Most businesses usually need all of the following:
- Employer Identification Number if filing taxes under the business name. Consult a tax accountant for all tax advice.
- Seller's Permit required by CA Dept of Tax and Fee Administration.
- CA Income Tax all businesses are required to submit a Business Income Tax statement annually.
The State of California does not require or issue business licenses for sole proprietorship's or general partnerships. Other business structures, however, must register with the state.
All businesses located in an incorporated city in Sonoma County must first obtain a business license from that city. The county does not require a business license to do business within its unincorporated areas. Check for sure at CalGOLD.
- City Business Licensing Requirements by EDB
- Business License if your business is within city limits, check with your municipality to obtain your business license.*
- Home Occupation Permit usually required for home-based businesses, check with your municipality.
*Bottom line: Business license is needed if you are doing retail sales in a municipality (e.g. farmers market, storefront). It is not needed if you are selling wholesale (e.g. to restaurants, markets).
Sales/Use Tax for Ag
California Dept of Tax & Fee Administration (CDTFA) regulates sales/use taxes, visit their site for the Tax Guide for the Agricultural Industry.
In some cases, purchases made by agricultural businesses are exempt from sales tax including:
- Animals, Feed, and Related Supplies
- Farm and Garden Supplies
- Liquefied Petroleum Gas (LPG)
- Farm Equipment and Machinery
- Diesel Fuel Used in Farming or Food Processing
As your business grows, you may find that you need to hire your first employee. There are several steps you need to take before you bring on someone. For more information, check out this information provided by the U.S. Small Business Administration (SBA) or connect with a mentor from the Small Business Development Center (SBDC). If you hire employees, you will need to obtain/be aware of the following:
- Registration Form for Employees required to file within 15 days after paying more than $100 in wages.
- Workers Compensation Insurance is required either by the employer or by self-employed (contract) worker.
- Wage/Hour Laws employers must comply with laws including minimum wages, hours and working conditions.
Fictitious Business Name
Register with the Sonoma County Clerk. Generally, this registration would apply if:
- an individual is doing business under a name other than their own
- the name suggests the existence of additional owners
- the name does not include the surname of each general partner.
If you plan to operate a business under a name other than your own, a fictitious business name statement is required in Sonoma County. Forms and information are online or call (707) 565-3700.
Insurance for Ag Operations
Although it can be expensive, it's important to have a farm policy. Talk to insurance agent(s) to find the best policy for your operation.
Make sure you and your business are covered for activities you want to do (e.g. atritourism, ag processing). Farm Liability Insurance policies generally only cover farming activities (ag processing may not be considered a farming activity). You may need a Commercial General Liability coverage. Talk to your agent.
An excellent resources is Farm Commons Insurance information. From understanding an insurance policy, to evaluating insurance coverage for crop and livestock loss, planning for worker injuries and more, find tip sheets, guides, and multimedia materials for building a resilient farm or ranch business with effective insurance coverage.
Farm Bill Insurance Programs
The following are offered by USDA Risk Management Agency to help cover farm income when losses occur. Visit the site for all programs, here are some that might be right for your operation:
- Actual Production History insure producers against yield losses due to natural causes such as drought, excessive moisture, hail, wind, frost, insects, and disease.
- Commodity Crops for barley, canola (including rapeseed), corn, cotton, grain sorghum, rice, soybeans, sunflowers, and wheat.
- Livestock and Dairy Insurance Plans
- Pasture, Rangeland, and Forage Plans
- Whole-Farm Revenue Protection provides a risk management safety net for all commodities on the farm under one insurance policy. This insurance plan is tailored for any farm with up to $8.5 million in insured revenue, including farms with specialty or organic commodities (both crops and livestock), or those marketing to local, regional, farm-identity preserved, specialty, or direct markets. Find an agent.
- Visit their site for entire list of insurance plans.
Getting Started in Business
The following resource can be of help to new businesses.
- Business support is available for all businesses in Sonoma County from the Economic Development Board. To get you started:
- Small Business Start-up Guide for Northern California by US Small Business Administration. State agencies, departments, and offices responsible for processing and monitoring state-mandated licensing requirements are included with addresses and phone numbers.
- SBDC (Small Biz Development Center) Napa-Sonoma has a consultant for ag.
- SCORE: Free business advice for small businesses by retired business professionals.