{"id":371741,"date":"2016-03-31T21:34:32","date_gmt":"2016-04-01T02:34:32","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/state\/california-law\/california-business-laws.html"},"modified":"2023-10-03T13:09:35","modified_gmt":"2023-10-03T18:09:35","slug":"california-business-laws","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/state\/california-law\/california-business-laws.html","title":{"rendered":"California Business Laws"},"content":{"rendered":"\n<div class=\"wp-container-core-columns-is-layout-9d6595d7 fl-sectionWithSidebar fl-container fl-flex fl-flex-wrap fl-gap30\">\n    \n    <div class=\"fl-page-articles fl-section-main fl-section-main-full-width\">\n        <div\n    data-testid=\"fl-general-title\"\n    class=\"fl-general-title fl-flex fl-gap20 fl-items-end\"\n>\n    <div class=\"fl-general-title-heading fl-flex fl-flex-column\">\n        <h1\n            class=\"fl-h1 fl-general-title-title fl-no-spacing\"\n            data-testid=\"fl-general-title-title\"\n        >\n            California Business Laws\n        <\/h1>\n        <p\n            class=\"fl-general-title-description fl-text-xl fl-no-margin\"\n            data-testid=\"fl-general-title-description\"\n        >\n            Because of the unique nature of California&#8217;s legislative system, Californians can vote on some types of business laws.\n        <\/p>\n    <\/div>\n<\/div>\n\n<section class=\"fl-gutenberg-byline\">\n    <div class=\"fl-gutenberg-byline-content\">\n                    <p><i>Created by <a href=\"https:\/\/www.findlaw.com\/company\/our-team.html\">FindLaw&#8217;s team<\/a> of legal writers and editors<\/i><\/p>\n\n                | Last reviewed\n        <time>\n                            October 03, 2023\n                    <\/time>\n    <\/div>\n\n    \n    <details class=\"fl-gutenberg-byline-toggle fl-gutenberg-byline-legally-reviewed\">\n        <summary>\n            <i class=\"fl-gutenberg-byline-icon\" aria-hidden=\"true\"><\/i>\n            Legally Reviewed\n        <\/summary>\n\n        <div class=\"fl-gutenberg-byline-toggle-content\">\n            <p><em>This article has been written and reviewed for legal accuracy, clarity, and style by <a href=\"https:\/\/www.findlaw.com\/company\/our-team.html\">FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with <a href=\"https:\/\/www.findlaw.com\/company\/company-history\/editorial-policy.html\">our editorial standards<\/a>.<\/em><\/p>\n\n        <\/div>\n    <\/details>\n\n    <details class=\"fl-gutenberg-byline-toggle fl-gutenberg-byline-fast-checked\">\n        <summary>\n            <i class=\"fl-gutenberg-byline-icon\" aria-hidden=\"true\"><\/i>\n            Fact-Checked\n        <\/summary>\n\n        <div class=\"fl-gutenberg-byline-toggle-content\">\n            <p><em>The last updated date refers to the last time this article was reviewed by FindLaw or one of our <a href=\"https:\/\/www.findlaw.com\/company\/our-team\/contributing-authors.html\">contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please <a href=\"https:\/\/lawyers.findlaw.com\/?fli=bylinelink\" target=\"_blank\" rel=\"noopener\">contact an attorney in your area<\/a>.<\/em><\/p>\n\n        <\/div>\n    <\/details>\n<\/section>\n<p>California business laws regulate large and&nbsp;<a href=\"https:\/\/www.findlaw.com\/smallbusiness.html\">small businesses<\/a>, from insurance to livestock management. Any business entity buying and selling products in California must have a seller&#8217;s permit. Small business owners have as many regulations as big corporations.<\/p>\r\n<p>Assembly bills and new laws go to the voters before becoming regulations, so business owners have a say in what affects their trade.<\/p>\r\n<p>Although most of California&#8217;s laws resemble other states, California has a long history of going its own way. As a result, California has its own&nbsp;<a href=\"https:\/\/leginfo.legislature.ca.gov\/faces\/codesTOCSelected.xhtml?tocCode=COM&amp;tocTitle=+Commercial+Code+-+COM\" target=\"_blank\" rel=\"noopener\">business laws and regulations<\/a>&nbsp;similar to but different from the rest of the nation. FindLaw provides a concise summary of some of these laws that affect large and small companies.<\/p>\r\n<p>According to recent statistics, more than 99% of all businesses in California are &quot;small businesses.&quot; A small business has fewer than 500 employees. The&nbsp;<a href=\"https:\/\/calosba.ca.gov\/\" target=\"_blank\" rel=\"noopener\">California Office of Small Business Advocate<\/a>&nbsp;helps small businesses obey state and federal regulations. The California Secretary of State handles&nbsp;<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/starting-a-business\/first-steps.html\">small business formation<\/a>.