How to Start a Business in California

Steve Goldstein
Steve Goldstein
Business Formation Expert
Steve Goldstein runs LLCBuddy, helping entrepreneurs set up their LLCs easily. He offers clear guides, articles, and FAQs to simplify the process. His team keeps everything accurate and current, focusing on state rules, registered agents, and compliance. Steve’s passion for helping businesses grow makes LLCBuddy a go-to resource for starting and managing an LLC.

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Start a Business in California

Starting your own business in California is one of the most exciting and profitable things you can experience. But where do you begin? There are numerous strategies to establish a business, each with important factors to consider. If you wish to start a business in California, there are many things that you should consider. Doing business in California, popularly known as The Golden State, will give you many opportunities because of the current estimated population, which consists of 40,223,504. Considering the large numbers, you will cater to a lot of customers.

Follow our in-depth guide on how to start a business in California. We will help you remove the doubt from the process and explore your chances of success. It will start from defining your business idea to establishing, launching, and expanding your business. And we will guide you every step of the way.

How to Start a Business in California?

To form a business in California, you must follow a few steps that include creating a business plan, choosing a business entity type, determining your California business costs, naming your business, registering a business, and lastly, marketing your California business. Starting a business is not something you can do overnight. The processing, planning, and preparation take a lot of time. If you want to start a business in California, you must have everything ready beforehand.

Continue reading to learn more about the procedure as a whole and what new small business owners should keep in mind as they carry out each phase.

Step 1: Create a Business Plan

The first thing you need to start your business is a solid plan. In creating a business plan, you should consider many things when you are in the decision-making phase. Your business plan in California is a road map for your successful business.

A business plan should consider the detailed purpose of your business. You should know what product or service you will serve in California. A purposeful business plan is important because that plays a key role in knowing how your business will make a profit. If the purpose of the business plan is vague and not aligned with what service you are giving, it will affect the business you are forming. Make sure to be SMART (specific, measurable, achievable, realistic, and in a certain timeframe) with your business goals. Also, researching your competitor’s service is a great deal to knowing what strategy you will form for your California business. And lastly, you should include the funding of your business.

A business plan should be created before you start a business. Without it, you have nothing but a blank slate. This document will help you understand the key parts of your business and the plan for success. Regarding the potential funding for your business in California, you can avail of business loans in bank and investor funding.

You can continue working on the legal structure of your business once you have the whole plan in your possession. You may create an LLC for your business legally. You can check other business guides shared by the LLCBuddy Editorial Team.

Step 2: Choose a Business Entity in California

A business entity refers to a legal structure formed to conduct business activities. It is a separate and distinct organization recognized by the law, which possesses rights, responsibilities, and liabilities distinct from its owners or members. Choosing a business entity for your California business is significant.

You must decide on a business entity structure while beginning your own business. The form of company entity you choose will significantly impact how well your personal assets are protected, how much tax you pay, and how much paperwork you have to deal with. You should consider forming a business entity in California through having Sole Proprietorship, LLC, LLP, and Corporation.

Sole Proprietorships

A sole proprietorship is a simple and common type of business structure where an individual owns, operates, and manages the entire business. It is the easiest and least expensive form of business organization to establish and maintain. One of the most appealing aspects of a sole proprietorship is the owner’s direct control over all aspects of the business.

A key characteristic of a sole proprietorship is that the owner and the business are considered a single legal entity. This means that all profits, losses, assets, and liabilities are the owner’s personal responsibility. Although this can lead to increased risk exposure, it allows the owner to control their business operations completely.

Consider a sole proprietorship if you want to start a business in California by yourself. For legal and tax reasons, the owner and the business are regarded as one and the same. The business owner takes on liability for the business. Therefore, the owner is liable for all business debts in the event that the company fails.

Limited Liability Company

A Limited Liability Company, also known as an LLC, is a business structure ideal for entrepreneurs and start-ups. It is perfect for start-ups and aspiring entrepreneurs since it has limited liability issues for a company. The California LLC is mainly used for the legal structure of a business between two or more companies that share management and profits. It also protects its owners from liabilities, debts, and responsibilities that may cause them in the future.

