Starting a Business in California? Here’s Your 2025 Legal Checklist

Launching a business in California is exciting, but navigating the Golden State’s complex legal landscape can be challenging. As we move through 2025, entrepreneurs face an evolving regulatory environment that requires careful attention to compliance. At Rokita Law P.C., we’ve created this comprehensive legal checklist to help you start your California business on solid legal footing.

Choosing the Right Business Structure

Your business structure affects everything from daily operations to taxes and personal liability. California entrepreneurs have several options:

• Sole Proprietorship: The simplest structure with minimal paperwork, but offers no personal liability protection.
• Limited Liability Company (LLC): Combines liability protection with tax flexibility.
• Corporation (C-Corp or S-Corp): Offers the strongest liability protection but comes with more regulatory requirements.
• Partnership: Multiple variations exist (general, limited, limited liability) depending on your needs.

Each structure has distinct advantages and disadvantages based on your business goals, tax situation, and risk tolerance. For example, while sole proprietorships are easy to establish, they don’t protect your personal assets from business debts and liabilities.

Business Registration and Formation

Once you’ve chosen a structure, you’ll need to properly register your business:

For LLCs:

1. File Articles of Organization with the California Secretary of State
2. Pay the filing fee ($70 as of 2025)
3. Create an operating agreement (not filed with the state but essential)
4. File Statement of Information (Form LLC-12) within 90 days

For Corporations:

1. File Articles of Incorporation with the California Secretary of State
2. Pay the filing fee ($100 as of 2025)
3. Create corporate bylaws
4. Issue stock certificates
5. File Statement of Information (Form SI-200) within 90 days

Our business formation services can help streamline this process and ensure all requirements are properly met.

Securing Your Business Name

Your business name is crucial to your brand identity and must be legally protected:

1. Name Availability Check: Search the California Secretary of State’s business database to ensure your desired name isn’t already taken.
2. DBA (Doing Business As): If you’re operating under a name different from your legal business name, file a Fictitious Business Name Statement with your county clerk’s office.
3. Trademark Protection: Consider whether your business name, logo, or slogans need trademark protection. Federal registration with the USPTO provides the strongest protection.

At Rokita Law P.C., we offer comprehensive trademark services to help protect your brand.

Tax Registration Requirements

California businesses face various tax obligations depending on their structure and activities:

1. Federal Tax ID (EIN): Almost all businesses need an Employer Identification Number from the IRS.
2. State Tax Registration:

• Register with the California Department of Tax and Fee Administration (CDTFA) for sales tax permits
• Register with the Employment Development Department (EDD) for employer taxes
• Register with the Franchise Tax Board (FTB) for income taxes

1. Local Tax Registration: Many cities and counties require businesses to register for local taxes.

Remember that California has implemented several tax changes in 2025, including adjustments to income tax brackets and sales tax requirements for digital goods and services.

Licenses and Permits

California has some of the most extensive licensing requirements in the nation:

1. General Business License: While California doesn’t have a statewide general business license, most cities and counties require local business licenses.
2. Industry-Specific Licenses: Depending on your business activities, you may need specific licenses from state agencies. Common examples include:

• Food preparation (health department permits)
• Alcohol sales (ABC license)
• Construction (contractor’s license)
• Professional services (legal, medical, accounting licenses)

1. Seller’s Permit: Required if you sell physical goods.
2. Environmental Permits: Businesses that impact the environment may need permits from agencies like the California Environmental Protection Agency.

Employment Law Compliance

If you plan to hire employees, California has some of the nation’s strictest employment laws:

1. Worker Classification: Properly classify workers as employees or independent contractors under California’s ABC test and comply with AB 5 requirements.
2. Mandatory Postings: Display all required federal and state employment notices in your workplace.
3. Wage and Hour Laws: Comply with California’s minimum wage ($18/hour for employers with 26+ employees as of 2025), overtime rules, and meal/rest break requirements.
4. Paid Leave: Understand California’s paid sick leave law, which requires a minimum of 24 hours or three days of paid sick leave per year.
5. New 2025 Requirements: Be aware of the latest workplace privacy regulations and expanded family leave provisions that took effect this year.

Intellectual Property Protection

Protecting your intellectual property is critical in today’s competitive business environment:

1. Trademarks: Protect your business name, logo, and slogans through registration.
2. Copyrights: Secure rights for creative works like content, software, and designs.
3. Patents: Consider patent protection for unique inventions or processes.
4. Trade Secrets: Implement proper safeguards for confidential business information.

Understanding the differences between intellectual property types is essential for comprehensive protection. Our intellectual property practice can help you develop a strategic approach.

Business Contracts and Agreements

Proper contracts are the foundation of business relationships and help prevent costly disputes:

1. Operating Agreements/Bylaws: Document internal business operations and management.
2. Client/Customer Agreements: Establish clear terms for providing goods or services.
3. Vendor Contracts: Formalize relationships with suppliers and service providers.
4. Employment Agreements: Document employment terms, confidentiality, and non-compete provisions where applicable.
5. Lease Agreements: Secure proper commercial space with favorable terms.

Well-drafted contracts can prevent breach of contract issues that might otherwise lead to litigation.

Insurance Requirements

Adequate insurance protection is essential for any California business:

1. General Liability Insurance: Protects against common business risks.
2. Professional Liability Insurance: Important for service providers.
3. Workers’ Compensation Insurance: Mandatory for businesses with employees.
4. Cyber Liability Insurance: Increasingly important with California’s strict data privacy laws.
5. Property Insurance: Protects physical assets and equipment.

Compliance with Privacy Laws

California leads the nation in privacy protection with the California Consumer Privacy Act (CCPA) and the California Privacy Rights Act (CPRA):

1. Privacy Policy: Create a compliant privacy policy for your website.
2. Data Management Procedures: Implement proper data collection, storage, and deletion procedures.
3. Consumer Rights Responses: Develop processes to respond to consumer data requests.
4. Employee Data Protection: Comply with requirements related to employee data.

Financial and Record-Keeping Systems

Establish proper financial and record-keeping systems from day one:

1. Separate Business Accounts: Maintain separate banking and credit accounts.
2. Accounting Systems: Set up proper bookkeeping systems.
3. Document Retention Policy: Develop procedures for maintaining business records.
4. Regular Financial Reviews: Schedule periodic reviews of financial performance.

Conclusion: The Value of Legal Guidance

Starting a business in California involves navigating multiple legal requirements across federal, state, and local levels. While this checklist covers many essential considerations, specific requirements vary based on your industry, location, and business model.

Working with experienced business attorneys at Rokita Law P.C. can help ensure you’ve covered all legal bases. Our team provides strategic guidance to entrepreneurs at every stage of business formation and growth.

Ready to start your California business journey with confidence? Contact our team for a consultation tailored to your specific business needs. We’re here to help you navigate California’s complex business landscape in 2025 and beyond.