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Richard - Bizlaw
Richard - Bizlaw, Attorney
Category: Business Law
Satisfied Customers: 10362
Experience:  30 years of corporate, litigation and international law
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Hello, my wife is currently transitioning from an Employee

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Hello, my wife is currently transitioning from an Employee at a salon in California to a Booth Renter. She needs to get a business license. Should she establish the business as a sole proprietor, corp, s-corp, or something else. My thought is corporation, but I'm not sure if that would be the best tax situation. Does she need to register with federal and state institutions separately?

I could not respond in chat and had to switch to this format.

Operating as an S corp would be a good choice. You get the benefits of limited liability but you are taxed as a sole proprietor. Once you incorporate you will have to get a federal tax id number. When you incorporate in CA you will also get a state registration number. If she sells products she will need a sales tax number. If she has to have a license to conduct her business she may need a license for the corporation but I am not sure of what she does.

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Customer: replied 4 years ago.
Thanks.


She is a hair stylist. She will sell products through the owner of the salon and receive a commission fee, but not buy and sell products on her own. She will pay a weekly fee to rent a booth in the salon and charge for her services. How does she incorporate in CA and the how will she obtain a Fed Tax ID? Are these 4 diff steps:

1.) Incorporate as sCorp in CA (will then automatically receive a registration #)

2.) Get Fed Tax ID

3.) Get license for the Corporation? (she already has a cosmetology license for the State of CA)
Customer: replied 4 years ago.
Additionally IYO would a company like Legal Zoom be of help here? I get a discount to join through my employer.

You can use Legal Zoom to form your corporation in CA. When you incorporate you will get a state registration number. You can get a tax ID number by going to irs.gov and do a search for the SS-4 form which is how you apply for a tax ID for your new corporation. You can do it online and get the ID number right away. As a booth renter you will not need a license for the business. If she ever goes out on her own she will need an establishment license but right now that is not necessary. Once she is incorporated she wants to make what is called a subchaper S election. You should be able to get the forms on Legal Zoom but if not you can get them on the irs.gov website - just search for sub chapter S form. You will also need to make a sub chapter S filing at the state level. That should be available at the state tax website.

If he has prepaid the rent and left the premises in good condition, then he should get his security deposit back since you have the rent through the end of the lease. AS long as he understands that the rest of the rent will be forfeit then he has met his obligation and is entitled to get his security deposit back as there were no damages or unpaid rent.

If you need further help please do not rate 2 stars/faces "Helped a little" or 1 star/face "I expected more".This is considered a negative rating against me.

Just reply to me via the "CONTINUE CONVERSATION" or "REPLY"

button with the questions you have as I receive no compensation for my efforts for the lowest two ratings.

Please keep in mind that I am trying to help you understand and resolve your situation. I don't make the laws, I am just reporting or interpreting them, so the outcome may not be what you had hoped for.

This communication is not intended as legal advice. A local attorney should always be consulted for legal advice. No client/attorney relationship is intended or created by this communication

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