Business Guide

Do I need local permits to open a business?

Only the City of Portola requires business licenses; the rest of Plumas County does not. There may be specific permits and requirements, depending on the kind of business you want to open, i.e. barber shop, auto repair, etc.. . It is safe to say that if you are opening a common retail store in an established retail space, you are good to go when it comes to local business permits. 

You should also check with the County Planning Department to make sure that the location where you plan on doing business is zoned for that purpose. If it isn’t, they can help you through the process of possibly getting a special use permit.

City of Portola business license information: https://www.cityofportola.com/business-licenses

What do I need from the State of California to open a business?

Although a Seller’s Permit is not strictly required, say if you only perform a service, but it’s a good thing to have and it doesn’t cost anything to get one. A Seller’s Permit allows you to purchase goods at wholesale prices and not be charged sales tax. Then, when you sell those goods to your customer, you charge sales tax and use that Seller’s Permit number to report and pay those taxes to the State. Basically, if you need to collect sales tax from your customers, you need a Seller’s Permit. To learn more about sales tax and apply for a resale number: https://www.taxes.ca.gov/Sales_and_Use_Tax/

The State also has various permitting requirements for specific businesses like auto repair, cosmetology, funeral homes, child care or construction businesses. If you are already in those industries, you probably know what you need, but you can always search on-line: “What do I need from the State to operate a construction business in California”.

If you have employees, you will have to pay payroll taxes to the State of California that includes Unemployment Tax/UI and Employment Training Tax/ETT. You also have to collect and pay on behalf of your employees their State Income Tax and State Disability Insurance/SDI.

For more information on State Payroll requirements:  https://edd.ca.gov/Payroll_Taxes/

What do I need from the Federal Government to open a business?

There are some cases where the Federal Government regulates and licenses a particular profession. Again, if you are part of that profession, you probably know what you need, but can still do an internet search for specific details.

Most requirements from the Federal Government revolve around taxes. There are several reasons to get an Employer Identification Number/EIN or a Federal Tax ID Number. It does not cost any fee to get that number and it can be done on-line at the link below. Which number you need depends on how your business is structured (sole proprietor or, say, Limited Liability Corporation). You will need the number if you will be hiring employees. Sometimes banks require the number for accounts or loans. As a sole proprietor, you can use your own social security number. A sole proprietor without employees and who doesn't file any excise or pension plan tax returns doesn't need an EIN (but can get one). In this instance, the sole proprietor uses his or her social security number (instead of an EIN) as the taxpayer identification number

EIN E-File Provider: https://www.irs-ein-tax-id.com/

Under what circumstances do I need an inspection?

If you have done any remodeling or construction on a business location, you will probably need the Building Department to inspect the work. If you are doing a food service business, you will need to have the Environmental Health Department inspect your facility. Sometimes, the State of California needs to inspect your business and as mentioned, that requirement should be revealed when you search for what you might need from the State.

What kind of things might not be on the radar that would affect me?

Zoning is the first thing that comes to mind. This is usually only a factor if you plan on doing business outside of established business areas in your community, or will be selling a product or service that is outside of the normal offerings and require county, state or federal oversight. Your best defense is to ask lots of questions and try internet searches that could reveal any unusual requirements.

Do not forget about private considerations as well. Even though everything looks fine to conduct your business, be aware that it may be a problem with neighbors. It’s best to root out these possible problems early on and mitigate them before you are so heavily invested it’s harder to maneuver. Also be mindful of how your business is affected by financial considerations; will a bank loan be affected by your business location?

Why or when do I need a fictitious name?

If your last name is not part of your business name, you need to file a fictitious name statement with the County Clerk/Recorder. This is the law and is meant to establish who owns a business. Some excellent examples are covered in the link below, but a more practical example might be that if you name your business Acme Plumbing, and someone writes a check to Acme Plumbing, how does the bank know that you are Acme Plumbing? If your business name is Freeman Plumbing, and the check is made out to Freeman Plumbing, and your name is Freeman, they would accept the check (depending on the rules of the bank for cashing checks).

It costs $20 to file a fictitious name with the County Clerk/Recorder. Then, you will publish the information in a general circulation newspaper within 30 days. If there is not a local general circulation newspaper locally, you would go to the adjoining county. If they don’t have one, you would go to a general circulation newspaper in Sacramento County. After it is published, the newspaper will supply you with an affidavit of notice that you will file with the Clerk/Recorder. Your bank will require this paperwork to open a bank account in your business name.

Fictitious name application from Plumas County: https://www.plumascounty.us/DocumentCenter/View/37057/Fictitious-Business-Name-Statement

Fictitious name information: https://www.plumascounty.us/DocumentCenter/View/9503/Fictitious-Business-Name-Information

How do I open a bank account?

