Before starting a business, the legal environment of your establishment should be
researched. There are many laws, rules, and regulations that must be followed to start and
run your business. Almost every aspect of your business is under some form of legal ruling.
Specific forms, licenses and other documentation must be filed with state and local
government offices in order to begin. Without this documentation, you may be prevented
from opening. It is important for you to take a close look at California's legal business requirements.
Aspects of Business under Legal Guidelines
Major aspects of business governed
by business law can be divided into the following
areas: legal structure, business name, trademarks and patents, licensing and permits,
contracts and legal liability.
What legal structure will your business take? This decision is of primary importance because laws governing many aspects of the business vary depending on its legal structure. The four main categories are: sole proprietorship, partnership, Limited Liability Company
and corporation. These four types of business entities are discussed in the section on "Structuring Your Business"
Even though a business name has no magic that will guarantee success, the name is
nevertheless very important to a new business. As a small business prospers and grows, the public will begin to recognize and associate the name with the product or service.
There is a body of law that specifically governs
the business name. For example, if a business contains anything other than the actual names of the owners, then it is classified as a "firm name"
or a "fictitious name."
If the legal structure of the business
corporation, then it must be incorporated and the business name must reflect this fact.
The Fictitious Business Name Statement must be filed within 30 days of the date you open your business. The statement is valid for five years. There is a fee for initial filing and a
charge for renewal. The chosen business name is valid in the county where you file, and must not be similar to any other business as to mislead the public. It must not violate any
federally protected names. The fictitious name must also be printed in the newspaper for four consecutive weeks. Your local newspaper may be willing to assist in this process.
To file your fictitious name or find out if the name you have chosen is still available, contact:
San Luis Obispo County
1055 Monterey Street Room D120
San Luis Obispo CA 93408
5955 Capistrano Suite B
Atascadero CA 93422
Trademarks and Patents
A trademark is a symbol that identifies a specific product. If your business sells services, then the trademark
is the one that you use in advertising; it will enable the public to set you
apart from your competition. Both trademarks and service marks can be registered for your
protection. You can do this by going to www.uspto.gov
A patent grants
a monopoly right to
produce, use, sell, or gain profit from a
specific invention. Patents are extremely important in business. There is a specific body of patent law that protects the rights of the registrant. Patent lawyers are usually listed separately in the telephone directory. In fact, general practice lawyers usually refer most inquiries about
patents to these specialists.
Licenses and Permits
Several federal, state and local licenses and permits are required for starting a new
business. Before you even apply for a license, you must first find out the land use requirements,
zoning requirements and detailed building code requirements for your type of business, and should do so before signing a rental, lease, or purchase agreement. Requirements may vary for each incorporated city in the county, and the county itself.For assistance call the appropriate number shown in the Resources chapter.
Permits required for new businesses are different depending on the type of business. The most common licenses and permits include: a business license, building permit, sales
permit, State ID and sales tax schedule, and occupational license.
Business licenses are issued by individual cities within the county, or by the county in county areas. These must be posted on the business premises for public inspection. The fee varies
depending on the type of business. If you are going to locate your business in more than
one city, a separate business license is required for each city and/or county. For
County of San Luis Obispo Tax and License Collector
Center, Room D290 1055
San Luis Obispo CA 93408 (805) 781-5832
For city offices, please see Resources chapter.
Home Occupation Permit
up a business in your home, you first need
to make sure
that the proposed
the property is consistent with the
zoning. To check the zoning,
you first must know the Assessor's Parcel Number of the property. If you are the property owner, this can be
obtained from your property tax statement. If you are a renter or lessee, your landlord will have this number. If this number is not readily available, contact (you will need the exact address of the property):
County Assessor's Office
Center, Room D360 1055
San Luis Obispo CA 93408 (805) 781-5643
Fax (805) 781-5641
Once you have obtained the Assessor's Parcel Number, go to your local City or County
Planning Department to 1) check the zoning and 2) to obtain information regarding allowable home occupations. Resources chapter.
For the County of San Luis Obispo, go to:
County of San Luis Obispo Planning Department
976 Osos Street Room 200 San
Luis Obispo CA 93408
Fax (805) 781-1242
If you are planning to place a sign on the exterior of
your business, you need a Sign Permit. Regulations regarding the types of signs and placement depend on the zoning for the parcel
and the type of business. The Sign Permit application requires you (the business owner) or your sign contractor to submit drawings indicating the advertising message, location, dimensions, construction, electrical wiring and components and the method of attachment. The fee for the permit depends usually on the value of the sign.
Start your permit process with the planning people at the addresses and phone numbers
shown above, the Planning Departments of the County or City
in which you will be located. Resources chapter.