LLCs offer pass-through taxation, meaning that the profits and losses flow through to the members’ personal tax returns, avoiding double taxation that corporations may experience. Additionally, LLCs have fewer formal requirements and administrative burdens compared to corporations. Read California classification of LLC tax to get more information about tax.

Another advantage of an LLC is the flexibility in the management structure. Members can choose to manage the company themselves or appoint managers to oversee the business operations. This allows for customization based on the unique needs and preferences of the owners.

Limited Liability Partnership

Limited Liability Partnerships (LLPs) are a unique business structure combining partnerships and corporations’ elements. An LLP offers limited liability protection to its partners, meaning that each partner is only responsible for their actions and debts rather than jointly and severally liable for the entire partnership’s obligations.

This structure is particularly popular among professional service providers such as lawyers, accountants, and architects, as it allows them to maintain the collaborative nature of a partnership while enjoying the liability protection typically associated with corporations.

In an LLP, each partner’s income is subject to self-employment taxes, and the profits and losses are passed through to the partners’ personal income tax returns, similar to a general partnership. This pass-through taxation avoids the double taxation issue faced by some corporations.


Forming a California corporation reduces your personal liability for business debts as an LLC does. A corporation can be taxed as an S-corporation (S-Corp) or a C-corporation (C-Corp). If a small corporation satisfies certain Internal Revenue Service (IRS) standards, then S-corporation status is available, providing pass-through taxation. However, most larger businesses and startups seeking venture financing are taxed as C-corps.

Step 3: Determine your California Business Costs

In California, you should determine the business costs that you will form. You should consider paying the Articles of Organization fee for LLCs, Articles of Incorporation fees for corporations, business licenses fee, office supplies and equipment, payroll, office rent, utilities, transportation, and taxes.

Usually, filing an initial California Articles of Organization fee costs $70, while the annual fee costs $10, $20 every 2 years in California. Read about the overall cost of LLC registration in California cost to know more about California LLC cost. If you wish to know more about how much it costs to form an LLC, you should look up and be guided by the LLC formation costs. For a corporation, you must pay the $100 for filing online and by mail. $115 for in person filing. Besides, you need to pay taxes as a corporation.

Step 4: Name Your Business in California

Naming your business doesn’t take a lot of time. With the help of California LLC name search, you can acquire a name for your business. If you form an LLC in California, you must follow the below rules while naming your business-

  • The name should not be confused with a government entity.
  • The name should be unique.
  • The name should be available to use.
  • Any other business does not use the name.
  • The new name must include “LLC” if it is a limited liability company.

In California, if you do not wish to file your business right away but want to hold the name that you have decided on, then you can reserve your business name for 60 days. You must file a name reservation application in the California Secretary of State to keep the name. There is a complete guide on LLC name guidelines for you to have a proper LLC business name.

Step 5: Register Your Business in California

In order to register a business in California, you need to file it with the California Secretary of State. Before that, you must have a California Agent for Service of Process for your business. The Agent for Service of Process is a person who is responsible for receiving important legal documents on your behalf.

Get the California Agent for Service of Process

You must get your California Agent for Service of Process before you file your business. The person should be eligible to conduct business in California. Also, they must be aged above 18 years. You can be your own registered agent. However, that will not be a wise decision. Appointing a professional will be much more beneficial for your business than doing it on your own.

Apply For California Formation Document

After you have a Agent for Service of Process, you need to file the California formation document. If you are filing an LLC in California, you must file the Articles of Organization and if you want to have a corporation structure, you need to file the California Articles of Incorporation.

Request For an EIN

In addition to the paperwork, you should apply for an Employer Identification Number (EIN). An EIN will serve as the tax ID for your professional corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website. You can obtain the EIN for free from IRS.

The application of an EIN in California can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is 4 weeks.
  • Apply by Telephone (for International Applicants)– International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

After you have your EIN number, you can benefit in a number of ways. It will give your LLC the final advantage necessary to operate at full capacity without encountering legal or judicial issues.

