How to Start a Business in California?

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How to Start a Business in California?

California, the western US state, is the most popular destination that nestles Hollywood , Disneyland , and Silicon Valley . Due to its large population and consistent weather, California is supposedly one of the most favorable business destinations. The state has the best access to venture capitalists.

Home to Apple , Google , Facebook , Well Fargo , Intel , and Hewlett-Packard , California stands out as a top business capital. Here, we list step-by-step processes to set up business in California.

Creating a Business Plan 

Like any other business, starting an enterprise in California also needs a robust business plan. Once you have chosen a business idea, you must formulate a business plan depending on your skill and resources. This will require you to strategize on the costs, competitors, and profitability. A well-drafted business plan helps you in setting up goals and sourcing funding.

Name Your Business and Find a Location 

When you have an idea and you have worked out the strategies around it to convert it into a business, you need to think of an appropriate name. The name of the business is crucial since it will decide the logo, further branding, and even the domain name. You can only apply for the domain once you have chosen it after giving a name to the business.    

Equally important is finding a place for your business in California. The location of the business will decide the type of licensing and permits required.

Decide On a Legal Structure 

In California, the most common type of business are:

  • Sole Proprietorship: No organizational documents need to be filed with the state to establish a sole proprietorship in California.
  • Partnership: No organizational document is required to create a general partnership agreement in California.
  • Limited Liability Partnership (LLP): To form an LLP, registration with the California SOS is a must.
  • LLCs: An article of the organization is filed with the California SOS to create an LLC. Also, an operating agreement must be prepared to draft the basic rules about how the LLC will operate.
  • Corporations: Articles of Incorporation are filed with the California SOS.

Apply for Licenses and Permits 

The following licenses and permits are required for conducting business in California:

  • Seller’s Permit: For selling goods in California, registration with the Board of Equalization (BOE) is required.
  • Another registration is required in California called Employment Development Department (EDD) when the organization has employees.
  • Employer Identification Number (EIN): When having employees, a federal Employer Identification Number (EIN) is required. EIN is also required in business transactions at banks and with other companies.
  • Regulatory licenses and permits: State agencies issue regulatory approvals and permits. These pertain to areas like health and safety, the environment, building and construction, and specific industries and services.
  • General Business License: Every business license must get a general permit from the city.

Get Insurance 

Insurance is essential for business as it acts as a protection in case of natural calamities, injuries, etc. There are two types of insurance :  General Liability Insurance for bodily insurance and cyber liability insurance to cover litigation in case of a data breach.

Register for Taxes 

In California, every business is taxed. There are mainly two types of taxes: corporate income tax (applies to corporations) and a franchise tax (applies to corporations, LLCs, and partnerships).

Setup Bank Accounts 

When starting a business in California, take care of the following:

  • Open a business bank account: This is separate from your personal bank account. It is essential for the protection of personal assets.
  • Get a business credit card: A separate business card is essential to maintain the company’s credit history. It is also helpful in raising capital.
  • Set up business accounting: This is required to keep track of the performance of the business to simplify tax filings.

Hire Employees 

Once all the framework is ready, it’s time to hire the employees. As mentioned above, in California, you need to register with the Internal Revenue Services (IRS) for employee taxes and to report new joiners.


After giving due consideration to the name of the business, branding should be the priority. Further strategies mainly depend on branding.  Keep in mind the core values and customer preferences. Branding will also help you choose the right domain name.

End Thoughts 

There are specific rules that apply when you start a business in California. Maintaining clarity about the processes before plunging into a business is important. California is a lucrative place to set up a company once you know the procedures.    

WomExperts Team

WomExperts Team

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