needed for publishing purposes, and it’s also good for you to keep a copy for your own records.
Once the form is filed, you then have 30 days time to publish the same form in a local newspaper where the business will be operating. This needs to be shown and published in the newspaper once per week for a whole month (four weeks).
The reason for publishing in a newspaper is that people within the county are notified and if there’s any objection they can object to it before the name is made official in the County records.
I would suggest that you confirm beforehand, with the County Clerk’s Office, if there is a predefined list of approved newspapers where one needs to publish this notice.
Once the four weeks of publication are done, you have to go back to the county office and file an affidavit of publication. This is basically a confirmation that you have completed that publishing requirements. This should be done within 30 days from the last newspaper publishing date.
Once the affidavit of publication is filed, you are then officially registered to do business in that chosen name.
Filing for Business License and Tax Certificate
The requirement of a business license depends on the legislation of the city where you operate your business. Most cities will require a business license
How to Register an LLC Name in California
To register a limited liability company in California you will need to file the articles of organization with the Secretary of State Business Programs Division.
You can find the online LLC-1 form here, and this will look like this:
Filing these forms would usually cost you less than $100 in fees.
You can go on the secretary of state website and do it yourself, as it’s quite a simple process. However, before filling it in make sure you confirm that the name is not already taken. Otherwise the form will get rejected and you will need to re-submit it with a new name and pay the fees again.
You can check if the Company name is already taken by doing a business name search at the secretary of state website.
If your business is registered as an LLC, you do not need to file a DBA to do business under your registered company name, however it may be necessary to file a DBA if you want to conduct business under a brand name that is different from your official company name.
Once you confirm your chosen LLC name is available you can proceed with filling in the form and file your articles of organization if it’s an LLC or your articles of incorporation if it’s a corporation.
The filing of these forms with the secretary of state can take anywhere between three days to three weeks, depending on how it’s done, who’s doing it, and whether it is being done online (which is a faster process) or via snail mail.
Once you get your articles back from the secretary of state then you can apply for your business license and any other required documents, such as your EIN (Employer Identification Number) if you will be employing people to work in the company.
To apply for an EIN you can do this online from the IRS website.
You also need to look into filing for an S Corp tax designation with the IRS, setting up operating agreements, resolutions, bylaws, and various other legal documents that you’re might need to run your business as an LLC.
So, as you can see it can start getting quite complicated at this point to understand what to file and how to go about legal and tax planning.
I always recommend you consult with an attorney to help you set up your LLC in the best way possible so that you can then concentrate on the operational business part and get your company moving forward and making some revenue.
Disclaimer and Conclusion
This article is meant to give a brief overview of what steps you need to follow in order to register a business name in California and is not meant to act as legal advice.
As mentioned above, when you register a company or corporation in California, it can get quite complicated, so I always recommend spending some money on an experienced attorney who can guide you through the intricacies of the legal and tax set up.
These attorneys will advise you on the optimum set-up for your business to avoid any future legal problems and make the most of any tax planning. So, the cost of their services can be seen as an investment in your company’s future security and also tax savings when the company becomes profitable.
Just make sure you spend the money on a good, experienced attorney.
Good luck with your business venture and please feel free to leave any comments or questions you might have, below.