Step 6: Apply for Business License and Permit

Obtaining a business license and operating permit is necessary to run any business in California. Before launching your new business, you should request any required business license or permission. Most California businesses need licenses or permits to operate. Federal, state, and local governments may all require businesses to have licenses and permits. The business license fee depends on the type of license you are applying for. You must contact California Department of Tax and Fee Administration for more details.

Step 7: Get a Bank Account

Your business dealings in California might be simpler with a US business bank account because it boosts your company’s legitimacy and liquidity. Most banks demand an EIN to create a business bank account for firms other than sole proprietorships. Also, keeping separate finances helps you avoid combining personal and professional finances.

Step 8: Market your Business in California

Now that your California business is already registered, you can market it with an ideal marketing plan. An ideal marketing plan can help a start-up business to become known. Making a comprehensive social media network like META, Facebook, Instagram, Twitter, and YouTube falls within this category. While creating an SEO campaign for your company website, you may also look at specialized communities on Facebook and LinkedIn.

Important Information

Do you need to have Business Insurance?

Your company needs insurance even if it’s a home-based business or you don’t have employees. Depending on your business planning and the risks you face, you may require different types of insurance. As your business expands, you might require more than one type of insurance. If you have employees, you are typically legally required to carry workers’ compensation insurance. You must contact California Department of Insurance to ensure what type of insurance is required for your business.

What is the most profitable type of business?

The most profitable type of business will vary depending on a number of factors, including your industry, location, target market, and business strategy. However, some companies, such as those that provide expensive products and other services, tend to be more profitable than others. If you’re unsure about the kind of business to launch, think about your abilities and interests and the demands of your target market to guide your decision on an effective business.


What is required to start a business in California?
To start a business in California, you need to register your business with the Secretary of State, obtain a federal Employer Identification Number (EIN), and secure any necessary permits or licenses.
What are the taxes for a business in California?
California business taxes include sales and use tax, income tax, employers’ payroll taxes, and other taxes.
What kind of permits and licenses do I need to open a business in California?
Depending on the type of business you operate, you may need to obtain special permits and licenses from the California Department of Consumer Affairs, the California Department of Tax and Fee Administration, or other state and local agencies.
How do I register a business in California?
To register a business in California, you must first choose a business name, then file a Fictitious Business Name Statement with the county clerk, and then register the business with the Secretary of State.
What is the minimum wage in California?
The minimum wage in California is currently $12 per hour for employers with 25 or fewer employees, and $13 per hour for employers with 26 or more employees.
What are the steps to starting a business in California?
The steps to starting a business in California include
What type of business structure should I choose in California?
The most common types of business structures in California are a sole proprietorship, partnership, corporation, and limited liability company (LLC). Each type has its own advantages and disadvantages, so it’s important to consult an attorney or accountant to determine the best structure for your business.
Is there a minimum amount of capital required to start a business in California?
While there is no minimum capital requirement to start a business in California, it’s important to have enough start-up funds to cover the cost of licenses, permits, and insurance, as well as any working capital needed to cover operating expenses.
Do I need a permit to start a business in California?
Depending on the type of business you’re starting, you may need to obtain one or more permits from the state, local, or federal government. It’s important to research the requirements for your specific business to ensure you have all the necessary permits.
What California laws should I be aware of when starting a business?
California laws governing business formation and operations are numerous and varied. It’s important to understand the state’s requirements for taxation, employment, and environmental regulations. It’s also important to understand the state’s liability and consumer protection laws, which can help protect your business from legal action.
What are the steps to start a business in California?
The steps to starting a business in California include deciding on a business structure, registering with the state, getting a business license and obtaining any necessary permits.
What paperwork is needed to start a business in California?
The paperwork needed to start a business in California includes the Articles of Incorporation for a corporation, the certificate of limited liability company, the partnership agreement for a partnership, the application for a fictitious name filing and the application for a business license.
What is the California Secretary of State’s website?
The website for the California Secretary of State is
What is the filing fee for a business in California?
The filing fee for a business in California varies depending on the type of business and the number of shares being issued.
What is the best way to find out what permits are required in California?
The best way to find out what permits are required in California is to contact the appropriate local, state and federal agencies to determine the necessary requirements.
What taxes must be paid when starting a business in California?
Taxes that must be paid when starting a business in California include income tax, corporate tax, sales tax and employment taxes.
Is there a California business tax?
Yes, businesses in California must pay a California business tax, which is a percentage of the company’s gross receipts.
What are the legal requirements for starting a business in California?
The legal requirements for starting a business in California include registering with the state, obtaining any necessary permits, selecting and forming a business structure and obtaining a business license.
What is the minimum capital required to start a business in California?
There is no minimum capital required to start a business in California.
What type of insurance is required for a business in California?
The type of insurance required for a business in California varies depending on the type of business and the number of employees.
What type of business structures are available in California?
The business structures available in California are Corporations, Limited Liability Companies, Partnerships, Sole Proprietorships and Non-Profit Organizations.
What is the California Employment Development Department?
The California Employment Development Department (EDD) administers the state’s payroll taxes and collects unemployment insurance taxes from employers.
Is a business plan necessary to start a business in California?
Yes, a business plan is necessary to start a business in California as it outlines the company’s goals, objectives and strategies.
How long does it take to start a business in California?
It typically takes several weeks to start a business in California, depending on the type of business and the paperwork involved.
What is the California State Board of Equalization?
The California State Board of Equalization (BOE) administers the state’s sales and use tax, property tax, and business income tax.
What is a fictitious name filing in California?
A fictitious name filing in California is a filing with the county clerk’s office that registers a business name that is not the owner’s legal name.
What is a certificate of limited liability company in California?
A certificate of limited liability company in California is a document filed with the Secretary of State that registers the company’s name and provides limited liability protection to the owners.
What are the steps for registering a trademark in California?
The steps for registering a trademark in California include performing a trademark search, filing the trademark application and submitting any related documents to the United States Patent and Trademark Office.
Is a business license required in California?
Yes, a business license is required in California in order to operate legally.
What resources are available to help start a business in California?
There are many resources available to help start a business in California, including the Small Business Administration and the California Business Portal.
Does California have an online database of businesses?
Yes, California has an online database of businesses called the California Business Search.
What is the California Franchise Tax Board?
The California Franchise Tax Board (FTB) is the agency responsible for administering the state’s income tax laws.
What is the California Department of Tax and Fee Administration?
The California Department of Tax and Fee Administration (CDTFA) is the agency responsible for administering the state’s sales and use tax, as well as other taxes and fees.

