The Starting a Business in California Checklist

June 24, 2019

Starting a business in California can be exciting. To hit the ground running, it is important for you to complete certain steps so that your business is set up legally and protected from the day you open your doors. If you are planning to move to the Golden State to open your small business, here is a checklist to help you make sure that you have taken care of everything.

Trending ideas for small businesses in California

As residents of the state are increasingly looking for greener choices to meet their transportation needs, hydrogen fuel cell cars have become increasingly popular. Since these vehicles need to find stations at which they can refuel with hydrogen, entrepreneurs might consider opening hydrogen fuel stations to meet the burgeoning need. A related business idea in California is to open repair shops that have hydrogen fuel cell service bays. Extra care is needed to repair and maintain hydrogen fuel cell cars, and offering a mechanic shop that has the capabilities to handle these cars can open you up to a new revenue stream. 

Another trending small business idea is to open a leasing company for real estate. According to the Public Policy Institute of California, the state's population is expected to reach 44.1 million people by 2030. To accommodate all of these people, an adequate supply of rental properties will be necessary. With a leasing company, you can take advantage of the expanding demand for rental housing in order to make strong profits.

Another idea for new small businesses in the state is to open a supplementary educational service such as a college preparation and tutoring company. With the Common Application being accepted by colleges and universities across the country and the University of California using its own application for admission to any of its universities, it has become easier for students to submit applications to multiple schools. This has led to an increasingly competitive landscape in college admissions and increased demand for help with admissions essays and ACT or SAT tutoring

Statistics about doing business in California

The U.S. Small Business Administration reports that there are 3.7 million small businesses in the state, accounting for 99.2 percent of all the businesses in California. These small businesses employ 6.7 million people, comprising 49.6 percent of the working population. Small businesses are vital for the economy of California, and it can be profitable to open a small business as long as you set it up correctly. 

Starting a small business in California checklist

If you are wondering how to start a small business in California, this checklist can provide you with an easy way to make certain you stay on track and take care of all of the necessary steps. Assuming that you have already fleshed out your business idea, you can work your way down this list to be ready to go.

1. Pick your entity structure

Choosing the right entity structure for your business is important. The right structure can protect your personal assets in the event that your business faces a lawsuit. You can choose from several business structures, including the following:

• Limited liability company
• S-corporation
• C-corporation
• Sole proprietorship
• Partnership
• Limited liability partnership

Many small businesses start out as sole proprietorships, which are businesses that have a single owner. However, this type of structure does not offer you personal liability protection. For that reason, it might make more sense to start out with an LLC or an LLP. Both of these entities limit your personal liability from creditors, meaning that they won't be able to go after your assets. Corporations also offer protection from liability, but they are more difficult to set up and generally used by companies after they have grown. The California secretary of state's website has more information about business entities and the forms that you need to complete and file to establish your company's entity.

2. Choose your business name

Before you can register your business with the secretary of state, you will need to choose your business name. Your business name must be one that is not already registered in the state. You can search your potential business names on the secretary of state's website. You will also want to conduct a search of the internet to make certain that another similar business is not already using the same name. You can search the name with the U.S. Patent and Trademark Office to make certain that it is not already trademarked.

3. Register your business

After you have decided on the proper entity structure and chosen a name, you will then need to register your business. To register and form an LLC in the state, you will need to file Form LLC-1 with the LLC division of the California secretary of state. To incorporate, you will need to file Form ARTS-GS.

4. Apply for your federal employer identification number

If you will hire employees, you will need to apply for a Federal Employer Identification Number from the IRS. It is also required for all LLCs and corporations. You can apply for your FEIN online with the IRS.

5. Get your permits and licenses

The next step that you will need to complete is to get all of the necessary permits and licenses for your business. You will need to check with the city in which it will be located to find out about what local permits and licenses might be required. You should also check with the state to learn more.

6. Open your business bank accounts

After you have completed all of these steps, you will need to open your business banking accounts. You can do so with your company registration information and your FEIN, and the bank will take it from there.

Opening a business in California can be exciting. By following the steps on this checklist, you can make certain that your business starts out on the right foot from day one.