How to Register a Business in California?
Table of Contents
Why California is Best Place to Start a New Business?
Here are the reasons why you need to consider California as a home for your business.
- Networking opportunities due to large population
- Consistent, calm weather
- Booming economy
- Diverse industries
- Large talent pool
Step by Step Guide to Register a Business in California
Step 1: Choose your business structure and name
You have the option of choosing between a limited liability company, a C-corporation, and a sole proprietorship. The choice will depend on how you want your business to be taxed and the risk you are willing to be exposed to if someone sues your business. You might want to consult a business attorney to advise you on which structure to choose for your business.
Settle on a well distinguishable name from other business names that are on record at the California Secretary of State. Another condition for choosing a business name in California is that it should not be misleading to the public. Not that you can only check for availability of a name again the type of business structure you intend to operate.
To check for the availability of a name, you need to mail a name availability inquiry to the California Secretary of State’s office in Sacramento. Checking for a business name in California is free, but if you frequently check for business names, you can open up an account that requires a minimum deposit of $100. This is a telephone service that charges $4 for each name search.
Step 2: Create a Business Plan
A business plan is a strong foundation from which you will build and grow your new business. Your business plan will include the following.
- An overview of the business
- Type of business
- Physical location
- Marketing strategy
- Financial plan
- Business growth plan
- Risk analysis
A business plan serves as a road map by which you will operate your business and can also ease your efforts to get funding for your business. Investors and banks will look at your business plan before they approve your application for financial help.
Step 3: Register Your Business
You will need to register your business at the California Secretary of State Website. Registration depends on the structure of your business. You will also need to get a federal Employer Identification Number (EIN), a nine-digit number you will use to file taxes, apply for business loans, and open a business bank account.
In California, you will also be required to register with the Employment Development Department if you hire one or more employees. You might also need to apply for a DBA (Doing Business As) Certificate if, at any point, you intend to use a fictitious name other than the legal name you have registered with the state. This is done at the county level, and requirement s may depend on the county you are operating from.
Step 4: File the Appropriate Taxes
You will be required to pay franchise tax for operating a business in the state of California. You will also be required to pay corporate income tax, and as a sole proprietor, you will pay income tax from the personal income that they bring home. Limited liability companies pay income tax and state tax. Corporations are responsible for California corporation taxes, while the shareholders in a corporation are responsible for paying taxes on the dividends that they receive from the corporation.
Step 5: obtain the Required Business Licences and Permits
When starting a new business in California, you will need to visit the CalGold website, that is hosted by the Governor’s Office of Business and Economic Development, where you will input your business information and be guided on the list of permits that you need to apply for, and the appropriate agencies that you will need to consult to get those permits,
Step 6: Open a Business Bank Account and Explore your Funding Options.
You need to open a business bank account, and if possible, get a business credit card. It is important to separate your business finances from your finances because you don’t want personal financial decisions to impact on your business and its credit score. This will also make filing of taxes easier. You can check your credit score and work on improving it by managing your business bank accounts and credit cards responsibly. This way, you will be eligible for small business loans. You can also think of exploring several financial options to fund your new business.
Best 5 Business Ideas to Start a Business in California
Customized Cakes
Every day is someone’s birthday in California. If you are a great baker, and you like baking, you can turn it into a business in California because cases and snacks are always very essential for every party.
Artist Agency
The film and fashion industry is ever-expanding. Your agency can allow model aspirants to get to their destiny. You can manage them and look for projects for them while you earn from it.
House Cleaning Services
California is a metropolitan city and many people have no time to take care of things like cleaning the house. The good thing about this business is that it does not need much investment, but being professional will go a long way in increasing your clientele. Jobs like End of Tenancy Cleaning Services are in huge demand nowadays.
Catering
People in California celebrate every day and if you start a catering business, you will many family functions, business dinners, and many other ceremonies in need of your catering services. The key factors in this kind of business are good marketing, and a good team.
Errand Services
You can ideally start a business that involves carrying out simple domestic tasks like going out for shopping to seniors and parents with small kids. Many people in California need help in carrying out their daily tasks that are otherwise time consuming. If you decide to take the idea online, you will be able to reach out to more people and earn a lot.
Coming up with a good business idea may be easier as compared to the steps you will need to follow to start a business in California. Moreover, the work does not stop once you register your business and get the permits. You still need to put in more work like hiring employees, getting a business insurance, getting a physical location if you need one, and getting funding.
