Guide to opening a home-based business

• Create a business plan that determines what type or range of consulting services you will provide.
• Choose a business structure. LLCs, Corporations and Limited Partnerships must register their structure with the CA Secretary of State before registering locally. 
• Apply for an Employer Identification Number (EIN), also known as a Federal Tax ID Number from the Internal Revenue Service (IRS). This is used to identify your business and allows you to hire employees.  If you are a sole proprietor without employees, you may choose to use your Social Security Number instead.
• Register your business with the City and County of San Francisco through the Office of the Treasurer and Tax Collector.
  • Note: You may choose to obtain a separate business address, or you may use your personal address for your registration.
• Choose and file a business name.  File a Fictitious Business Name (FBN) Statement at the SF Office of the County Clerk if you will be using a name other than your given name, the names of your partners, or the officially registered name of your LLC or corporation. Research the name's availability in the county, Secretary of State, and the US Patent and Trademark Office before filing.

• Make sure to take a moment to investigate whether the service you offer requires a professional certification or license. Career One Stop is a free online resource to assist you in determining if a license is required for your occupation.  
• Some freelance work may require more than just a business registration. To determine if any additional permits are required, find your type of business using the permit locator and/or The Governor’s Office of Business and Economic Development's Cal Gold (Calgold.ca.gov) or consult with San Francisco Office of Small Business staff at Permit Center (49 South Van Ness Ave). 
• Book an appointment with the Office of Small Business  
   

If considering a Home Office, keep in mind the following:  

1. You cannot have clients coming to the home. 
2. You cannot have employees who do not live there coming to the home. 
3. You cannot display advertising or any other physical alteration that is non-residential in character. 
4. You cannot use more than 1/3 of the total floor area of the unit for commercial purposes. 

NOTE If you are renting your home or must comply with a Homeowners Association charter, check if this commercial activity is allowable.  

NOTE Although home-based businesses cannot be open to the public or host clients, some professional occupations that are recognized as traditionally being practiced at home are exempt from this requirement. Those may include acupuncture, home-based massage therapy, psychiatry. The Planning Department has created an Accessory Uses for Dwelling Guide about the rules and steps of using a home office or having a home-based business. 

Food manufacturing from home 

The California Homemade Food Act (often referred to as the Cottage Food Law) allows some businesses to make certain foods from home. However, you must meet certain qualifications. Be sure to check the California Department of Public Health Cottage Food Operations webpage and the San Francisco Department of Public Health Cottage Food Permit webpage for additional information.  

Customers are allowed to pick up orders from your home under this program. 

Who qualifies? 

Businesses producing “non-potentially hazardous” foods (ie. foods that do not require refrigeration to keep them safe from bacteria that could make people sick) 

Class A (Direct sales only) operators making under $75,000 or Class B (Direct and/or Indirect sales) operators making under $150,000 in annual gross sales 

Businesses with no more than one full-time employee (not counting family or household members) 

Who does inspections? 

There are two classes of homemade food producers. The class you fall under depends on who you sell your goods to. Regardless of your class, you must attend a food processing class. 

Class A (Direct sales only): If you only sell directly to the consumer, you may conduct your own health inspections. The SF Department of Public Health will only inspect if there are consumer complaints. 

Class B (Direct and/or Indirect sales): If you sell directly to the consumer and/or sell to a retail food facility such as a market, bakery, or restaurant, your home kitchen must be inspected annually by the SF Department of Public Health. 

Some other key requirements 

The label must include the words "Made in a home kitchen" or "Repackaging in a home kitchen" (information on cottage food labeling is available at the California Department of Public Health Cottage Food Operations website)  

No infants, small children, pets, or smoking are allowed in the kitchen during cottage food preparation. 

• Solicit work. There are a number of ways to seek out work, including using the web, word-of-mouth, advertising, and partnerships. 
• Negotiate compensation & payment plan prior to signing a contract. Consider taking a class or seeking other advice on contracts. 
• Prepare and pay your local, state, and federal taxes. Learn more from these departments:
  • sftreasurer.org 
  • sfassessor.org
  • ftb.ca.gov
  • irs.gov
• Note: Depending on the legal form of your business, you may be required to pay the federal self-employment tax, among other taxes. Review the forms and associated taxes for independent contractors.
• Health Insurance. If you are self-employed, you are responsible for your own medical insurance. As a resident of California, you may qualify for federal premium assistance to buy private health insurance through Covered California. If you’re a resident of San Francisco you may also consider getting insurance through Healthy San Francisco, which is available regardless of immigration status, employment status, or preexisting medical conditions.