How To Register as A Sole Prop in California

A step-by-step guide:

Step 1: Choose a Business Name (Optional)

By default, a sole proprietorship operates under the owner’s legal name (e.g., John Smith Photography). However, if you want a different business name, you will need to file a Fictitious Business Name (FBN), also called a Doing Business As (DBA). You can file this at your local County Clerk’s office in the county where your business will operate and then you must publish the DBA in a local newspaper (usually within 30 days). Cost: Varies by county, typically $75–$150.

Step 2: Get a Business License (Required in most counties)

Most cities/counties in California require a business license (sometimes called a Business Tax Certificate). You can go to your city hall or county office for this application and some offer it online. Once you apply the processing time is usually a few days to a week. Cost: Varies by city/county, typically $50–$150 per year.

Step 3: Register for a Seller’s Permit (If Selling Products)

If you are selling tangible products, you need a Seller’s Permit from the California Department of Tax and Fee Administration (CDTFA). You can register for free online at CDTFA website. This is needed so your state can collect and report sales tax.

Step 4: Get an EIN (Optional but Recommended)

If you have no employees, you can use your Social Security Number (SSN) for tax purposes. However, getting an Employer Identification Number (EIN) is recommended for privacy and tax purposes. Apply for this for free at the IRS website (Apply for EIN). Having an EIN is useful because it:

  • Keeps your SSN private when filling out W-9s.

  • It is required if you hire employees later.

  • Needed to open a business bank account.

Step 5: Open a Business Bank Account (Recommended)

To separate personal and business finances, you should open a business checking account. To do this you need:

  • EIN (if obtained) or SSN.

  • Business license.

  • Fictitious Business Name Certificate (if using a DBA).

Step 6: Understand Self-Employment Taxes

Since a sole proprietor doesn’t have taxes withheld from paychecks, you must:

  • Pay self-employment tax (15.3% for Social Security & Medicare).

  • Make quarterly estimated tax payments to the IRS and California Franchise Tax Board (FTB) if you expect to owe more than $1,000 in taxes. The due dates are April 15, June 15, September 15, January 15 and you can pay via IRS Direct Pay or FTB Web Pay.

Step 7: Get Business Insurance (Recommended)

Even though sole proprietors don’t have liability protection, they can get business insurance to cover risks. Recommended policies:

  • General Liability Insurance (covers accidents, lawsuits).

  • Professional Liability Insurance (for contract disputes or missed deadlines).

Step 8: Track Business Income & Expenses

  • Keep detailed records of business income and expenses for tax deductions.

  • Use accounting software like QuickBooks, Wave, or Excel.

  • Separate business vs. personal expenses for tax compliance.

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