How to Register a Business in California

This guide will walk you through the steps to legally establish your business in California state, from choosing a business structure to obtaining necessary permits and licenses.

1. Key Steps for Business Registration in Calfornia

California tax agencies

• California tax agency: CA Employment Development Department (EDD) – income tax withholding and unemployment tax

2. Registration Steps

2.1 Choose a Business Structure

The first step is choosing your business structure. Here are the main options:

• Sole Proprietorship Simplest structure for single-owner businesses
• Partnership For businesses with multiple owners
• LLC (Limited Liability Company) Combines benefits of corporations and partnerships
• Corporation More complex structure with shares and shareholders

The structure you choose will determine your registration requirements with the Department of Revenue (DOR) and other agencies.

2.2 Register for Withholding Tax and Unemployment

i. Find your EDD tax account number and unemployment rate

After you register with the California EDD, you can find your EDD payroll tax account number and unemployment rate in a few places:

• On your “New Employer Account Registration Info” letter, or;
• In the upper right-hand corner of any additional agency correspondence (listed as “Account ID”), or;
• In your online e-Services for Business account

ii. Find your unemployment (UI) rate, and employment training tax (ETT) rates

• Your unemployment (UI) rate, and employment training tax (ETT) rates can be found:

  • In your online e-Services for Business account—under the “I Want To” section, click Get My UI Rate.
  • On your “UI Rate and Reserve Account” letter from the agency

  If you cannot find your account number or tax rates, contact the agency directly at (888) 745-3886.

• Personal Income Tax only (PIT-only) companies

If the CA EDD has let you know that your business is PIT-only, and they've given you an EIN beginning with “8", enter your unemployment tax rate as 0%.

iii. State Disability Insurance (SDI) and Paid Family Medical Leave (PFL)

The California State Disability Insurance (SDI) program provides short-term Disability Insurance (DI) and Paid Family Leave (PFL) wage replacement benefits to eligible workers who need time off work.

Note: The city of San Francisco has additional requirements for employers.

2.3 Register Workers Compensation

i. All businesses, regardless of size or employee status, must carry workers’ compensation insurance — this includes corporate officers. Sole proprietors without employees have the option to obtain coverage for themselves.

ii. You can get coverage from a commercial provider, California’s state fund, or self-insure with approval. (link: California Department of Industrial Relations)

2.4 Retirement savings

1. If an employer has 5 or more employees and doesn’t provide a 401(k) or other retirement plan, they are required by law to register for CalSavers — the state’s retirement savings program.
   1. Key points about CalSavers:
      1. It’s an automatic-enrollment, individual retirement account (IRA) program.
      2. Employees can opt out if they don’t want to participate.
      3. Deadlines for compliance depend on the size of the business, but all eligible employers should already be enrolled by now.