Also Read

Why Start Business California is So Important

One of the key factors that make starting a business in California so crucial is the sheer size of its economy. As the largest state in the U.S. by population and GDP, California offers unparalleled market potential for companies in virtually every industry. From tech giants in Silicon Valley to entertainment juggernauts in Hollywood, there is no shortage of opportunities for entrepreneurs to tap into this massive market and make their mark.

Furthermore, California’s reputation as a trendsetter and influencer in various sectors makes it an ideal location for innovative startups looking to disrupt industries and drive change. The state’s forward-thinking policies on clean energy, sustainability, and social responsibility have set a precedent for businesses worldwide, making it an attractive destination for investors and consumers alike.

Additionally, California’s diverse workforce is another compelling reason why starting a business in the state is so important. With a population that is among the most educated and talented in the country, entrepreneurs have access to a wealth of skilled professionals who can help turn their vision into reality. Whether in technology, finance, healthcare, or any other field, California’s workforce is well-equipped to support businesses of all sizes and industries.

Moreover, the state’s strategic location on the West Coast provides businesses with access to global markets and enables them to establish valuable connections with partners and customers around the world. With its world-class ports, airports, and infrastructure, California serves as a gateway to the Asia-Pacific region and beyond, giving businesses a competitive edge in the global marketplace.

In conclusion, starting a business in California is a strategic move that can open up a world of possibilities for entrepreneurs. With its vibrant economy, innovative spirit, diverse workforce, and strategic location, the Golden State offers an unparalleled environment for growth, success, and sustainability. By taking advantage of everything California has to offer, businesses can position themselves for long-term success and make a lasting impact on the world stage.

