A How-To Guide To Opening a Business in The Golden State from PRIME Corporate Services

California is known for its warm weather, industry opportunities, and celebrity culture. With so many great attractions, it is no wonder it is the fifth largest economy in the world. If you are thinking about starting a business, California is the place to go. Read on to learn more about the necessary steps to start your next endeavor.  

(We’ve got all the 411 to get you started on the path to business success in California, but if you want to skip the required reading and get a faster start, reach out to one of our PRIME advisors for a free consultation.) 

Five Easy Steps to Forming a Business in California

We’ve broken the business formation process into five basic steps: 

  1. Create a Business Plan 
  2. Decide on a Location 
  3. Choose a Business Structure 
  4. File Tax and Employer Identification Documents 
  5. Obtain all Necessary Permits and Licenses

Read on for more details about each step.

Step 1: Create a Business Plan

Creating a well thought-out business plan is the key to success. A business plan is like an outline, making sure you are registered, and operating profitably as quickly as possible. If you need assistance writing out a plan, the U.S. Small Business Administration (SBA)’s site  and scheduling a consultation with a PRIME advisor are great ways to get personalized advice and one-stop help in setting up for your business in California. 

Step 2: Decide on a Location 

The next step in building a business is deciding where your business will operate. You must decide the type of business you will run before you decide the location. This question will determine the size, employee number, and proximity to parking (if necessary). Make sure to check the zoning ordinances and ease of access for customers. 

Step 3: Choose a Business Structure 

Once you choose a location for your business, you should decide the structure. What does this mean? Different types of entities in California require this distinction, as it determines issues of liability, taxes, and other obligations. 

The different types of organizations include:

The California Secretary of State provides an informational site on the nuances of each entity and how one could go about setting it up. As always, you can reach out to one of our PRIME advisors for a free consultation if you are seeking additional guidance. 

No matter the type of business you choose, you will need to follow these steps: 

  1. Choose a registered agent: A registered agent is an entity or individual that is legally designated to accept tax and legal documents on behalf of your business. 
  2. Obtain an Employer Identification Number (EIN): An EIN is a number assigned by the IRS to identify your business for tax purposes.
  3. File formation documents: The required formation documents will be determined by the business structure you choose. 

Step 4: File Tax and Employer Identification Documents 

As one of the final steps of the business formation process, you must file tax and employer identification documents. In California, there are a variety of state agencies and programs which provide guidance on tax obligations.  

Once the appropriate taxes are filed, an Employer Identification Number (EIN) should be obtained. This process can be completed through the IRS website.   

If you have questions or need help throughout the process, PRIME’s tax team is here to assist you. 

Step 5: Obtain all Necessary Permits and Licenses

It is finally time to complete the registration process with obtaining all of the necessary permits and licenses. The California Secretary of State website offers two resources to help entrepreneurs determine which permits and licenses they need: CalGOLD (The Gold Standard For Permit Assistance) and the Department of Consumer Affairs. While different types of businesses have different documentation, the process to obtain them should be somewhat routine. If you want someone to double check your work, schedule a consultation with a PRIME advisor

Starting a Business in California—Next Steps

Getting a business running is only half the work. Here are some factors to consider long term when running a business: 

  1. Hiring High Quality Staff: A business is only as successful as its employees. Consider the qualities you want in employees and the proper compensation and benefits it takes to maintain their allegiance. Is there an agency you want to hire through? These are all questions to consider. 
  2. Finding the Right Insurance: What type of insurance do you need to cover the worst possible risks? General Liability Insurance is typically the way to go for most businesses. Other types of insurance to consider are Worker’s Compensation Insurance and Professional Liability Insurance.
  3. Implementing Influential Marketing: You can’t have a business if people don’t know about your product or service. Creating a website and corresponding social media is the way to get your name out. Hire a professional or create a site yourself through services such as Wix or WordPress.

Starting a business in California can be a daunting process, but it doesn’t have to be painful. We’ve got a huge library of information and resources on our blog, and our advisors are just a click away for a free consultation. We’ll help you execute on your big ideas and bring your business to life!

Starting a Business in California: FAQs

How much does it cost to start a business in California?

The filing fee for the Articles of Incorporation is $100. 

How do I obtain a license or permit to create my business? 

The CalGold (California Government: On–Line to Desktops) contains the proper information about business license/permit requirements. The database provides links and contact information to the proper organizations which provide the proper documentation. This can’t be filed through The Secretary of State. 

What makes California a good state for starting a business?

California has the fifth largest economy in the world, attracting millions of tourists every year. The state has warm weather, industry opportunities, and celebrity culture, making businesses likely to succeed. 

Starting a Business in California—More Resources

If you’re looking for more information about forming a business in California, check out the following links: