How to Start a Business in California

Written by Dave Lavinsky

how to start a business in california

Starting your own business is exciting, but to launch a successful business, it’s important to get started in the right direction. Each state has its own unique regulations and requirements for businesses, especially those starting up. In this article, you will learn the steps to starting a business in California.

14 Steps to Starting a Business in California

To start a business in California, you’ll need to follow the same steps as any other state. There are a few specific things you need to do to register your business in California, and you’ll also need to familiarize yourself with the rules and regulations that apply to businesses in the state.

  1. Determine Your Business Name
  2. To determine your business name, you’ll first need to choose a name that is available. You can search the California business name database to see if your desired name is already taken. If it is, you can still use that name as long as you register it with the state.

    Download and complete the Name Reservation Request Form and submit your request to reserve a business name in person or by mail.

    Fictitious Business Name

    You can apply for a fictitious business name through the County Clerk’s Office in the county of your principal business location.. Find your California county website here.

  3. Write a Business Plan
  4. The next step in starting any business is to conduct thorough market research and write a business plan. This document will outline your business goals, strategies, and how you plan to achieve them. It’s important to be realistic in your planning and to include all the necessary information, including financial models. A well-written business plan can help you secure funding from investors or lenders, and it can also be used as a roadmap for your business. Our collection of sample business plan can help you determine the best type of business to start.

    If you’d like to quickly and easily complete your business plan, download Growthink’s Ultimate Business Plan Template and complete your business plan and financial model in hours.

  5. Choose a Business Structure
  6. Choose the right business structure for your business. This will determine how much liability you will have, the amount of documentation required by California and the federal government, as well as your tax filings. There are a few different types of business structures to choose from, and each has its own benefits and drawbacks.

    • Sole Proprietorship – A sole proprietorship is an unincorporated, informal business structure that’s owned and managed by one person. This is the simplest business structure to start, but it also has the most liability and is harder to raise funds for. Even if you already have another job that pays your bills, it’s best not to use your regular earnings as funding for your new venture.
    • Partnership – Two or more people can start a business together by forming a partnership. Each partner contributes the services and capital required, and they share any profits and losses. This can be a great way to get your business off the ground because you don’t have to do it all yourself, but remember that each partner is also responsible for any debts or issues that might occur.
    • Corporation – A corporation is a separate formal business structure that’s owned by shareholders instead of by the company’s employees. Incorporating your business can reduce your personal liability in case there are any lawsuits, but it also creates another layer of business taxes and regulations to deal with. The small business deduction may help you save on your taxes as a corporation, but it’s not available for all businesses.
    • Limited Liability Company – A limited liability company (LLC) is similar to a corporation because you also have some liability protection by working through an LLC. An LLC combines the benefits of both a partnership and a corporation, and it provides several other advantages too. The LLC provides tax advantages, and it also gives you room to add more partners later on with less documentation required.

    You can find additional information about each of these legal entities and other business structures on the California Secretary of State website.

    Once you’ve chosen a business structure, you’ll need to register with the California Secretary of State. You can file the appropriate documentation online, by mail or in person. Learn more here.

    Based on the chosen business structure, you will also need to determine your tax reporting requirements including both California state taxes and federal taxes. The following resources will help you determine your tax obligations and assist you with the necessary documentation:

    • Franchise Tax Board: The California Franchise Tax Board administers and enforces personal and corporate income tax and franchise taxes in California.
    • Department of Tax and Fee Administration: The California Department of Tax and Fee Administration (CDTFA) administers tax and fee programs including sales & use tax along with 30+ other special taxes and fees.
    • California Tax Service Center: Get answers to all your California tax questions including income tax, payroll tax, and other taxes and fees that may be applicable to your business.
    • Internal Revenue Service: The Internal Revenue Service (IRS) processes the applications for a federal employer identification number (EIN) which is required if you plan on hiring employees and employment tax returns.

  7. Choose a Business Location
  8. Now it’s time to choose a location for your business. This can be in a commercial area, or you may be able to operate out of your home. If you choose to lease space, make sure to get a good deal and that the location is in a good area for your type of business. You’ll also need to get business licenses and zoning permits from your local government.

    If you need assistance on deciding on your business location, contact the California Business Investment Services unit of the Governor’s Office of Business and Economic Development here.

  9. Licenses and Permits
  10. Businesses in California are required to have a number of licenses and permits in order to operate. This includes a business license, zoning permit, seller’s permit, and workers’ compensation insurance. Make sure you familiarize yourself with the rules and regulations that apply to your type of business.

    The following resources will help you determine if your business type requires any licenses or permits:

    CalGOLD (The Gold Standard For Permit Assistance)

    California Department of Consumer Affairs

  11. Open a Business Bank Account
  12. To get started, you’ll need to open a business bank account. This will help you keep your personal and business expenses separate and make it easier to track your expenses and income. You’ll also need to set up a business credit card to use for business expenses.

