To get good mileage out of the Golden State, you have to know how to drive through. In this article, I’ll work you through the step-by-step process of how to start a business in California. <\/p>\n\n\n\n
According to Forbes<\/a><\/strong>, California\u2019s $3.1 trillion economies would be the fifth biggest in the world, ranked between Germany and the United Kingdom. <\/p>\n\n\n\n Before we take you through the process of registering a business in California, take a quick look at the table of contents below.<\/p>\n\n\n\n\n\n If it were a country, California\u2019s $3.1 trillion economies would be the fifth biggest in the world, ranked between Germany and the United Kingdom. The state represents 15% of the U.S. economy. <\/p>\n\n\n\n According to Forbes<\/a><\/strong>, home prices in the state are the highest in the nation at a median of $592,000, having doubled from the lows of 2011 and surpassing their pre-recession highs in 2017. <\/p>\n\n\n\n Starting a business in the Golden State is one that affords a golden opportunity that creates an ease of network that increases net worth.<\/p>\n\n\n\n California is home to more than 4 million<\/a> small businesses, which employ 7.1 million people across the state. Small businesses makeup 99.8% of all businesses within the state and employ 48.8% of the state’s workforce, making them a vital part of the Golden State economy. <\/p>\n\n\n\n California’s gross domestic product (GDP) grew at a rate of 3.5% through the third quarter of 2018, which outpaced the U.S. economy’s national growth rate of 3.4%.<\/p>\n\n\n\n Considering starting a business in California? Here are some advantages and steps to getting started.<\/p>\n\n\n\n Due to the large population and friendly climate scenery, California comes out as one of the favorite business destinations in America where meetings and other activities take place.<\/p>\n\n\n\n Cities like San Diego and Anaheim are popular for companies to hold their conferences and conventions. Whether you\u2019re starting a business in a large or niche industry, California hosts plenty of similarly minded people and events that can help you grow.<\/p>\n\n\n\n The economy of the State of California<\/strong> is the largest in the United States, boasting a $3.2 trillion gross state product (GSP) as of 2019. If California were a sovereign nation (2019), it would rank as the world’s fifth-largest economy, ahead of India and behind Germany. <\/p>\n\n\n\n Additionally, California’s Silicon Valley is home to some of the world’s most valuable technology companies, including Apple, Alphabet Inc., and Facebook. In total, over 10% of Fortune 1000 companies were based in California in 2018, the most of any state.<\/p>\n\n\n\n According to calmatters<\/a><\/strong>, more than half of all U.S. venture capital still flows to California companies. They\u2019ve averaged 3.8% GDP growth over five years \u2014 compared, respectfully, to 2.5% national growth.<\/p>\n\n\n\n The dominant sectors in California are finance, business sectors, government agencies, and the manufacturing sector. Much of the economic activity happens in the Coastal cities of Los Angeles, San Francisco Bay Area, and San Diego.<\/p>\n\n\n\n California houses are the capital of the media, technology, and agriculture industries. This opportunity presents a multi-centered business pool where businesses thrive and keep the economy running.<\/p>\n\n\n\n Los Angeles is the entertainment mecca of the world, while San Francisco and the surrounding Bay Area have their grasp on the tech industry. <\/p>\n\n\n\n The weather condition in California is nice and conducive. It allows businesses to thrive in and out of seasons without affecting productivity. <\/p>\n\n\n\n California enjoys mild weather year-round, especially in Southern California, where it is typically sunny and rarely rains or snows.<\/p>\n\n\n\n Generally, all businesses that wish to operate in California must register and form their legal entity with the California Secretary of State\u2019s Office, file appropriate taxes, register as an employer, and obtain business licenses and other permits from appropriate cities or counties. <\/p>\n\n\n\n In a few lines to come, we’ll outline the step-by-step process to follow in order to start a business in California.<\/p>\n\n\n\n Starting a business involves taking bold steps in order to establish your business. The following information will guide you to help plan, prepare, and operate your business. <\/p>\n\n\n\n To start a business in California, you need to heed the following steps:<\/p>\n\n\n\n Take time to explore and analyze ideas for your business. At this stage, you need to consider your interests, skills, resources, availability, and the reasons why you want to form a business. <\/p>\n\n\n\n Your business idea should be formed with the knowledge of your target market, competition, milestones, and marketing plan.