California Tax Registration Checklist
1. FTB Registration
Companies doing business in California are required to register with the Franchise Tax Board and pay franchise fees. The only entities exempt from franchise fees are unincorporated entities like sole proprietorships and unincorporated partnerships. Annual LLC and Corporate fees begin at $800 and increase, based on the amount of the company’s annual revenue. For more information about how to register with the FTB, visit https://www.ftb.ca.gov/.
2. Get your EIN
An Employer Identification Number (EIN) is required for many fundamental business functions, such as obtaining a bank account; payment of federal, payroll, or other taxes; and a variety of other reasons. Important: upon filing for the EIN, the applicant will receive an SS4 form with the EIN number on it, and the designation of the responsible party. To apply for an EIN online, visit the IRS website at https://sa.www4.irs.gov/modiein/individual/index.jsp.
3. Sales Tax Registration
California Sales and Use Tax is, in general, a tax on the sales price of goods sold to Californians. California businesses must file periodic tax returns with the California Department of Tax and Fee Administration. For more information on how to register and file Sales and Use tax returns, visit the CDTFA at http://www.cdtfa.ca.gov.
4. Form 8832 Election
This election allows a business to be taxed by the IRS in a way that is different from its default status. To do this, the business must mail in IRS Form 8832 Election. For example, an LLC, whose default classification is partnership treatment, would need to file an 8832 in order to be taxed as a C-Corp; and a corporation would have to file an 8832 in order to be taxed as an S-Corp. For more information about 8832 filings, visit the IRS website at https://www.irs.gov/forms-pubs/about-form-8832.
5. Payroll Taxes
Businesses must withhold taxes when they pay their W-2 employees. These withholdings are to pay FICA taxes, payroll taxes, and remit the Employee’s withheld wages. For more information about how payroll taxes work, visit the IRS website at https://www.irs.gov/businesses/small-businesses-self-employed/employment-taxes.