Why California Property Management Business is So Important

One of the key reasons why property management business in California is so important is the state’s high cost of living. California consistently ranks as one of the most expensive states in the country, with skyrocketing property prices and rental rates. For property owners, this means that their investments are extremely valuable and must be managed carefully to maximize their returns. Property managers play a vital role in this process by handling everything from tenant relations to maintenance and repairs, ensuring that the property remains in top condition and continues to generate income for the owner.

Property management business is also important in California due to the state’s stringent regulations and laws governing real estate transactions. From rent control ordinances to fair housing laws, property owners in California must navigate a complex web of regulations to ensure compliance and avoid costly legal issues. Property managers are well-versed in these laws and regulations, helping property owners navigate them successfully and avoid potential pitfalls that could lead to financial losses or legal troubles.

In addition, property management business in California helps to maintain the overall quality of the state’s real estate market. By providing professional management services, property managers ensure that properties are well-maintained and in good condition, which in turn helps to attract and retain tenants. This not only benefits property owners by ensuring a steady stream of income, but also benefits tenants by providing them with safe and comfortable living or working spaces.

Furthermore, property management business in California contributes to the state’s economy by creating jobs and stimulating growth in the real estate sector. Property managers hire a wide range of professionals, from maintenance workers to leasing agents, contributing to job creation and economic activity in the state. Additionally, property management companies often work with a network of vendors and contractors to provide services such as repairs and maintenance, further stimulating economic growth in California.

Overall, California property management business plays a crucial role in the state’s real estate market by ensuring the efficient and effective management of properties, facilitating compliance with complex regulations, maintaining the quality of properties, and contributing to the state’s economy. As such, property managers are essential partners for property owners, helping them to protect and maximize their investments in one of the most competitive real estate markets in the country.

Why Open a Bakery in California

One of the main reasons why starting a business in California is so important is the access to a large and affluent consumer base. California is the most populous state in the country, with a diverse population that encompasses people from all walks of life. This diverse consumer base provides a wide variety of tastes, preferences, and needs, making it an ideal market for testing out new products and services.

Furthermore, California is known for its strong economy and robust job market. With one of the largest economies in the world, California is a hotspot for businesses looking to tap into the state’s wealth of resources and opportunities. Whether you’re a tech startup in Silicon Valley or a fashion designer in Los Angeles, California offers a plethora of resources and support to help you succeed.

In addition to its economic prowess, California is home to a vibrant entrepreneurial community that encourages collaboration and innovation. Entrepreneurs in California have access to a wealth of networking opportunities, mentorship programs, and startup accelerators that can help them take their business to the next level. Whether you’re looking to connect with like-minded professionals or learn from seasoned veterans, California’s entrepreneurial community is there to support you every step of the way.

Moreover, California boasts a diverse and talented workforce that is well-equipped to support businesses of all sizes and industries. From software engineers in the Bay Area to fashion designers in Los Angeles, California offers a pool of talent that is second to none. With its strong educational system and vibrant cultural scene, California attracts some of the brightest minds from around the world, making it an ideal place to build a skilled and motivated team.

Finally, starting a business in California can open up a world of opportunities for expansion and growth. With its strategic location, well-developed infrastructure, and strategic partnerships, California offers businesses the potential to scale and expand both nationally and internationally. Whether you’re looking to reach new markets, attract investors, or forge strategic alliances, California provides the platform and support you need to take your business to new heights.

In conclusion, starting a business in California is not just a smart decision – it’s a strategic one. With its diverse consumer base, strong economy, vibrant entrepreneurial community, talented workforce, and endless opportunities for growth, California offers entrepreneurs a launching pad for success. So, whether you’re a seasoned entrepreneur or a first-time startup, California is the place to be if you want to turn your business dreams into reality.


In conclusion, embarking on the entrepreneurial journey of starting a business in California, also known as The Golden State, requires thorough research, planning, and dedication. Understanding the local business landscape, choosing the right structure, and complying with all regulatory requirements are essential steps to ensuring your venture’s success. This article has provided valuable insights and guidance for aspiring entrepreneurs looking to seize the opportunities present in California’s dynamic economy. By leveraging available resources and approaching the process with diligence and determination, you can lay the foundation for a thriving and prosperous business in California.

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