Starting a business in California can be a great manner to be your own boss while bringing new products, services and ideas to your residential district. Thousands of businesses in California are using Shopify to baron their on-line stores, and every day, more entrepreneurs begin their journey to starting their own ship’s company. We ’ ve put together some resources to help you get started .
1. Choose a business idea
gradation 1 when starting a commercial enterprise in California ? Coming up with a great theme. If you already have something unique and commercially-viable in thinker, you ’ re ready to get started. If you don ’ t have a in full realized concept for your product or service, Shopify has business resources available to help you understand how to start a humble business in California, and work through the process of understanding what products to sell and who to commercialize them to .
2. Name your California business
Naming your business is crucial for branding your clientele, but it ’ south besides an substantive tone in the procedure of registering your operation. Most regulative agencies ask for your business name on forms, so you ’ ll need to come up with a good name first .
If you don ’ t have a name in mind, you can get some ideas using Shopify ’ south Business Name Generator. once you ’ ve settled on a few options, search for them online to see if any early businesses are already using them. You can besides check the United States Patent and Trademark Office to see if any businesses have already trademarked your favored name .
It ’ s a well mind to check to see if a match domain list for your web site is available, since your web site ’ south cover is besides very important to your stigmatize .
When you ’ re fix to make your name official, you ’ ll need to perform at least two actions :
3. Create a business plan
Most successful businesses start with a business plan, whether it is required for registration or not. A great business plan can help you stay organized and goal-oriented throughout the inauguration process, and is often required as part of applying for a business lend .
Although writing a business design may seem like a daunting step in the procedure of figuring out how to start a clientele in California, it ’ s a reasonably aboveboard text file. Shopify can help, with resources like an adaptable business plan template deoxyadenosine monophosphate well as several examples to inspire you .
4. Choose a business structure and get started
When starting a small business in California, it ’ sulfur significant to choose the right structure for your operation. Three coarse types of clientele structures are sole proprietorships, limited liability companies ( LLC ), and corporations. Each one has advantages and disadvantages. Below is a summary of each, a well as the initial steps required to set up your business. Looking for more contingent on the versatile business structures ? You can find it on the Shopify Blog .
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Sole Proprietorship in California
What is a sole proprietorship?
A lone proprietorship is an unincorporated clientele owned by one person, and the simplest structure available in California. They are slowly to set up, cheap to get started, and you get to keep all of your business profits. The downside is that you could potentially end up paying more tax than the early business structures, and be without the legal protection afforded by a specify Liability Company ( LLC ) or pot, which means you could be personally liable for debts, lawsuits, and more .
Is a sole proprietorship right for you?
Sole proprietorship is great for small businesses that intend to stay humble, operating locally with few or no employees. These types of businesses are perfect for person who produces unique products like handmade goods, or person who provides an individual servicing, like a tax accountant. If you ’ re researching how to start a occupation in California with no money, this is a good option .
Fictitious business name statement
As separate of the startup process, you may need to register a fabricated name, which is any commercial enterprise name that does not include your last list. This is besides sometimes called a DBA ( doing business as ), assumed mention, or trade list. Registering a fabricated commercial enterprise name is meant to connect the true identity of a business owner with the name of the occupation they own, so that stakeholders are able to pursue legal military action or debt collection .
Get an Employer Identification Number (EIN)
If you ’ rhenium planning on hiring employees, you ’ ll need an Employer Identification Number ( EIN ). This is your federal tax number and serves a similar aim to your personal Social Security Number ( SSN ), except for your commercial enterprise. You may be able to skip this gradation if you are operating your business without employees .
Limited Liability Company (LLC) in California
What is an LLC?
An limited Liability Company ( LLC ) is a hybrid business structure that delivers many of the advantages of sole proprietorships and corporations with a reduce administrative burden and some legal protection from debts and liabilities. They are relatively easy to manage, though they are not available to businesses in every industry. Plus, LLCs may be national to both state and federal tax, which can require filling out extra forms .
Is an LLC right for you?
An LLC may be a good choice for you if you are planning on starting a belittled to medium business or if you want to launch your early-stage enterprise with some legal protections .
Get an EIN
LLCs are required to register for an Employer Identification Number ( EIN ) from the Internal Revenue Service ( IRS ). This act is like to your personal Social Security number ( SSN ), except it is for your commercial enterprise. The IRS provides a elementary, interview-style application process and you will need your SSN or Individual Taxpayer Identification Number ( ITIN ) in order to complete your application .
