Business Assistance Guide – Taxes and Reporting Requirements

All new businesses employing one or more persons must apply for a Federal Employer’s Identification Number (EIN) with the Internal Revenue Service. All new businesses operating in California employing one or more persons must apply for State Employer’s Identification Number with the Employment Tax Office of the Employment Development Department. All appropriate public agencies should be contacted directly for specific instruction concerning license, tax and related requirements and how often (quarterly, annually or monthly) forms, reports or payments must be filed with the taxing agency.

• If You Have Employees
• Sales Tax
• Workman’s Compensation Insurance

If You Have Employees

You must withhold and pay federal income tax, social security tax, and unemployment tax for all employees. As an employer in California, you must withhold and pay state employee income tax, state unemployment insurance tax, employment training tax and disability insurance tax.

• The California Employment Development Department (EDD): Lists all employee-related forms, taxes, and information you need to be in compliance with state employment laws.
• Business Owner’s Toolkit: A place to learn about obtaining a Federal Employer’s I.D. Number.
• Internal Revenue Service (IRS): Tax information and tips for all types and sizes of businesses.

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Sales Tax

All businesses selling tangible personal property must pay a percentage of total gross receipts to the California Board of Equalization. This sales tax is collected from the consumer or purchaser at the time of sale and may be composed of state, county and city taxes. Sales tax rates vary within the state. In Sonoma County, the sales tax is 7.5 percent. Some businesses may not be required to collect sales tax on certain services or goods, such as professional fees or groceries.

• State Board of Equalization: The State Board of Equalization homepage. California Sales Tax information and list of tax-related links.
• CalGOLD: Provides businesses with information on permits and other requirements of California and at all levels of government.
• State of California Franchise Tax Board: The State of California Franchise Tax Board homepage.

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Workman’s Compensation Insurance

All businesses employing one or more persons must insure the employee for a work-related injury. The rates depend on the nature of each employee’s occupation. California offers State Compensation Insurance or this can be obtained through private insurance groups.

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