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Checklist for Opening a Small Business in California, USA

Calling California the hub of startups won’t be wrong. With the largest population in the United States and an above average per capita income (as compared to the other states), California is already a home to startups and small businesses.

In fact, a vast array of potential customers, a lot of whom are comparatively wealthy individuals make California an ideal state to launch an innovation and or a luxury brand as well as a philanthropy project.

The overall small business ground in California is quite fertile, however, the opportunities may not be evenly distributed across the state, i.e. the coastal counties, the neighborhoods of Silicon Valley and Hollywood are full of rich population, while the interior is mainly comprised of working class. 

But, this uneven distribution should not be a hurdle if you are an enthusiastic entrepreneur and want to live your dreams. The uneven distribution is not a big problem, but setting up a small business may look like a tough task because California’s complex tax code is relatively burdensome and

The uneven distribution is not a big problem, but setting up a small business may look like a tough task because California’s complex tax code is relatively burdensome and first time entrepreneurs may also find government regulations exorbitant.

If you are based in California and you are eager to step into the world of entrepreneurship, you might be looking for answers to queries like:

  • Doing business in California guide
  • Small business tax in California
  • Doing business as a sole proprietor in California
  • CA business tax rate
  • Commercially domiciled in California
  • Starting a sole proprietorship in California
  • Step-by-step guide to doing business in CA
  • California business requirements
  • Starting a LLC in California
  • How to start a business in California with no money
  • How to start an online business in California
  • How to start a home business in California
  • How much does it cost to start a business in California
  • How to register a business in California

This article will answer the queries listed above and will also provide some additional resources to help you start a small business anywhere in California. Here goes the list of actionable items that you can consider as a checklist for opening a small business in California.

1- Finding a Profitable Business Opportunity:

There can be hundreds of small business ideas that can be highly profitable if started and run perfectly, however, not every business idea is equally good for everyone. Choice of the right idea matters most because the business success partially depends on it.

Check out some of the best small business ideas for Los Angeles, small business ideas for San Diego, small business ideas for San Francisco, and small business ideas for San Jose. If you are based in a small city, you may want to look at the list of small business ideas for small towns.

2- Preparation of Business Plan:

Once you have a profitable business idea in mind and you are done with the feasibility check of the business idea, the next thing you should do is to develop a business plan.

For a business plan to be perfect and understandable, you should conduct a market research about potential competitors and determine the cost that will incur in starting a business and also what you can use as a competitive advantage.

A business plan is a blueprint of your goals and objectives that will be achieved through the different course of action and activities. If you need business plan help, you may check with the local SBA office. SBA provides assistance for business planning throughout the state and at 144 California resource partner office.

3- Financial Planning:

Securing finance for your business through different sources like personal savings or credit card business funding, bank loans, and family funding is one stream of options. Alternatively, you may be interested in running a crowdfunding campaign or reaching out venture capitalists.

Check various options for raising capital for your startup and make sure to have an emergency startup funding plan in hand too. Effective financial planning allows you to avoid running out of money!

Other than that you can also get financial help from Economic Development California Business Portal . On this portal, you can find financial help according to your business needs. Some of the options available there include:

  • Small Business Development Centers.
  • Small Business Loan Guarantee Programs.
  • Financial Development Corporation.
  • California Capital Access Programs.
  • Industrial Development Bonds.

4- Identify the Entity Type:

The first practical step in setting up a legal business entity is to register it with the relevant authorities. Start with the choice of the type entity, which will determine how your business participants and business will be taxed by the government. For that you will be needing the help from your private attorney. The business entity must be registered with California Secretary of State as one of the following options:

  • Entities requiring registration: Limited Liability companies (LLB), Limited Partnership (LP), Limited Liability Partnership (LLP), and Nonprofit.
  • Entity that may Require Registration: Simple Partnership do not fit in criteria of registration with (CSS).
  • Entity not Requiring Registration: Sole Partnership.

5- Choose a Business Name:

The name that you will select for your business should not be copied, it should not Trademark, Name, and Logo of other businesses. It should be unique and registered in California Secretary of State.

Follow this link to check the name availability. While registering the business name, make sure to register a relevant domain name, even if you do not have plans to build a website right now.

6- Register your Business:

To register your business it is important to download forms and information required from the Secretary of State website

The fee information and the submission guidelines are also available on the website, however, getting it done by a legal expert or an attorney is highly recommended.

7- Consider Business location and Zoning Regulations:

Remember your business location is a public record from where you will operate your business. If you intend choose a building on lease for office space or operate from your home, you should contact your county or city office for legal permits and zoning regulations.

These regulations are updated frequently, so it’s better to keep an eye on updates via OPR website or by visiting the local office.

8- Obtain Necessary Business Permits:

Once you have registered your business with California Secretary of State, you must acquire business permit. A business permit is a legal certificate that authorizes a business to conduct its business activities. California State Board of Equalization is the authority to contact for permits and licenses.

9- Obtain Employer Identification Number (EIN) & Find Tax Requirements:

If you intend to have employees, you should obtain Employer Identification Number from IRS. The document may require information about number employees and the type of business.

As a business owner you will need assistance in tax related issues including federal and state taxes, i.e.:

  • Internal Revenue Services (IRS) administrates all Federal Tax.
  • Franchise tax Board administrates two major tax of California Personal Income Tax and Corporation Tax.
  • Employment Development Department administrates Payroll Taxes, Employment Training Tax, State Disability Insurance and Personal Income tax.
  • California Tax Service Center is partnership of tax agencies to improve taxpayer’s resources and educational programs that are offered by the State of California.

10- Lease an Office

You can either lease commercial space or organize separate a space for home office. You may want to convert that extra bedroom into a home office.

11- Purchase Equipment

The next step is to buy necessary equipment, inventory and supplies required to start operations.

12- Hire employees if Needed

You might not want to hire people right in the beginning, but at some point you do need a team to take your business to the next level. Make sure to hire people who help you grow your business.

13- Start Marketing

Get the marketing materials ready, i.e. business website, business cards, social media profiles, print materials, brochures etc. and start running your business!

The Bottom Line:

Please, be advised that starting a business for the first time is always challenging if you are not aware of legal requirements. You may hire an attorney to help you setup a business, but personnel assessment is also important.

So, go through the available guidelines and do as much research as possible. Moreover, the above checklist items are general guidelines for starting a business in California and you may require additional steps depending upon the type of your business. The best way is to keep educating yourself!

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