The document outlines a step-by-step checklist for starting a business in San Francisco, including structuring the business, developing a business plan, ensuring zoning compliance, registering the business, and financing it. It explains various business structures such as sole proprietorships, partnerships, corporations, and LLCs, detailing their legal implications and tax obligations. Additionally, it addresses the process of registering a business, protecting its name, and obtaining financing, along with related compliance requirements.

1. STARTING A BUSINESS IN SAN FRANCISCO FAQs
What steps should I follow in starting my new business in San Francisco?
Use the following checklist of steps in starting your new business (see the questions below for further details):
1. Structure the business.
2. Develop a business plan.
3. Check City Planning to ensure that you are permitted to conduct the kind of business you would like to conduct in the
location or area you have selected.
4. Register your business.
5. Protect your business name.
1111 Jones Street, Suite 8
6. Finance your business.
San Francisco, California
United States 94109
How do I structure my business?
Tel / Fax 415.345.9885
One of the first decisions you need to make as a business owner is how your business should be structured. There is no one
legal entity that best fits all small businesses. Whether you decide to start as a sole proprietor, partnership, limited liability
entity, or nonprofit depends on several factors such as ease of entity management, liability, and taxation.
What is a sole proprietorship?
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A sole proprietorship is an extension of you and essentially subjects you, personally, to unlimited liability in your business as
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well as legal responsibility for all debts against the business. Profits from a sole proprietorship flow directly to the owner’s
personal tax return without taxation at the business level. Most small businesses start out as sole proprietorships because
this is the simplest type of business structure. To start a sole proprietorship, you will need a San Francisco Business
Registration Certification from the Tax Collector’s Office.
What is a general partnership?
In a general partnership, two or more people share ownership of a single business. Just like a sole proprietorship, the law
does not distinguish between the business and its owner. Each partner is responsible for the debts and obligations of the
business. Generally, implementing a formal written partnership agreement is prudent to define roles, expectations, future
contributions, and involvement in the business, as well as what would happen in case of liquidation. Without an agreement,
default partnership laws will apply. A general partnership has flow-through taxation, meaning no taxes are paid at the
business level. Instead, the individual partner is taxed on his/her share of the partnership income. To start a general
partnership, you will need a San Francisco Business Registration Certificate from the Tax Collector’s Office.
What is a limited partnership (LP) and a partnership with limited liability (LLP)?
“Limited” means that most of the partners have limited liability in terms of their investments as well as limited involvement
regarding the day-to-day management decisions. This form of ownership is not often used for operating a retail or service
businesses. In general, LLPs are set up to accommodate investors. In California, you must file a Certificate of Limited
Partnership with the California Secretary of State. The initial fee is $70 with a minimum $800 minimum franchise tax due at
the time your LP is filed. LLPs are only available for architecture, accounting, and legal services in California.
What is a C-corporation?
By law, a corporation is a separate and unique entity from those who own it. While partnership and sole proprietorships are
an extension of you, a corporation can be separately taxed, sued, and enter into contractual agreements. The owners are
called shareholders, and the shareholders elect a board of directors to oversee the major policies and decisions and appoint
officers who carry out the daily operations of the business. A properly formed corporation assumes a separate legal and tax
life distinct from its shareholders. Profits are subject to two levels of tax – corporation taxed as separate entity and
shareholders taxed on dividends paid by corporation. The process of incorporation requires more time and money than other
forms of organizations. Corporations are monitored by federal, state, and local agencies, and as such may have more
paperwork to comply with regulations. Formalities include separate bank accounts, scribing meeting minutes, holding regular
meetings, and filing requirements. You must submit a $100 fee to California Secretary of State for Filing Articles of
Incorporation and first year’s tax to CA Franchise Tax Board.

2. What is a sub-chapter S-corporation?
This entity takes the advantages of the limited liability aspect of a corporation and the pass-through tax treatment of a
partnership. There is no federal income tax. S-corporation pays the state taxes (1.5% in 2008). This entity is limited to 100
shareholders and limited to 1 class of stock. Shareholders cannot be nonresident aliens (for federal income tax purposes).
You must file Articles of Incorporation with Secretary of State. Additional filing requirements with the Internal Revenue
Service - IRS Form 2553 and California Franchise Tax Board.
What is a limited liability company (LLC)?
Just like an S-Corp, the LLC provides limited liability features of a corporation and the tax pass-through operations of a
partnership. The difference is that the LLC is a relatively new type of business structure. In terms of formation, the LLC is
easier to form than a corporation, but more complex to form than a general partnership. Owners are called members. An
LLC is typically taxed as a partnership if it has two or more members for federal income tax purposes. The LLC will not pay
federal income tax and must file tax returns for each individual member. In California, LLCs cannot be businesses engaging
in banking, insurance, or trust. You must file a $70 filing fee for Articles of Organization with the Secretary of State, $800
annual tax to CA Franchise Tax Board, the first year tax of $800 payable within first 3 months of organization, and be subject
to an annual fee to CA Franchise Tax board based on the LLC's gross income. LLC's must maintain separate bank accounts
but no board minutes are required.
How do I develop a business plan?
There is no particular way to develop a business plan. It is generally a document that defines your business goals and
potential and serves as your company’s resume. The basic parts include an executive summary, a current and pro forma
balance sheet, market plan and strategy, an income statement, and a cash flow analysis. Banking institutions look to this
business plan to provide specific and organized information about your company including how you plan to repay any
borrowed money. Before loaning capital, investors will also require your resume, copy of lease, articles of incorporation,
maps, floor plans, market survey results, and marketing material enclosed in the plan (see “Business Plan Outline” for more
information.
What happens if I do not comply with zoning regulations?
If you tie yourself to an area or space you cannot use because of conflict with zoning regulations, you can lose your rent
deposit along with any improvements you may have made. Your neighbors and other businesses in or near your location may
complain, and a City Inspector could determine that you're operating a business illegally and force you to close. This is why
you should come prepared to City Planning with the following information about the space and area in which you plan to
conduct business: square feet, the property’s physical condition, layout, traffic flow, parking, utility requirements, and costs.
Go to:
Zoning Center
City Planning Information Center
1660 Mission Street, 1st Floor
San Francisco, CA 94102
Tel: 415-558-6377
www.sfgov.org/planning
How do I register my business?
California Incorporation Registration (for partnerships, corporations, nonprofits, and limited liability entities) can be filed with
the Secretary of State. You must also conduct a business name search. A Federal Employer Identification Number (EIN) is
required for most businesses; only sole proprietors with no employees are not required to have an EIN. Sole proprietors may
use their Social Security Number as an EIN. Non U.S. Citizens must get a Taxpayer Identification Number (TIN) from the IRS
before filing for their local business license. All San Francisco businesses must register at the Tax Collector’s Office within 15
days of starting their business.
How long does it take to receive a Business Registration Certificate?
A Business Registration Certificate will be mailed to the mailing address on file within ten (10) business days of the starting
date indicated when the business was registered with the Office of the Treasurer & Tax Collector. In the event that the
business owner needs the certificate sooner, a temporary certificate can be requested.

