What are California employer requirements for small businesses?
California has some of the strictest employer requirements in the country. Before you hire your first employee, you need to register with the Employment Development Department for state payroll taxes. This covers unemployment insurance, state disability insurance, and personal income tax withholding. You’ll get an EDD account number that you use for all quarterly filings and payments.
Workers’ compensation insurance is required from day one with no exceptions. California doesn’t care if you only have one part-time employee. You need coverage before they start work. Rates depend on your industry and payroll, with higher-risk trades like construction paying significantly more than office-based businesses.
Wage and hour compliance trips up a lot of employers. California minimum wage is currently $16 per hour, but San Diego and some other cities have higher local minimums. Overtime kicks in after 8 hours in a single day, not just 40 hours in a week like federal rules. Employees must get a 30-minute unpaid meal break before their fifth hour and a paid 10-minute rest break for every four hours worked.
Sick leave requirements expanded recently. You must provide at least 40 hours of paid sick leave per year. Employees start accruing from their first day and can use sick time after 90 days. Track this carefully because California enforces it.
Pay stubs require specific information including hours worked, pay rates, accrued sick leave, and employer name and address. Missing any required element can result in penalties even if you paid the employee correctly.
Once you hit five employees, you need to provide sexual harassment prevention training. Two hours for supervisors, one hour for everyone else, within six months of hire and every two years after. At 50 employees, additional requirements like CFRA family leave kick in.
New hire reporting must happen within 20 days. You also need to provide new employees with a stack of required notices covering their rights, workers’ comp information, and paid family leave details.
Working with a small business bookkeeper helps you track payroll obligations and stay on top of quarterly filings. Payroll setup done correctly from the start prevents the penalties and back payments that come from getting California compliance wrong.
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More Questions
How do I set up invoicing in QuickBooks?
Configure your company info, customize invoice templates, and set default payment terms before sending your first invoice. Enable QuickBooks Payments so customers can pay online directly from the invoice.
Read answerCan a bookkeeper fix years of neglected books?
Yes. Bookkeepers regularly handle catch-up work for businesses with years of neglected records. As long as bank statements and basic documentation exist, the books can almost always be reconstructed and brought current.
Read answerWhat should be included in bookkeeping services?
Core bookkeeping services should include transaction categorization, bank reconciliation, and monthly financial statements. Payroll, accounts receivable, and sales tax filing are often separate. The real test is whether you get accurate books and usable reports each month.
Read answerWhat payroll taxes do I need to pay in California?
California employers pay four state-specific payroll taxes on top of federal requirements. Unemployment Insurance and Employment Training Tax come from your pocket, while SDI and Personal Income Tax get withheld from employees.
Read answerHow do I track food costs for my restaurant?
Food cost tracking uses a simple formula: beginning inventory plus purchases minus ending inventory equals your cost of goods sold. Count inventory weekly, track every purchase, and calculate your food cost percentage to catch problems before they hurt your margins.
Read answerWhat is the difference between a bookkeeper and an accountant?
Bookkeepers handle ongoing financial recordkeeping like categorizing transactions and reconciling accounts. Accountants analyze that data, prepare taxes, and provide strategic financial advice. Most small businesses need both working together.
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