<\/p>\r\n<h2>California Business Formation<\/h2>\r\n<p>Business types in California range from one-person operations to multi-national conglomerates.<\/p>\r\n<ul>\r\n<li><b>Sole proprietorships<\/b>&nbsp;are businesses owned and operated by a single individual. A sole proprietorship may have more than one employee, but they are often small businesses with few workers.<\/li>\r\n<\/ul>\r\n<ul>\r\n<li><b>Partnerships&nbsp;<\/b>may have two or more owners. A partnership describes the nature of the business relationship. Whenever two or more people create a profit-oriented business, they have a partnership.<\/li>\r\n<\/ul>\r\n<ul>\r\n<li><b>Limited liability companies&nbsp;and&nbsp;limited liability partnerships<\/b>&nbsp;protect business owners from personal liability. Sole proprietors and partners can be held personally liable in legal matters, but members of LLCs and LLPs cannot. There are additional requirements for setting up and filing a limited liability company.<\/li>\r\n<\/ul>\r\n<ul>\r\n<li><b>When a business incorporates,<\/b>&nbsp;it becomes a separate entity from the company&#8217;s owners, operators, and shareholders. To incorporate, a business must follow specific local and state laws. These include filing articles of incorporation, issuing stock, and electing a board of directors.<\/li>\r\n<\/ul>\r\n<p>Any business can become an LLC or a corporation. There are benefits to incorporation, such as tax breaks, protection from liability, and the ability to buy real estate in the business&#8217;s name. Business owners should get legal advice during business formation.<\/p>\r\n<h2>Regulations for California Business Owners<\/h2>\r\n<p>Large or small, businesses must comply with regulations affecting their ability to do business and their employees&#8217; right to work. California&#8217;s employment laws affect all state and private workers within the state.<\/p>\r\n<p>Proposition 22 established that gig workers are independent contractors. If a company uses independent contractors, some factors can make them &quot;employees&quot; despite their contract.<\/p>\r\n<p>Other laws that affect&nbsp;<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/business-operations.html\">California corporations&#8217; operations<\/a>&nbsp;include:<\/p>\r\n<ul>\r\n<li>California&nbsp;<a href=\"https:\/\/www.findlaw.com\/state\/california-law\/california-wage-and-hour-laws.html\">Wage and Hour Laws<\/a>. Minimum wage in California is currently $15.50 per hour, about twice the Federal minimum. Any hours over eight in any workday or 40 in any workweek are overtime and paid at time-and-a-half.<\/li>\r\n<\/ul>\r\n<ul>\r\n<li>California requires workers&#8217; compensation insurance for businesses with one or more employees. Sole proprietors are not exempt from this regulation.<\/li>\r\n<\/ul>\r\n<ul>\r\n<li>Three new family leave laws went into effect in 2023. Assembly Bill 1949 creates penalties for discrimination against workers taking bereavement leave. Senate Bill 951 extends paid family leave through 2024 and increases wage replacement rates for 2025.<\/li>\r\n<\/ul>\r\n<h2>Licenses and Permits<\/h2>\r\n<p>Doing business in California, or any state, requires&nbsp;<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/starting-a-business\/state-business-licenses.html\">licenses and permits<\/a>. Once a business has the necessary permits, they must renew them annually. New businesses must obtain them for the first time from local and state agencies.<\/p>\r\n<h3>Local Licenses and Permits<\/h3>\r\n<p>Businesses apply for local business permits at city or county offices where they operate. Each county and city has a list of businesses that are required to have business licenses.<\/p>\r\n<p>In some areas, like greater Los Angeles, where the unincorporated areas are intermingled with smaller cities and the City of Los Angeles, you&#8217;ll need to check with the county to determine exactly which type of license you need.<\/p>\r\n<p>Local licensing agencies also control building permits, healthcare licensing, and local sales tax. Los Angeles, San Francisco, and San Diego all charge additional sales tax on top of the state sales tax.<\/p>\r\n<h3>State Licenses and Permits<\/h3>\r\n<p>The&nbsp;<a href=\"https:\/\/www.sos.ca.gov\/business-programs\" target=\"_blank\" rel=\"noopener\">California Secretary of State&#8217;s<\/a>&nbsp;office handles most general business matters for California companies. This is where you go for answers to questions about:<\/p>\r\n<ul>\r\n<li>Business taxes<\/li>\r\n<li>State business licenses<\/li>\r\n<li>Business names and trademarks<\/li>\r\n<li>Business entity formation<\/li>\r\n<\/ul>\r\n<p>The state also handles business tax laws. State sales tax is currently 7.25%.