  13. Learn About Intellectual Property Ownership
  14. When starting a business, it’s important to protect your intellectual property. This includes any ideas, products, or processes that are unique to your company. You can do this by registering your trademarks and copyrights with the government. You should also have a contract drawn up between you and your employees specifying that any intellectual property created while working for you belongs to the company.

  15. Get Business Insurance
  16. There are a number of different types of business insurance that you may need to protect your business. This includes liability insurance, property insurance, and workers’ compensation insurance. Make sure you talk to an insurance agent to find out which policies are right for your business.

    One of the best ways to protect your business is to have a good liability insurance policy. This will help cover any legal expenses that might arise if someone sues your company.

    Property insurance is another important policy to have. This will help cover the cost of repairing or replacing any property that’s damaged or lost in a fire or natural disaster.

    Workers’ compensation insurance is required in California for most businesses. This policy will help cover the cost of any injuries to your employees.

  17. Establish Your Accounting and Tax Filing System
  18. Now that you’ve got the basics down, it’s time to establish your tax and accounting filing system. This will help you keep track of your expenses and income, and make it easier to file federal and California taxes. You’ll need to set up a bookkeeping system and track all of your business transactions. You’ll also need to file a tax return each year, even if you don’t earn any income from your business.

    There are a number of different accounting software programs that can help you with this. QuickBooks is a popular program that many small businesses use. You can also hire an accountant to help you with your taxes and bookkeeping.

    If you’re starting a business in California, there are a number of resources available to help. The California Franchise Tax Board offers a variety of helpful resources, including information on taxes and how to save money when filing taxes .

    You may also want to talk to SCORE , a non-profit organization that helps small businesses get off the ground. This includes mentoring and training to help you successfully start and run your business. You may also want to look into the various federal and state business incentives programs which provide funding and tax credits for certain types of businesses.

  19. Create a Marketing Plan
  20. Creating a marketing plan is essential for any business. This includes identifying your target market, coming up with a marketing strategy, and setting goals and objectives. You’ll need to allocate a budget for marketing and track your results to see how well your campaign is performing.

    There are a number of different marketing channels you can use, including online advertising, print advertising, television advertising, and radio advertising. You’ll also want to consider SEO, or search engine optimization, to help you get your business website ranked higher in the search engines.

    One of the best ways to market your business is through word-of-mouth marketing. This involves getting your customers to refer their friends and family to your business. You can do this by providing excellent service, training your staff to be friendly and helpful, and using customer testimonials on your website or marketing materials.

  21. Obtain Funding For Your New California Business
  22. Starting a business can be expensive, and it’s important to have a good financial cushion to help you through the early stages. There are a number of different ways to obtain funding for your new business. You can apply for a loan from a bank or credit union, or you may want to consider using a crowdfunding platform to raise money from individual investors.

    You can also look into government grants and small business loans, which are available to help businesses in specific industries or with specific types of projects. The Small Business Administration (SBA) is a good place to start when looking for government funding.

    Another option is to get funding from friends or family members. This can be risky, but if you have a good relationship with your backers, it can be a good way to get your business off the ground. You may also be able to offer them an equity stake in your company as compensation for their investment.

  23. Recruit and Hire Employees
  24. Starting a business can be a lot of work, and it’s important to have a good team of employees to help you get the job done. You’ll need to recruit and hire the best people for the job, and provide them with the training and resources they need to be successful.

    There are a number of different ways to find employees for your business. You can post jobs online, or you can go to job fairs and networking events to meet potential candidates. You’ll also want to make sure you have a good recruitment process in place, which includes screening candidates and conducting interviews.

    Once you’ve hired your employees, it’s important to keep them motivated and engaged. You can do this by giving them regular feedback, providing opportunities for promotion, and showing them how their role contributes to the overall success of the company. Training your employees is also extremely important, as it ensures that everyone in your business has the skills needed to do their job well.

  25. Stay Organized
  26. Starting a business can be a lot of work, and it’s important to stay organized so you can manage it effectively. This includes having a good system for tracking your expenses and profits, setting deadlines for yourself and your employees, and organizing your office space.

    It’s also important to have a clear plan for where you want your business to go. This includes setting goals and objectives, coming up with a marketing plan, and developing a business strategy. Having a solid plan will help you stay on track and make sure your business is heading in the right direction.

    You may also want to consider using a business management software program to help you stay organized. These programs allow you to track your sales, expenses, and profits, as well as manage projects and employees.

  27. Open for Business
  28. Now that you know the basics of starting a business in California, it’s time to take the next step and actually open for business.

For more information on starting a business in California, visit the California State of Secretary website.


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