If you are planning to construct your place of business, or do any major remodeling, you must have a building permit. Special permits may be required for parking, food preparation, fire safety, discharge of pollutants, etc. If you are building within city limits, there are specific forms that must be filed. For more information, contact your Planning Department: see Resources chapter
If you are building outside a city, specific forms must be filed with the county. For further information on county building permits, contact:
County of San Luis Obispo Planning Department
976 Osos Street Room 200 San
Luis Obispo CA 93408
If you are planning to sell items that are subject to state sales tax, you must also apply for
a seller's permit for each place of operation. This "resale number" will eliminate the need to pay
tax when you purchase
items for resale
in your business. A
personal Statement of Financial Condition and estimations of monthly sales and expenses may be required with new applications. There is no fee required for a sales permit; however, under certain
conditions a security deposit may be required. To apply contact:
California State Board of Equalization
4820 McGrath Suite 260
Ventura CA 93003-7778
State ID and Withholding Schedule
If you will be an employer, you must obtain a state employer identification number and
employees withholding schedule from:
Employment Tax District
4111 Broad Street
San Luis Obispo, CA 93401 (888) 745-3886 (805) 788-2600
If you are applying for a Fuel Tax Permit or Sales Tax Permit, you are automatically registered with the Employment Development Department. Registration must be within fifteen days of the first payment of wages. No fee is required for registration.
There are many occupations that require licensing in California. For information on this
Department of Consumer Affairs
Please see Business Tax Certificates under the chapter on "Understanding Taxes"
for additional information on licenses and permits.
A contract creates legal rights and duties between people. Business contracts can be divided into three groups: commercial contracts, employment contracts, and real estate transactions.
Commercial Contracts: The laws of commercial contracts originate from many sources, but the most important law
concerning commercial contracts is the Uniform Commercial Code. It is a comprehensive commercial law adopted by every state,
covering the sale and purchase of goods. It does not apply to services.
Employment Contracts: Employment contracts are governed by labor laws. An entire section of the legal profession specializes in this very complex and constantly
Real Estate Transactions: Real estate transactions involve the lease or purchase of land or property for your business premises. Contact a reputable real estate
person, or ask advice from a bank or title company.
A business has three types of liabilities: product liability, legal liability, and employment liability.
Product Liability is a business' responsibility
ensure that the product
it sells is safe for the
public to use. It also covers warranties a business offers for its products. You must make
sure that you understand your responsibility, as a business owner, to the legal environment. This is a constantly changing area of U.S. law. You must become aware of its implications to your business before you start. For information concerning the legal liability of your
business, you should contact your attorney.
Legal Liability: Legal liabilities are the obligations a business owes to the government, such as abiding by the business law, the contract law, the tax law, the permit and licensing requirements. Legal liability also includes the protection against deceptive trade practices listed under the Uniform Deceptive Trade Practices Act.
Employment Liability: Employment liability is tied closely to employment contracts and labor laws. There is an entire body of law which regulates the number of hours worked, minimum wage, health benefits, discrimination, undocumented alien workers, termination of employment, retirement benefits, vacation, insurance, union contracts, etc.
Injury and Illness Prevention Program
California's worker safety law requires businesses with 10 or more employees to have a written comprehensive safety program
that identifies work place hazards. Employers also must have a safety training program, a way for workers to identify hazards with no fear of reprisal and a person responsible to implement the plan. Employers with fewer than 10 workers must comply with the law, but do not need all of the regulations in writing. Penalties for violators range from fines, to closing down operations, to jail time. For free assistance with your program, call:
Department of Industrial Relations
Cal/OSHA Consultation Service 1901 N. Gateway Blvd., Suite 102
Fresno CA 93727
(800) 963-9424 (559) 454-1295
Americans with Disabilities Act (ADA)
This comprehensive legislation provides civil rights protection in employment, transportation, public accommodations, and more to individuals with disabilities. Employers
must comply with several provisions under this law. For ADA technical assistance, information, referral, training, and consultation on complying with the Act, contact:
The Pacific Disability and Business Technical Assistance Center
Fax (510) 285-5614
The Equal Employment Opportunities Commission
Where to Find Help
Business laws are very complex and all encompassing, as you probably noticed from reading the above discussion. In fact, business law covers such a vast area of our legal environment, a legal specialty has developed in "business law" and those lawyers who specialize in this area are known as business lawyers. To find a competent business lawyer who can handle all your business needs contact the San Luis Obispo Bar Association or get referrals from Trade Associations, or personal friends.
Your business attorney should be with you from the start of planning your business through reviewing your business plan. While their services
not inexpensive the consequence of making legal errors in starting and running your business can be very costly.