<\/p>\r\n<h3>Federal Licenses and Permits<\/h3>\r\n<p>The only federal license that California businesses need is an Employer Identification Number (EIN). You need this to report taxes to the federal government, whether you have employees or not. You will need an EIN to open a business account with the bank. An EIN application is available at the IRS website.<\/p>\r\n\n<div class=\"categoryContainer container responsivegrid\">\n            <h2>Learn About California Business Laws<\/h2>\n    \n    <div class=\"grid category-container-grid\">\n            <div class=\"g-col-12 g-col-md-6\">\n        <ul class=\"nav-links fl-list-style-none fl-no-margin-horizontal\">\n                            <li>\n                    <h3>                                                    <a title=\"California&#x20;Antitrust&#x20;Laws\" href=\"https:\/\/www.findlaw.com\/state\/california-law\/california-antitrust-laws.html\">\n                                California&#x20;Antitrust&#x20;Laws\n                            <\/a>\n                                            <\/h3>\n                    <p><p>General information about California&#8217;s antitrust laws, which are intended to foster competition, including the statute of limitations for filing a complaint and links to other pertinent information.<\/p>\n<\/p>\n                                    <\/li>\n                            <li>\n                    <h3>                                                    <a title=\"California&#x20;Civil&#x20;Statute&#x20;of&#x20;Limitations\" href=\"https:\/\/www.findlaw.com\/state\/california-law\/california-civil-statute-of-limitations-laws.html\">\n                                California&#x20;Civil&#x20;Statute&#x20;of&#x20;Limitations\n                            <\/a>\n                                            <\/h3>\n                    <p><p>List of California&#8217;s statutes of limitations for various types of civil actions, including personal injury; false imprisonment; defamation; fraud; damage to personal property; professional malpractice; trespassing; and more.<\/p>\n<\/p>\n                                    <\/li>\n                    <\/ul>\n    <\/div>\n            <div class=\"g-col-12 g-col-md-6\">\n        <ul class=\"nav-links fl-list-style-none fl-no-margin-horizontal\">\n                            <li>\n                    <h3>                                                    <a title=\"California&#x20;Deceptive&#x20;Trade&#x20;Practices&#x20;Law\" href=\"https:\/\/www.findlaw.com\/state\/california-law\/california-deceptive-trade-practices-laws.html\">\n                                California&#x20;Deceptive&#x20;Trade&#x20;Practices&#x20;Law\n                            <\/a>\n                                            <\/h3>\n                    <p><p>An overview of California laws that prohibit deceptive trade practices, such as false advertising or tampering with a car&#8217;s odometer, with links to resources on related topics.<\/p>\n<\/p>\n                                    <\/li>\n                            <li>\n                    <h3>                                                    <a title=\"California&#x20;Interest&#x20;Rate&#x20;Laws\" href=\"https:\/\/www.findlaw.com\/state\/california-law\/california-interest-rates-laws.html\">\n                                California&#x20;Interest&#x20;Rate&#x20;Laws\n                            <\/a>\n                                            <\/h3>\n                    <p><p>Basics of California law with regard to interest rates and usury regulations, including the legal maximum interest rate a creditor may charge and penalties for unlawful interest rates.<\/p>\n<\/p>\n                                    <\/li>\n                    <\/ul>\n    <\/div>\n    <\/div>\n<\/div>\n<div>\n    <div id=\"fl-content-list-container\"\n        class=\"fl-flex fl-flex-column fl-content-list-container\">\n                    <h2>California Business Law Articles<\/h2>\n        \n        <ul class=\"fl-list fl-content-list fl-no-margin\" data-testid=\"fl-content-list\">\n                            <li class=\"fl-list-control-list-item\" data-testid=\"fl-content-list-item\">\n                    <i class=\"fa fa-angle-right medium\" aria-hidden=\"true\"><\/i>\n                    <a title=\"California Antitrust Laws\" href=\"https:\/\/www.findlaw.com\/state\/california-law\/california-antitrust-laws.html\" class=\"fl-list-item-link\">\n                        California Antitrust Laws\n                    <\/a>\n                <\/li>\n                            <li class=\"fl-list-control-list-item\" data-testid=\"fl-content-list-item\">\n                    <i class=\"fa fa-angle-right medium\" aria-hidden=\"true\"><\/i>\n                    <a title=\"California Civil Statute of Limitations  Laws\" href=\"https:\/\/www.findlaw.com\/state\/california-law\/california-civil-statute-of-limitations-laws.html\" class=\"fl-list-item-link\">\n                        California Civil Statute of Limitations  Laws\n                    <\/a>\n                <\/li>\n                            <li class=\"fl-list-control-list-item\" data-testid=\"fl-content-list-item\">\n                    <i class=\"fa fa-angle-right medium\" aria-hidden=\"true\"><\/i>\n                    <a title=\"California Corporations Laws\" href=\"https:\/\/www.findlaw.com\/state\/california-law\/california-corporations-laws.html\" class=\"fl-list-item-link\">\n                        California Corporations Laws\n                    <\/a>\n                <\/li>\n                            <li class=\"fl-list-control-list-item\" data-testid=\"fl-content-list-item\">\n                    <i class=\"fa fa-angle-right medium\" aria-hidden=\"true\"><\/i>\n                    <a title=\"California Deceptive Trade Practices Laws\" href=\"https:\/\/www.findlaw.com\/state\/california-law\/california-deceptive-trade-practices-laws.html\" class=\"fl-list-item-link\">\n                        California Deceptive Trade Practices Laws\n                    <\/a>\n                <\/li>\n                            <li class=\"fl-list-control-list-item\" data-testid=\"fl-content-list-item\">\n                    <i class=\"fa fa-angle-right medium\" aria-hidden=\"true\"><\/i>\n                    <a title=\"California Interest Rates Laws\" href=\"https:\/\/www.findlaw.com\/state\/california-law\/california-interest-rates-laws.html\" class=\"fl-list-item-link\">\n                        California Interest Rates Laws\n                    <\/a>\n                <\/li>\n                            <li class=\"fl-list-control-list-item\" data-testid=\"fl-content-list-item\">\n                    <i class=\"fa fa-angle-right medium\" aria-hidden=\"true\"><\/i>\n                    <a title=\"California Securities Fraud Laws\" href=\"https:\/\/www.findlaw.com\/state\/california-law\/california-securities-fraud-laws0.html\" class=\"fl-list-item-link\">\n                        California Securities Fraud Laws\n                    <\/a>\n                <\/li>\n                            <li class=\"fl-list-control-list-item\" data-testid=\"fl-content-list-item\">\n                    <i class=\"fa fa-angle-right medium\" aria-hidden=\"true\"><\/i>\n                    <a title=\"California Security Deposit Laws\" href=\"https:\/\/www.findlaw.com\/state\/california-law\/california-security-deposit-laws.html\" class=\"fl-list-item-link\">\n                        California Security Deposit Laws\n                    <\/a>\n                <\/li>\n                            <li class=\"fl-list-control-list-item\" data-testid=\"fl-content-list-item\">\n                    <i class=\"fa fa-angle-right medium\" aria-hidden=\"true\"><\/i>\n                    <a title=\"How to Form an LLC in California in 7 Steps\" href=\"https:\/\/www.findlaw.com\/state\/california-law\/how-to-form-an-llc-in-california.html\" class=\"fl-list-item-link\">\n                        How to Form an LLC in California in 7 Steps\n                    <\/a>\n                <\/li>\n                    <\/ul>\n    <\/div>\n<\/div>\n<script type=\"application\/ld+json\">\n  {\n    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class=\"general-popular-directory-title\">\n                <h3>Popular Directory Searches<\/h3>\n            <\/div>\n            <ul>\n                                    <li><a href=\"https:\/\/lawyers.findlaw.com\/business-commercial-law\/\" target=\"_blank\" rel=\"noopener\">Business &#038; Commercial Lawyers<\/a><\/li>\n                                    <li><a href=\"https:\/\/lawyers.findlaw.com\/auto-dealer-fraud\/\" target=\"_blank\" rel=\"noopener\">Auto Dealer Fraud Lawyers<\/a><\/li>\n                                    <li><a href=\"https:\/\/lawyers.findlaw.com\/consumer-protection\/\" target=\"_blank\" rel=\"noopener\">Consumer Protection Lawyers<\/a><\/li>\n                                    <li><a href=\"https:\/\/lawyers.findlaw.com\/contracts\/\" target=\"_blank\" rel=\"noopener\">Contracts Lawyers<\/a><\/li>\n                                    <li><a href=\"https:\/\/lawyers.findlaw.com\/franchising\/\" target=\"_blank\" rel=\"noopener\">Franchising 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