Register your LLC
once you have a business name and an EIN, you can register your LLC with the California Secretary of State by filing a Statement of Information on-line, using the California bizfile service. Filing tips are besides available on the California Secretary of State web site. You can besides submit your documents in person at some offices of the California Secretary of State .
Choose a registered agent
A register agent, or an agent for service of serve, is a person or pot who you designate to receive court documents in the event that your LLC is subject to legal action. This is separate of the LLC structure that can protect your personal assets from debts and liabilities. You can not be your own file agent in California. The California Secretary of State provides a valuable FAQ on record agents and how to find one .
Pay state tax
LLCs in California are subject to an annual tax that is administered by the California Franchise Tax Board. It is besides probable that your LLC will need to pay sales tax—you can find out what types of sales qualify and how much to charge from the California Department of Tax and Fee Administration .
Prepare an operating agreement
Though an manoeuver agreement is not required to be submitted to the California Secretary of State in order to register your LLC, it is a step that can give you the ability to outline how your business will operate, how it is managed, and how profits are allocated. The State has default rules but your operate on agreement may provide better protection of your assets in the event of indebtedness issues. There are operating agreement templates available to help get started .
Corporation in California
What is a corporation?
A corporation is a structure that entirely separates the individual owners from the occupation, protecting personal assets from fiscal and legal liabilities. Corporations in California typically enjoy a lower tax rate than individuals and they are besides easier to sell than LLCs or sole proprietorships because they are separate entities from the people who own them. Corporations can issue stock, allowing businesses to raise funds from investors for expansion, development, and more. however, corporations have the most rigorous regulative and administrative requirements, including during the startup phase .
Is a corporation right for you?
A California corporation could be right for you if :
- You plan on raising funds from investors
- You’re starting a very large operation
- Your goal is to build up a company and then sell it
- You’re especially interested in protection from liabilities
Get an EIN
The beginning step on your path to incorporation is to register for an Employer Identification Number ( EIN ) with the Internal Revenue Service ( IRS ), which makes it easily to apply using an interview-style application process. You ’ ll need your Social Security Number ( SSN ) or Individual Taxpayer Identification Number ( ITIN ) in order to complete your lotion .
This federal tax count functions similarly to your personal SSN. You ’ ll need your EIN for subsequent steps.
File Articles of Incorporation
Your Articles of Incorporation is a text file that outlines the details of your company, such as the commercial enterprise appoint, location, and for-profit status. You can find details on the submission serve via the web site of the Secretary of State .
Choose a registered agent
There is some overlap between corporation and LLC requirements, one of which is the prerequisite for a register agentive role, or an agent for serve of serve. This person or corporation receives court documents on your behalf if your pot is subject to legal proceedings. Find more information in the California Secretary of State FAQ .
Prepare corporate bylaws
corporate bylaws define how your corporation is structured and governed. This can be quite a long and detail document, so set aside enough of time for this step. Corporate bylaw determine details such as :
- Annual meetings
- Quorum (minimum number of voting board members or stockholders)
- Document handling
- Conflicts of interest
If you ’ rhenium looking for inspiration, there are corporate bylaw templates available .
Elect directors and hold board meeting
Every corporation needs a board of directors. While this is however another thing to do on your inauguration checklist, a board of directors is a capital way to assemble a group of people with useful cognition and experience that can help your business become a success. California has rules and requirements around the composition of your board of directors, including a diverseness necessity enacted January 1, 2021, that states that corporations with capitulum offices located in California must have at least one female board member a good as dining table members from underrepresented communities .
In California, malcolm stock differentiates a corporation from other commercial enterprise structures. By issuing banal, you are raising funds and committing to collective ownership of your business. Stock is normally issued at the first board meet. Setting parcel prices can be complicated so it is worthwhile to read up and understand the serve .
File a Statement of Information
Like an LLC, corporations need to file a Statement of Information with the California Secretary of State .
Pay state tax
Corporations in California are capable to an annual tax administered by the California Franchise Tax Board. Your corporation may besides have to pay sales tax. Find out which sales qualify and how a lot to charge from the California Department of Tax and Fee Administration .
