Starting a Company
The first step to starting a business in LA is to choose your company type – for-profit, nonprofit or limited liability (LLC). All companies doing business in the City of Los Angeles must register with the city and pay annual business taxes. Registering with the county, state and federal government may also be required, depending on your company type. Incorporating your business entity with the California Secretary of State is necessary if you choose to structure your business as a partnership, corporation or LLC. To obtain an employment identification number (EIN), businesses must register with the US Internal Revenue Service (IRS). Obtaining a California Sales Tax Certificate Number (also known as a Seller’s Permit) will allow you to charge and submit sales taxes. Finally, if you have employees, you’ll need to obtain a Payroll Tax Account Number with the State of California.
There are paid services such as Legal Zoom (legalzoom.com) or charitable organizations, such as Start Up Nation (startupnation.com) and My Own Business (scu.edu/mobi), that help entrepreneurs start businesses. Start Up Nation provides counselling services from a variety of experts and peers who have started their own businesses, and My Own Business is a nonprofit devoted to educating entrepreneurs on how to start and run a business. The Central California Small Business Development Center (SBDC) is another great resource that provides mentoring services and free consulting from business experts in areas such as planning and cash-flow management. It also offers free seminars and training tools online at centralcasbdc.com.
Opening a Bank Account
Major banks in LA include City National Bank, Chase, Wells Fargo, U.S. Bank, Capital One and Discover. Most banks charge a service fee of $12 to $25 per month for checking or savings accounts, as well as a minimum deposit of $25. Some, such as Capital One, will allow you to open a bank account online in as little as five minutes. If you’re a student, there are a variety of banks, such as Chase, that will waive or cut service fees significantly with proof of enrollment. To open a bank account in LA, you’ll need your Social Security Number or Tax Identification Number, proof of home address, email address, funding method, and additional information for any joint account holder. Most banks will require proof of a foreign or local address in the form of a lease, utility bill or other mail, a passport, and a driver’s license.
In addition to US federal taxes, you must pay California state taxes. As with federal taxes, your individual or corporate state tax rates vary according to your type of business and income bracket (a higher annual income is taxed at a higher percentage). The current self-employment tax rate in California is 15.3 percent, so with individual income tax and federal tax included, you should expect to put aside 30–35 percent of your income for your annual taxes. The window for filing annual taxes in the US is January 29 to April 17. Professional tax-filing companies such as H&R Block are available, and there are also online tax-preparation companies; for example, TaxSlayer Pro and TurboTax. The IRS also offers its own FreeFile service. Organizations such as Optima Tax Relief offer free tax consultations, and nonprofits such as Volunteer Income Tax Assistance Program (VITA) provides free tax help and preparation services to individuals who earn less than $65,000 per year.
Phone and Internet
The largest telecom providers in the US are Verizon Wireless, Sprint, AT&T and T-Mobile, and generally you should expect to pay within the range of $40 to $120 a month for your phone plan. Some providers, such as T-Mobile, offer benefits such as unlimited roaming across North America, starting at $70 per month, which may be beneficial for people who travel regularly between these countries. While the “big four” providers are the most widely used, alternative providers have disrupted the market with simple pricing models, such as Google Fi’s $20 per month flat fee for unlimited calls and texts, $10 per GB of data, and roaming without extra cost; or Virgin Mobile Beyond Talk, which offers a variety of plans, including unlimited text and data with 300 minutes of talk for $35/month. Other alternatives include Republic Wireless, Ting, Airvoice Wireless and Straight Talk Wireless, which don’t require a contract.