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 calculate labor cost percentage?
Divide total labor costs by total revenue and multiply by 100. The key is including all labor costs in your calculation: wages, payroll taxes, benefits, and workers' comp. Not just base pay.
Read answerHow do I reconcile daily sales with deposits?
Daily sales and bank deposits rarely match dollar for dollar. Credit card batches settle 1-2 days later with fees deducted, and cash requires its own tracking. The key is matching each payment type to its deposit path.
Read answerWhat records should I keep for my small business?
Keep financial records like bank statements, receipts, and invoices for at least seven years. You'll also need tax returns, business formation documents, contracts, and employee records if you have staff.
Read answerHow do I find a good bookkeeper near me?
Start with referrals from your accountant or other business owners. Look for someone who understands your industry, communicates clearly, and has a professional process. Local isn't always necessary since most bookkeeping happens remotely.
Read answerWhat is double-entry bookkeeping?
Double-entry bookkeeping records every transaction in two accounts, with one side balancing the other. This method provides built-in error checking and produces the financial statements businesses need for taxes, loans, and decision-making.
Read answerCan QuickBooks handle multiple businesses?
Yes, QuickBooks can handle multiple businesses. QuickBooks Online lets you manage multiple companies under one login, but each business needs its own subscription and company file.
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