Starting a Business in Burbank, CA

Initiated 3/28/2009

I'm interested in making a couple of iPhone apps/games and maybe sell some crafts. I've done some contracting in the past writing software, but never got around to setting up a real business. I plan to get a business checking account and make payments from there to help distinguish between work and personal expenses.

It turns out that setting up a business is complicated, but the IRS gives you a lot of help. I definitely recommend browsing their website if you are interested in not getting audited :-) Past that, the following is a very basic ongoing step-by-step on how to start a business in Burbank.

1. Getting an EIN (Employer Identification Number)

The IRS requires any business to get an EIN. The form itself is very short, but if you're like me and don't know what to put in the fields, it can take an hour! Here's the website:

Get an EIN

Here are my choices:
Business Type: 'Sole Proprietorship'. I was choosing between this and an LLC (Limited Liability Company). An LLC costs money to start (I have heard numbers of around $800 a year) in exchange for, well, limited liability. In short, if your company fails, your credit doesn't go down with it.
Business Purpose: 'Sell Goods', even though I am not sure if software is a good or a service still. I figure that, while digital goods are not tangible, I am still making software in a goods kind of way. And since I am planning to also sell some crafts, which are definitely goods, this is an agreeable answer.
Primary Purpose: 'Internet Sales'

And voila, I have an EIN.

2. Fictitious Name Filing

I chose to call my business Sefthuko Ventures, which is considered a Fictitious Name. Basically, if your company name doesn't include your name (like Hermann Chong Investments), you need to do this too. Having a company name that doesn't include your name doesn't affect liability - as far as I can tell, all it means is that you are a fibber and you need to fill out some more forms.

The forms are at lavote.net. You have to do two things in California:

The absolute cheapest place I could find to do these things for me is at British Weekly, which is a Santa Monica joint that seems to only exist for fulfilling bizarre California law demands. In exchange, I don't have to wait to receive the results of my fictitious name filing, and 4 weeks later I will magically be a real company.

This is the first time I've had to cough up money to start a company:

Seems like a pretty easy charge to forget five years in the future. The British Weekly charged me $63 to do the first-time filing and publishing.

You can see some pretty crazy examples of how this is actually published here.

The British Weekly was incredibly efficient! I paid and mailed the filing on Saturday and was mailed the results on Thursday!

3/28/2009: Paypal'd money (on a Saturday)
3/30/2009: Received receipt of payment
4/2/2009: Received confirmed DBA statement!

3. County Licenses

I went to http://www.business.gov to figure out what I need to do to be legit. I was forwarded over to CalGOLD for all of my license needs. I chose these kinds of businesses in their search and got some useful information:

Evidently if you are one of these, you have to get an LA County Business License. I don't seem to be on the list, so I won't get one.

And if you are one of these, California wants you to get a license from them, too. I am also not on this list.

4. City Licenses

Once I got the fictitious name certificate, I went to the License and Code Services Division in Burbank to pay taxes:

City of Burbank License and Code Services

It costs $87.85 a year, plus a one-time registration fee of $30.00. After talking with the clerk, I found out something sad: the Home Occupation business that I would be creating in Burbank prohibits the actual manufacture of crafts-that-require-sewing. So I guess I have to outsource this to someone else, and if I end up doing things in large quantities, I'll need a commercial location. So that just got really expensive really fast.

However, it sounds like I can have someone else in Burbank sew something for me as a service (I would buy them the material), and then sell that on Etsy without having done a single thing with a needle.

5. Seller's Permit

Eventually I plan to sell crafts, which requires a seller's permit:
Seller's Permit Website

I will fill this out once I have a sense of expected monthly sales (and an actual product).

6. Opening a Business Checking Account

The elusive 'business account' interested me the most. The ability to easily segregate business and personal costs just by choosing between credit cards! Also, it would allow me to put all business-related deposits in a central location. I signed up with Bank of America, only because I had a previous checking account there. They give you tools to help manage the account, but it isn't free like their normal personal checking accounts (unless you have a minimum balance). I read on the site that the fee was also waived with a valid debit card purchase each month, but I haven't seen that written on anything else since.

They emailed me, asking me to sign a letter to prove the tie between me and the business.

3/27/2009: Applied online
4/3/2009: Faxed in requested information
4/6/2009: Received and mailed in signed agreement
4/13/2009: Received business check card

7. Starting as an iPhone Developer

Unless I jailbreak the app, I need to enroll as a developer in order to be able to upload software to the iPhone. It is $99.

It is taking a long time, so I called Apple to see what was going on and they said that it would take an unspecified amount of time.

4/2/2009: Gave $99 to enroll as a business developer
4/20/2009: A friend of mine applied as an individual developer, and heard back within an hour!
4/21/2009: Got an email from Apple asking me for business documents to confirm. And all this time, I thought I was waiting for a phone call :-)
4/22/2009: Faxed in the documents.
4/28/2009: Apple sends me an email saying they haven't gotten my documents.
4/29/2009: I send Apple an email saying that they have.
4/30/2009: Apple sends me an email saying that they did actually receive my documents.
5/6/2009: Apple sends me an email saying everything is cool. I pay them $99. An hour later, they email me back with the activation codes!

8. Maintenance of Business

So apart from the renewal of the fictitious name filing every five years, I will look forward to filing these every year:

And every quarter, I will have to file:

There are many tax calendars on their website for anyone interested. Check out Publication 509, 1518 and this calendar on EDD CA.

9. The Future

If I were to employ anyone, I would be subject to Payroll Tax and would have to register with California for an employer account number.

10. Resources

I fully expect to be totally lost and missing vital requirements. There are many places called "Small Business Development Centers" that I can go to for help. The nearest one to me is in Glendale:

Eastern Los Angeles SBDC
Service Corps of Retired Executives (SCORE)
330 N. Brand Blvd.
Suite 190
Glendale, CA 91023
818-552-3206
818-552-3321

There's also one in Van Nuys:

North Los Angeles County SBDC
5121 Van Nuys Boulevard, 3rd Floor
Van Nuys, CA 91403-2100
818-907-9922

© 2009 Hermann Chong