5. Obtain a business license and permits
future up on your starting a little business in California checklist : your business license and permits. Regardless of the structure of your business, you may need to obtain a business license, permits, or both in rate to operate in the submit of California. For example, if your business will sell alcohol, you ’ ll need a license. The California Governor ’ randomness Office of Business and Economic Development maintains a handy search tool that can help you find which licenses and permits may be required for your operation. The California Department of Tax and Fee Administration besides provides license and license data, vitamin a well as an easy adjustment portal .
6. Examine insurance options
These days it ’ s a good theme to have insurance for your business, flush if you have the protections of an LLC or pot. The California Department of Insurance offers enough of steering on what kind of indemnity you might need for your operation, including general liability, professional liability, and worker ’ randomness recompense .
7. Understand financial considerations
You can prepare to start operating your business, specially if you have set up an LLC or pot, by opening a business bank account, applying for a business citation menu, and possibly evening contracting a commercial enterprise accountant. An accountant in particular can do wonders for ensuring your books are balanced and your business is positioned to achieve fiscal solvency .
If you are in need of extra fund during startup or ongoing operations, you may want to consider Shopify Capital to fuel your business .
8. Market your business
once your sole proprietorship, LLC, or corporation is registered, it ’ randomness time to prepare for launch by getting your clientele ready to show off to the populace .
Brand your business
Branding is the public-facing identity that helps potential customers recognize the value and personality that your clientele brings to the marketplace. Branding includes ocular elements like your logo, official colors and imagination ; text elements like your motto or tagline, tonicity, voice, and fonts ; and intangibles like positioning and brand persona. Building a stigmatize can be a bunch of playfulness and truly allow you to get creative for your business .
Build a business website
nowadays, a web site for your business is an essential separate of the room you communicate with customers. fortunately, platforms like Shopify make building a web site easier, and there is some guidance available to help you through the process. The stigmatization that you will have already done will be implemental in designing your web site. In order to get started, you ’ ll motivation :
- Digital logo files in different sizes that suit your front page, footer, and anywhere else you want to brand your new website
- Brand colors, so you can personalize your website theme and match it to your products, services, print materials, and more
- Attractive product photos and images that engage users visually
- Coordinated fonts to create a consistent look and feel across all of your promotional materials
- A site map that outlines the page structure and makes it easier for you to organize all of the information you want to communicate to your customers
- Your public contact information
Promote your business
promotion is the last step in the inauguration process. You can focus your promotional efforts by creating a marketing plan that gets your product or service in battlefront of your ideal potential customers, keeps your scheme on track, and ensures your brand is being used to the fullest. market plans frequently include :
- An executive summary that summarizes your overall plan
- A mission statement that outlines your overarching goals and business philosophy
- Objectives that detail the specific things you want to achieve through your LLC
- A Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis that can help you identify what you’re doing right and what needs to be refined
- Market research that helps you understand your industry, potential customers, and competitors
- A market strategy that details your plan of attack
- A budget that keeps your finances under control
For a little supernumerary inhalation, have a look at these marketing plan examples. once your marketing design is ready to go, there ’ s lone one thing left to do—launch your business !
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How long does it take to start a business in California?
Starting a business can take anywhere from just a few days for a sole proprietorship, to two months or longer for a corporation. It depends on the structure of your business, the complexity of functional requirements such as permits and licenses, and the accelerate at which you are able to assemble the compulsory documents and fees ,
How much does it cost to start a business in California?
You may be able to start a occupation in California for less than $ 100 USD in the case of a sole proprietorship. however, depending on your occupation structure and the number of permits and licenses your business requires, it could cost several hundred dollars or more to get started.
Do businesses pay taxes in California?
Businesses that are structured as LLCs or corporations in California may pay taxes at both the state and federal levels. sole proprietors in California pay state and federal tax as separate of their individual annual personal income tax .
This post is for information only. You are responsible for reviewing and using this information appropriately. This content doesn’t contain and isn’t meant to provide legal, tax or business advice. Requirements are updated frequently and you should make sure to do your own research and reach out to professional legal, and tax and business advisors, asif needed. Businesses outside of California will have different steps and requirements. To sell products using the Shopify platform, you must comply with the laws of the jurisdiction of your business and your customers, the Shopify Terms of Service, the Shopify Acceptable Use Policy and any other applicable policies.
See our other submit guides on How to start a clientele in Texas, How to start a business in Florida .