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9 Important Must-Do’s for the New Business Owner in California

So you just started a new business, or you have been in business for a while and are now ready to hire your first employee – how exciting! With a new business comes many responsibilities that owners need to be aware of. Here is a checklist of important documents, notices, accounts, and policies you will need for success!

  • Apply for an Employer Identification Number (EIN). 

In the United States, an EIN is the corporate equivalent to a Social Security number. The IRS uses the EIN to identify the taxpayer. These must be used by business entities – corporations, partnerships, and limited liability companies. Most sole proprietors can get away with using their SSN, but an EIN would be beneficial to have, especially if you plan to expand your business.

  • Get a California Employee Development Department (EDD) eServices Account. 

An eServices account for your business allows you, as the employer, a fast, easy, and secure way to file returns, make payments, and manage employer payroll tax accounts 24 hours a day, 7 days a week.

Some benefits for having this account:

  • Fulfills the new e-file and e-pay mandate for employers
  • No cost to enroll and use
  • Provides confirmation when your return, report, or payment is received
  • Saves time by saving basic account information for future transactions
  • Reduces paper and mailing costs
  • Get a California Employee Development Department (EDD) Tax ID. 

Similar to the EIN, the CA EDD employer ID number is an 8-digit number (example: 000-0000-0), assigned by the state and used for all state tax forms.

  • Get a local business license. 

Business licenses are permits issued by government agencies that allow individuals or companies to conduct business within the government’s geographical jurisdiction. This grants you permission by your local government to start a business!

  • Open a Business Bank Account 

This bank account can assist with business loans, credit, savings, and checking account functions- specifically for companies and not for individuals.  

  • Get Worker’s Compensation Insurance

All California employers must provide workers’ compensation benefits to their employees even if they only have one employee. The website for the State of California has a list of FAQs to go over if you have any questions regarding worker’s compensation.

  • Create a Sick Leave Policy per California Law

Business entities with employees in California are required by law to provide and allow employees to use at least 24 hours or three days of paid sick leave per year. Employers adopting new policies to comply with the law may choose whether to have an “accrual” policy or a “no accrual/up-front” policy. There have also been many legislation changes to leave policies within CA since the start of the pandemic. Similarly, local jurisdictions within CA have their own set of regulations in place that should be considered.

  • Create an employee handbook. 

Creating an employee handbook will ease the process of onboarding new hires and keeping your employees in the know about certain policies and your company’s code of conduct. You can also use your handbook to inform your employees about the benefits that are available to them.

  • Post required notices (Labor Law Postings) at your workplace. 

It is important to have labor law postings visible in common areas for your employees to see per State & Federal law. Without these positing, you may face unwanted penalties.

Once you’ve prepared your business for operation and compliance, the next step is to start the hiring/onboarding process. It is always advised to speak with a trusted professional to ensure the process goes as smoothly as possible.

For more information regarding setting up a new CA business, contact Payroll Systems for an interactive checklist.

You deserve a recruitment process that is highly efficient and agile. Payroll Systems’ ATS is the tool you need to empower your company with top-notch talent.

Contact us to learn more about our HR and payroll solutions to complement ATS— from timekeeping systems with companion mobile app, physical clocks, and customized job costing and labor distribution reporting.

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This article provides general information and shouldn’t be construed as legal or HR advice. Since employment laws may change over time and can vary by location and industry, please consult a lawyer or HR expert for advice specific to your business. You can also contact Payroll Systems to inquire about our HR support services.