6 Steps to Take When Starting a Business in California

Starting your own business is one of the most liberating experiences that you can have. But, you’ll need to navigate through your state’s laws in order to avoid complications in the future.

Many people are unsure how to go about starting a business in California. So, we’ve put together a brief guide that outlines everything you need to know.

Let’s explore what you should keep in mind.

1. Come up With a Solid Business Idea

As you might guess, you can’t expect your business to be successful if you don’t come up with a solid idea first. Fortunately, you have a large amount of flexibility when it comes to what path you choose.

A common mistake the new entrepreneurs make is focusing their business on their interests with disregard to the local market. To elaborate, let’s assume that you want to open an independent clothing brand in Los Angeles.

It won’t take much research to discover that there are thousands of other brands that already exist and thousands of people doing the same thing as you right now.

Instead, you should look for gaps in different industries that you would be able to fill with your product or service.

2. Develop the Fine Details

After you’ve come up with a notable business idea, you can then move forward with the fine details.

This is when you can begin to consider aspects of your company like your business name, who you will hire, your marketing strategy, etc. During this stage, it’s also imperative that you figure out your financial planning.

You’ll have to have a strong understanding of how much money you’ll need to start, how many sales you will need to break even, and when you can reasonably expect to reach this point.

3. Register Your Business as a Legal Entity

Although it’s possible to function as a sole proprietorship, there’s a handful of advantages that come with registering a business in California.

Not only will you experience additional credibility as a legitimate business, but you can also protect yourself from lawsuits in the future. For this reason, many entrepreneurs choose to register their company as a California LLC even if they could remain a sole proprietorship.

In contrast, forgoing this opportunity will result in you being fully responsible for any debts or liabilities that your business has. In extreme scenarios, you could find yourself being sued for exponentially more money than your company is worth (such as through a PAGA lawsuit).

4. Open a Business Bank Account

It’s imperative that you properly separate your personal income and business income.

As a business owner, you will need to pay taxes based on the amount of revenue that your company generates. This also means that you will need to obtain an employer identification number in the state of California.

Those who sell physical products are required by the state to register for sales tax. Additionally, those who plan on hiring employees will also need to register for state employer taxes.

It can be notoriously difficult to pay your business-related taxes if you don’t open a business bank account in order to keep your income separate.

You also run the risk of having your personal finances and assets pursued during legal action if you mix your personal and business income. Fortunately, all you need to do is create a separate account at any bank and use it solely for your company.

It’s also recommended that you consider getting a business credit card. These often come with a large number of benefits and can provide much-needed financial support during the early stages of your business.

5. Obtain the Necessary Permits and Licenses

Depending on what industry you plan on operating in, you’ll need to secure certain permits and licenses. Not only will you need to consider California business laws, but you also need to consider federal laws.

Even local government laws could impact the way you run your company.

To elaborate, let’s assume you plan on opening a restaurant. This means you’ll need the following:

• Building permits
• Signage permits
• Health permits

Failure to secure these will result in legal trouble in the future. Most often, this comes in the form of fines and fees.

But, it’s possible that you could have your business shut down by a government entity.

6. Establish a Presence in Your Industry

Once you’ve gotten all of the major details sorted out, you can begin to establish a presence in your industry. This is an essential part of the process, since how you brand your company significantly impacts how your audience views you.

There are two core concepts to consider when branding:

1. Your marketing should properly represent your brand
2. Your branding should resonate with your audience

To elaborate, let’s assume that you don’t research your target demographic before marketing to them. There’s a strong chance that the overall tone of your marketing message will deter them from interacting with your brand.

Starting a Business in California Can Seem Difficult

The above information will help ensure that the process goes as smoothly as possible. Then, you’ll be able to seamlessly go about starting a business in California and start building your industry presence.

Want to learn more info you should keep in mind? Be sure to explore what the rest of our blog has to offer.