<\/p>\n\n\n\n After choosing a business idea, consider drafting a business plan to ascertain your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. <\/p>\n\n\n\n Investors and lenders will want to review your business plan before providing financial assistance, and you can be prepared by drafting a plan before you start soliciting funding.<\/p>\n\n\n\n SEE ALSO: Starting A Business After College | 10 Avoidab<\/a><\/strong>le Mistakes To Look Out For<\/a><\/strong><\/p>\n\n\n\n Choose a business structure. Here’s a list of the types of legal business structures :<\/p>\n\n\n\n There also are special versions of some of these structures, such as limited partnerships and S corporations. You\u2019ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. <\/p>\n\n\n\n After that, your next step will be to file your tax and employer identification documents.<\/p>\n\n\n\n For LLCs and corporations, you will need to check that your name is distinct from the names of other business entities already on file with the California Secretary of State (SOS). <\/p>\n\n\n\n You can check for names by doing a business entity name search on the SOS website. You can reserve an available name for 60 days by filing a Name Reservation Request Form<\/a><\/em>. <\/p>\n\n\n\n Is your business a sole proprietorship or partnership that uses a business name that differs from the legal name of the business owner (for a sole proprietorship) or surnames of the individual partners (for a partnership)? <\/p>\n\n\n\n If so, you must file a trade name<\/a><\/strong> in the county clerk\u2019s office for the county where your business is located. Check county websites<\/a> for more information.<\/p>\n\n\n\n If your business is online, you have to register your business name as a domain name. In addition, to avoid trademark infringement issues, do a federal and state trademark inquiry to ensure the name you want to use is not the same as or too similar to a name already in use. <\/p>\n\n\n\n SEE ALSO: What Is A Trade Name For Business? Registration, Procedures<\/a><\/strong><\/p>\n\n\n\n You\u2019ll need to pick a location for your business and check local zoning regulations. Choosing a specific location has to be done after due consideration of what’s best for your customers. <\/p>\n\n\n\n Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. <\/p>\n\n\n\n Refer back to your business plan to evaluate whether you can afford your desired location during your company’s early months.<\/p>\n\n\n\n While you must decide on a location, it is also important to verify that the location is zoned for your type of business.<\/p>\n\n\n\n Alternatively, if you decide to run a home-based business, again check your local zoning laws. You should also review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.<\/p>\n\n\n\n Most businesses require licenses or permits in order to operate. Please click on each of the resources below to determine if your business requires any licenses or permits.<\/p>\n\n\n\n If you will sell goods in California, you must register with the Board of Equalization (BOE) to get a seller\u2019s permit. You can register online at the BOE website. If your business has employees or is taxed separately from you, you must obtain a federal\u00a0Employer Identification Number (EIN)<\/a>\u00a0from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Every California business must obtain a general business license from the city where the business is located. In the case of unincorporated sections of the state, the license is issued by the county where the business is located.<\/p>\n\n\n\n This covers areas such as health and safety, the environment, building and construction; and specific industries or services. Regulatory licenses and permits frequently are issued by state agencies. <\/p>\n\n\n\n For step-by-step guidance about state licenses or permits, you may need, check the state\u2019s CalGold website<\/a>. For information about local regulatory licenses and permits, check the websites for any cities or counties where you will do business.<\/p>\n\n\n\n This covers people who work in various fields. The state\u2019s CalGold website<\/a> provides information on professional and occupational licensing.<\/p>\n\n\n\n California places a tax on every kind of business. This includes imposing a corporate income tax that applies to corporations and other entities that are taxed as corporations, and a franchise tax that applies to corporations, LLCs, and many partnerships.