Starting a business means handling several legal issues. New owners need to know the rules and regulations that apply to their companies to help them keep in line with the law.
This blog will talk about the legal factors to think about when starting a business in California. Learning about these will help new owners build their business on solid ground.
Filing requirements
As a business owner, you will have to submit ongoing filing requirements. These include the following:
- Annual report or biennial statement
- Statement filing fees
- Franchise tax
- Initial reports
- Articles of organization or amendment
After setting up your business, you may still need to file the articles of amendment in the future. For example, if you moved addresses or changed the company’s name, you will have to file this document.
Permits and licenses
The licenses and permits you will secure vary depending on your industry. You may also have to secure certificates from the state and city. Moreover, renewal requirements vary, so it is wise to inquire from local business licensing offices.
For instance, you may have to secure health and safety certificates if you sell food or cooking ingredients. You may need to regularly renew your sales permits if you plan to sell regulated items like tires or alcohol. If you provide professional services, you may need certification from a third-party board to renew your license.
Internal requirements
These requirements vary depending on a company’s business entity. For instance, corporations must hold initial and annual director and shareholder meetings, record meeting details and issue stock to shareholders. They must also keep track of all stock movements.
Meanwhile, limited liability companies (LLCs) have more lenient internal requirements. However, owners must maintain an updated operating agreement and record all membership interest transfers. LLCs must also issue membership shares and hold annual meetings.
Understanding the legal landscape is crucial for entrepreneurs starting a business in the state. By carefully considering the vital legal factors outlined in this blog, new business owners can establish a solid foundation for their ventures.