You might have dreams about starting your own small business in California. You need to take a few steps before making your first sale.
The state has created a starter guide specifically designed to assist you in opening a business. Another great resource is the California Office of the Small Business Advocate CalOSBA.
Below is a list of steps to start a business in California. This step-by-step checklist will help you to make the process faster and easier while remaining legal.
Select a business concept.
You probably already have an idea for a business. But take some time and think about the product or service you will be selling and why. Also, consider who you are going to sell it to. It’s crucial to determine if there is a market for your product or service at the price you want to charge before investing any resources.
Create a business plan to obtain funding.
While business plans are technically an option, launching without one is not a good idea. Business plans give you clarity and direction. They allow you to gather the resources needed to reach your goals, from personnel to equipment.
A business plan is usually required to get outside financing, such as from banks, investors, or family and friends. These stakeholders will want to know how you plan to use the money to generate sales before they give you any money. The U.S. Small Business Administration offers simple steps to help you get started if you have never written a plan.
Search for business names, trademarks, and branding.
To verify this availability, use the California Business Name Database. Use the California Business Name Database to confirm availability. You can use the U.S. Patent Office’s trademark search portal to see if someone else has registered your desired trademark. You may want to speak with an expert or lawyer if they have one.
Once you have checked everything, you can focus on your logos, colors, and slogans. Many entrepreneurs often find this the most fun part of the startup process.
Decide on a business structure.
All businesses must select a corporate structure to comply with state law and taxes. The four most common ones are:
- A sole proprietorship is often the default option for entrepreneurs simply because the setup time is minimal. There is no difference between the assets and liabilities of your business and your assets with sole proprietorships.
- General partnershipThis is a structure reserved for small businesses with two or more partners. Various types of limited partnerships exist, which can help separate personal assets from business assets.
- Limited Liability Company: This corporate structure is a good compromise for small businesses. It is easy to set up an LLC. The number of owners is up to you. Each owner benefits from liability protection, which can shield their assets.
- Corporation Due to its limited liability, this structure is preferred by larger companies. However, it is less flexible than an LLC.
CalOSBA’s Business Structure Guide provides a detailed breakdown of the registration requirements to start a business in California.
Employers can apply for an EIN (Employer Identification Number)
The IRS uses an EIN to track your business (similar to Social Security Numbers) for tax purposes. You should apply for your EIN as soon as possible.
Obtaining licenses and permits
You may need to get permits or licenses at the state or local level, depending on your type of business. Retailers must obtain state-issued seller permits, and restaurants must pass food safety inspections.
Visit the California Secretary Of State’s Resources for Business portal to see what regulations might apply to your company. This portal includes links to local and federal agencies that you should contact to ensure compliance.
Before they can hire their employees, employers have to meet several requirements. These include payroll, workplace safety, and sick leave. Some of these rules apply to specific industries. Some of these rules are specific to your industry. It’s always a good idea, before hiring team members, to check with the California Department of Industrial Relations.
Insurance can be a requirement for specific industries. All occupations require coverage, including doctors, plumbers, and childcare workers. On the other hand, a web developers working from home may need a different type of business insurance based on their circumstances.
Visit the California Department of Insurance to see if any rules may apply in your case.
Filing the appropriate federal, State, and Local Taxes
This is just an enhanced version of the personal tax filing you do. While many small-business owners submit their tax paperwork to the appropriate agencies, you may want to hire a CPA to review your work during your first few years.
Prepare to accept payments.
Next, you will need to select a payment processor. Clover is the preferred payment processor for small businesses.
- Accessories for POS Systems
- Comprehensive payment acceptance
- PCI-compliant data security
- Clover App Market: Business Software Integrations
- Reporting Capabilities
- Online ordering and Virtual Terminal
- Merchant Advances and Support
You can also get 24/7 phone and email support for your Clover account to help you troubleshoot problems.
Open a business bank account.
Even though a corporate bank account is not a requirement by the state, some vendors, investors, suppliers, landlords, and government agencies may expect that you have one. It’s easier to separate your personal and business finances when you have a corporate credit card and bank account.
We’ve put together some tips on how to open a business account.
Marketing strategy for initial business development and ongoing business development
Create a marketing strategy as you prepare to launch your business. This will help you to make the first sales. Continued business development will allow you to continue generating sales for many years. You can choose from many different strategies. Customer engagement is one of the most popular ways to use loyalty programs.
This guide is intended to give you some insights into how to start a business in California. The journey can be lonely at times. Clover is a startup accelerator that specializes in getting startups off the ground.