3. How long does my registration last? Do I need to renew my registration?
The business registration certificate is issued on a yearly basis. The one-year registration period is based on San Francisco's
fiscal year calendar which begins on July 1 and ends June 30th of the following year. Every year thereafter, the Business Tax
Registration Certificate is renewed each year in February for the following full fiscal year.
What is the fee for the Business Registration Certificate?
For new businesses, the first year's registration fee is based on the tax due on its estimated payroll expense liability as
reported on the Application for Business Tax Registration (see chart below). The tax rate on payroll expense is 1.5%.
Businesses that hire employees to perform work or render services within San Francisco pay registration fees based upon
their total payroll expense attributable to San Francisco.
Estimated Tax Due On
Payroll Expense Registration Fee Registration Fee
Less than $1.00
(Taxable Payroll is zero) $25.00
$1.00 - $10,000
(Taxable Payroll is between $0.01- $666,666.66) $150.00
$10,001 - $50,000
(Taxable Payroll is between $666,666.67 and $3,333,333.33) $250.00
$50,001 and over
(Taxable Payroll is over $3,333,333.33) $500.00
The place to register is:
Office of the Treasurer & Tax Collector
City Hall, Room 140
1 Dr. Carlton B. Goodlett Place
San Francisco, CA 94102
How do I protect my business name?
Every person who regularly transacts business in the state of California for profit under a fictitious name shall file a Fictitious
Business Name (FBN) Statement, otherwise known as Doing Business As (DBA), no later than 40 days from the time he or
she commences to transact such a business. Check your business name to make sure that the business name(s) you wish to
use for your business is not currently registered with the City and County of San Francisco.
The place to file and register is:
County Clerk, City Hall, Rroom 168
1 Dr. Carlton B. Goodlett Place
San Francisco, CA 94102
Tel. 415-554-4950
Patents, and trademarks can be registered with the US Patent and Trademark Office (USPTO). Copyright registration can be
filed with the Library of Congress, US Copyright Office.
How do I finance my business?
After developing your business plan, you should already know all your expenses, both one-time startup expenses and ongoing
cash requirements. You should itemize each purchase and expense and resource its realistic cost. With cash flow in hand, you
will need to find capital to finance your business. This could be in any form, including bank loans, personal savings, and family
contributions. Before you ask for a loan from a financial institution and/or alternative lender, be prepared to answer the
following loan preparation questions:

4. Business Planning
1. What products/services does your business offer?
2. What are your revenue expectations over time? How many units do you have to sell and at what price to reach those
expectations?
3. What are the expenses of the business?
4. What does the cash flow model of the business look like - when do you have to pay for expenses and when will you be paid
for your products/services?
5. Who are your customers, and how do you define your target market?
6. How are you planning to market to your customers?
7. Who is your competition, and how are you different?
8. If your business is in a commercial space, where is it located? What are the terms of your lease?
9. What systems do you have in place to manage your financials? Your employees?
10. Do you have all the required permits and licenses for your business?
11. If you are acquiring an existing business, what is the acquisition price based on? Do you have copies of the previous
owner's tax returns and/or financial statements?
Is a Loan the Right Answer?
1. What specific items would you purchase with a loan?
2. If you're looking for "working capital," what is happening in the business (new expansion, unexpected losses) that is
causing the need?
3. What assets (inventory, equipment, cash) and liabilities (accounts payable, credit cards, loans) does your business
currently carry?
4. How much money are you able to contribute to the business from savings and/or home equity?
Personal Finances
1. What are all sources of income into your household?
2. What are all the expenses of your household?
3. Is your household income sufficient to cover all household expenses?
4. If you own a home, what kind of mortgage do you have? Do you have any equity available to use as collateral? If you have
a negatively amortizing loan, what are you plans to manage your monthly payment if/when your bill increases?
Credit
1. What is your credit score?
2. What is your impression of you credit score and what are your plans to improve your score over time?
3. Do you have any recent late payments or accounts currently in collection?
4. Have you ever declared bankruptcy? If so, explain what was happening in your life at the time.
5. How much credit card debt do you currently carry? Are you trying to consistently pay down your principal balance?
For Credit Check and Repair Counseling, contact SCORE or SBDC
• SCORE
415-744-6827
sfscore@sfscore.org
• San Francisco Small Business Development Center
415-841-4050