How to Start a Business in California: Step-By-Step Guide
How to start a business in California? This question crosses the minds of many entrepreneurs and enthusiasts from all over the country and even far abroad. The idea to start a business in LA or other sunny city is not surprising. California is the biggest and the wealthiest state in the USA. It is the home for many world’s leading companies, including Google and Apple. It is the state where Silicon Valley and Hollywood are located.
If you are certain that CA is the right place for your future business and “How to start a small business in CA?” doesn’t leave your mind, it’s time to forget about finding excuses and to focus on opportunities. This is exactly what we’ll do in this article.
There is no single effective formula for starting the business in California. There is no secret that is going to reveal you a magic plan. Every case is individual and unique. Nevertheless, you should prepare a checklist which will help you to cover the essential points.
Step 1. Choose a business idea for starting your business
Only some people start to prepare the plan of actions after they are 100% sure what business they are going to launch. If you just want to leave an office job and to start your own occupation, choosing the idea is the first step.
There are some things to keep in mind: your interests, goals, skills, and opportunities. Keep your goals realistic. You can pay attention to the trends or the lack of services/providers on the market. Don’t forget to estimate the performance of a chosen type of business for a long-time perspective. Here are some ideas (though the list is far from complete and you can come up with something different):
- Catering services
- Beauty salon
- Photography services
- Tourism services
- Real estate or car dealership
- Web design and web development
- Digital marketing services
- Data mining and analysis
- Landscaping and house repair
- Customized Cakes
- Pizzeria or foreign cuisine restaurant
- Coffee shop
- Event management
- House cleaning services
- Pet grooming and daycare
Step 2. Plan your business
Sometimes successful business ideas appear accidentally — as a reaction to a failure, a chat with a friend, a film you have watched, an ordinary walk in a park. These are moments of enlightenment, like the one Newton had with an apple. It always takes a lot of planning to turn a brilliant idea into an effective strategy. A business plan covers five main points.
Product development. Answer some important questions.
- What makes your idea stand out?
- What will make your product unique and in-demand?
- What problem does it solve?
- How can you be helpful to clients?
Business structure. There are three options to start a business in California:
- DBA — “Doing Business As,” just a registered name for providing services.
- Corporation — has a structure that includes directors, officers, stakeholders; more complex and rather appropriate for big companies.
- LLC — Limited Liability Company, the best option for easy management and taxation, with proper liability protection but less complexity.
Business name. The name should be unique and memorable. It doesn’t necessarily need to reflect the sphere of your activity but at least a slight relation is preferable. Here’s a checklist that will help:
- Check similar names in Google and other search systems.
- Check the trademarks.
- Check the availability in California Secretary of State’s business entity database.
- Make sure it is easy to understand and pronounce.
- Make sure it will survive the test of time.
- Check how it sounds with the identifier (Inc., Co., LLC).
- Check whether it requires the formation of a PC (Professional Corporation).
- Don’t include words “bank,” “trust,” “trustee,” “insurer,” “insurance company” in the name — it is forbidden.
Marketing and sales. You’ve defined a unique selling proposition on the product development stage. Now, it is time to focus on the target audience, to create a SWOT, to outline the strategies for advertising and sales.
Partnerships. Whether you plan to announce what brands you are working with or you just need suppliers, it is important to think about partnership options and terms. Developing friendly professional relationships is what helps businesses to succeed.
Step 3. Form your business
Articles of incorporation increase your credibility and protection from personal liability. So how should you act after you decide to give the official start for your business?
Form an LLC and register it. It is the optimal solution for a small business: easy to set up and manage if compared to California corporations, with less troublesome tax management is less troublesome and with the price of registration around $70. For this:
- Fill in Form LLC-1 (Articles of Organization).
- File it to the California Secretary of State LLC Division.
- Wait a bit until the document is approved.
- Held an Organizational Meeting to adopt the Operating Agreement (even in case of a sole proprietorship).
Register for taxes. Now, it’s time to obtain a FEIN — Federal Employer Identification Number, better known as the Tax ID number. It is like a social security number for your business. Without it, you cannot hire any people or even open a bank account.
Open a business bank account. This will help to keep personal and business expenses separately and to manage taxes easy. Open a corporate credit card to start building your credit profile. It will be useful in case you need to apply for a loan someday. You can open an account in any bank. The required documents include filed paperwork, FEIN, a resolution signed by a registered agent.
Setup accounting. It helps to track the dynamics of expenses and understand how your business is performing and developing.
Step 4. Obtain business license, permits, insurances
The registration of the company doesn’t allow you to start the activity. You also need to get the corresponding certifications to prove that you are qualified to provide this particular kind of service.
The business should comply with the government regulations on all levels – local, state, federal. It means you need to obtain the permits and licenses required by the government. Check which ones you need on CalGold.
Speaking about business insurance, it helps you to manage the risks and focus on business development. It is recommended to purchase insurance even for home-based businesses.
Step 5. Annual and ongoing requirements
Some permits are issued once and forever (though it happens rarely), the others need renewals. California government requires filing some documents on a regular basis. For LLC in California, it is the “Statement of Information.” Every two years business owners are to update business addresses and other details. The filing fee is only $25.
Step 6. Work on the brand identity
To make your business successful, you need to build a brand:
- Define your values and positioning.
- Define your tone of voice.
- Come up with a key message and a slogan.
- Create a recognizable visual identity.
- Decide on some unique features and highlights.
Step 7. Establish a web presence
There is a conventional 21st-century rule: if your business is not represented online, it doesn’t exist. Even if you don’t plan to find clients online, they are likely to find you. Similarly to the official registration, an official website is proof of your credibility. Well, we live in a world where it is normal for the California secretary of state to share personal ideas on Twitter. When people hear about a new service provider, they Google the name to check it out. Don’t disappoint them.
Launching a website is not a difficult task. Weblium, for instance, allows handling this task very fast with minimum efforts and expenses. In case you haven’t heard about this service before, Weblium is a website builder, which provides a huge collection of templates for all website types. You need just to fill it with content.
After the website is ready, it’s time to set up your Google profile and accounts in social networks — Facebook, Instagram, LinkedIn, Yelp, etc. It will help people to find your business and also to provide quick feedback.
Some more nuances
These are the basic steps, which give you a plan and a guideline, but also raise some questions.
#1. How to find interesting ideas to start a unique, competitive and successful business?
Check out the unique products that exist abroad. You may start the cooperation or come up with a similar idea and adjust it to the local environment and specific circumstances.
#2. How old should I be to start my own business?
You have to be 18 to sign contracts and other important documents legally. If you are a young genius, you can start it earlier with parents’ consent.
#3. Can I start the business without leaving my current job?
It is only a matter of your priorities, skills, and time management. There are many people who managed to do it, and there are many who failed.
The bottom line
To start a business in California, you need to believe in your success. It may sound beaten but it’s actually true. There are numerous opportunities to turn your idea into something great, and a positive attitude is a part of the formula.
Think about what you would like to do because your own business requires a lot of time and devotion. Then, create a plan for its development. Register it. Setup all the official moments and deal with the paperwork. Move to the creative part —to branding.
And the last task before you reach the finish line, manifest your online presence. Use Weblium to create a site that will attract attention and complete all the business goals you set. You probably will be tired by this time, so commit the launch to the team who will be glad to let you rest a bit. Good luck with all your business ideas!