<\/p>\n\n\n\n Sole proprietorships:<\/strong> Pay state taxes on business income as part of their personal state income tax returns (Form 540<\/a>).<\/p>\n\n\n\n Partnerships:<\/strong> Partners pay state taxes on partnership income on personal tax returns. In addition, California partnerships also must file Form 565<\/a>, Partnership Return of Income.<\/p>\n\n\n\n LLCs<\/strong>: Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form. The specific form used will depend on how the LLC is classified for federal tax purposes. California LLCs also are required to file a biennial statement of information. <\/p>\n\n\n\n Corporations:<\/strong> Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to California corporation taxes. And, finally, corporations must file an annual statement of information<\/a> with the California SOS.<\/p>\n\n\n\n Business insurance protects your business and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits and natural catastrophes. <\/p>\n\n\n\n Utilizing the services of an insurance agent will help you explore the different coverage options for your business, which might include general liability <\/strong>insurance to protect you against claims relating to bodily injury or property damage, or cyber liability insurance to cover litigation and settlement fees following a data security breach.<\/p>\n\n\n\n RELATED POST: Long Term Care Insurance | Pros And Cons | How It Works<\/a><\/strong><\/p>\n\n\n\n Lastly, you need to open a business account to enable easy tracking of income and expenses. For some business types, including LLCs and corporations, a separate bank account is necessary to maintain your liability protection.<\/p>\n\n\n\n READ ALSO: Top 10 High Yield Business Savings Account<\/a><\/strong><\/p>\n\n\n\n To most people, starting a business in California is one that requires huge financing. Nevertheless, there are businesses that might not require financial investments. All they need to breathe is the willingness to work hard and devotion.<\/p>\n\n\n\n The first step to starting a business without money in California is determining the type of business you want to venture into. <\/p>\n\n\n\nEconomic Facts About California<\/strong><\/h2>\n\n\n\n
Is California a good place to start Business?<\/strong><\/h2>\n\n\n\n
Benefits of starting a business in California<\/strong><\/h3>\n\n\n\n
#1 Networking opportunities<\/h3>\n\n\n\n
#2 Bolstering economy<\/h3>\n\n\n\n
#3 Diverse industries<\/h3>\n\n\n\n
#4 Good climate condition<\/h3>\n\n\n\n
How To Register A Business In California<\/span><\/strong><\/h2>\n\n\n\n
How to start a business in California: Step by step<\/strong><\/h2>\n\n\n\n
1. Choose a Business Idea<\/span><\/h3>\n\n\n\n
2. Decide on a Legal Structure<\/span><\/h3>\n\n\n\n
3. Choose a Business Name<\/span><\/h3>\n\n\n\n
4. Pick a Business Location and Check Zoning Regulations<\/span><\/h3>\n\n\n\n
4. Register Your Business Entity<\/span><\/h3>\n\n\n\n
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In addition, while not required by law, you also should prepare an operating agreement to establish the basic rules about how your LLC will operate. The operating agreement is not filed with the state. For more information, see How to Form an LLC in California.
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Although not legally required, you also should prepare bylaws<\/a> to establish your corporation\u2019s internal operating rules. Bylaws are not filed with the state. S Corporations <\/strong>must also file IRS Form 2553, Election by a Small Business Corporation, <\/em>with the IRS.
For more information, see How to Form a Corporation in California<\/a><\/em> and How to Form a Professional Corporation in California<\/a><\/em> (for professionals).<\/em><\/li><\/ul>\n\n\n\n5. Apply for California Licenses and Permits<\/span><\/h3>\n\n\n\n
Tax Registration<\/strong><\/h4>\n\n\n\n
If your business will have employees, you must register with the California Employment Development Department (EDD) for employer withholding taxes. You can register online using EDD\u2019s Employer Services Online<\/a>.<\/p>\n\n\n\nEIN<\/strong><\/h3>\n\n\n\n
Banks often require an EIN to open an account in the business\u2019s name, and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There is no filing fee.<\/p>\n\n\n\nGeneral Business License<\/strong><\/h3>\n\n\n\n
Regulatory licenses and permits<\/strong><\/h4>\n\n\n\n
Professional and occupational licenses<\/strong><\/h4>\n\n\n\n
7. Register and Report Taxes<\/span><\/h3>\n\n\n\n
8. Obtain Insurance<\/span><\/h3>\n\n\n\n
9. Open a Business Bank Account<\/span><\/h3>\n\n\n\n
Can I Start A Business Without Money In California?<\/strong><\/h2>\n\n\n\n