If your business includes your last name, you should be able to go to any bank and open a business checking account. If the business has another name, you will need to bring in paperwork from the Plumas County Clerk/Recorder to establish your identity as the owner of that name.

If you want to accept credit cards in your business, your bank can help you set that up through their own service. If you want to use another credit card processor, that is your choice and you can tie that service to your bank account so whatever payments you accept through the outside processor will be deposited into your bank account. Outside processors include names like Square or Paypal. Pay attention to how much each processor charges for each transaction. In many banks, they charge a different percentage for different credit cards your customers may present. Services like Square usually charge a slightly higher, but flat fee for all cards. Additional fees can add up quick, so it’s worth asking questions. 

What is a business plan and why is it important?

You will have a much more successful trip if you have planned out your route, where you are staying and for how long. There’s still opportunities to make changes and take side trips, but you have a general plan you work with. That’s a business plan. It establishes what your goals are, what your resources are, how you want to conduct business, how you will grow your business, how you will finance your business and how you will assess your business along the way. It is meant to keep you on track and to show other stakeholders, like banks, that you have a viable plan to become successful. There are many resources that will help you develop a business plan, and most don’t cost anything. If you don’t have a business plan, you are already behind a step.

Business plan assistance: https://www.sierrasbdc.com/

What kind of insurance is required?

Most businesses use two kinds of insurance: liability and property insurance. Liability coverage takes care of someone getting injured at your place of business. Sometimes, it covers issues that arise if there is a problem with what you sell; like malpractice insurance. Property insurance can cover real estate and/or the equipment and inventory of your business. Coverage can include natural disasters, fire, water damage, or theft. There are several insurance agents in Plumas County that can explain and offer these products.

Once you have established that relationship with an agent, be sure to ask about anything that differs from your normal business practice. Special events, projects done off-site, or even working from home can affect coverage.

If you have employees, you will have to provide Unemployment Insurance and Worker’s Compensation coverage. Unemployment insurance is paid to the State, but Worker’s Compensation coverage can come from any number of providers. Again, the best place to start is your insurance agent.

What are my resources in Plumas County?

The Indian Valley Innovation Hub is glad to connect new business people with local services, sometimes at reduced prices. These resources have done business in Plumas County and are familiar with all the details a new business needs to pay attention to. These services would include marketing, financial, employment and legal. The Sierra Business Council is also available to offer advice, assist with business plans and work on finding financing for new businesses.

How should I structure my business?

Will you be a sole proprietorship? A Limited Liability Corporation? An S Corp? The answers to these questions are best answered by an attorney and accountant. As a new business, the main consideration lies with how the business is handles it’s finances. An accountant can guide you towards a structure that makes sense tax wise, considering your current finances and offers the flexibility a start-up needs. If considerations move into liability, multiple owners, proprietary assets, disproportionate investment of owners; it’s time for a lawyer. This can be a fairly simple process when all the facts have been presented to an expert, but it is good advice to use one of these professionals early on.

How do I set up payroll?

You need to make two connections; the Internal Revenue Service and the California Employment Development Department. You will need to register with both entities. Once you have your identifying numbers with both agencies, you will be able to make regular payments to cover payroll taxes. Sometimes these are made monthly, sometimes quarterly, depending on how many employees you have. Some large employers make these deposits weekly. These deposits cover federal income tax, social security payments, state unemployment, state disability, state income tax and employment training tax. Some of these are paid by you, some are paid by the employee, and some are shared by both. However, it is your responsibility as the employer to pay these taxes regularly and on time.

Each agency will supply you with the information you need to calculate these payments from you and your employee. More common is to pay for a payroll program like Quickbooks Payroll or other online payroll services. Many businesses have their accountant handle their payroll needs.

Small town business considerations?

Small, rural communities are wonderful places to live, but can be a challenge economically. However, the same advice applies to any sized location; know your market. There is always room for basic services; food, gas, hardware, pharmacy, or restaurants. But how many of these can survive? As you move into more specific types of businesses, the question of survival becomes even more acute. The most basic questions need to be asked; what is the potential of the market? Or said differently, how much money is there in this community for this product? Unless you are starting a business because the product is a passion of yours (and that’s a viable reason to open a business if you aren’t so worried about finances), then you need to do your homework for your sake, your finances sake and the communities sake. The Indian Valley Innovation Hub, along with the Sierra Business Council are a great place to start when analyzing the market. Then, take that analysis and work it into a truthful, viable business plan. Remember, not all business plans point to a successful business, and that’s alright. Now is the time to discover if a business might not have the best chance at success.