How To Start & Grow Your Business

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How to Start a Business in California

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The 3.4 million small businesses in California account for 99 percent of the state’s employers and employ 52 percent of the total workforce. California boasts a dynamic economy, some of the fastest growing companies in the country, high wages, and is also the number one state for venture capital — receiving four times more venture capital than the national average. California is famous for year-long warm weather, beaches and parks, mountains, and cities. Despite the high cost of living and taxes, we think there are a lot of upsides to living in and doing business in California!

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How to Start a Business

Starting a business can be both exhilarating and challenging. It requires your full attention and energy. It all begins with an idea, an observation that there is a problem and the belief that you have a new solution – or a better one. Allow us to walk you through the steps in this free guide: How to Start A Business.

General resources for starting a business in California

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Fun facts about starting a business in California

Famous business founded in California: Apple Inc.

Apple Inc. is a multinational technology company founded and headquartered in Cupertino, California, that designs, develops, and sells consumer electronics, computer software, and online services. As of March 2016, there are over one billion actively used Apple products worldwide.

Famous entrepreneur born in California: Steve Jobs, co-founder and CEO of Apple.

Born in San Francisco, California, Steven Jobs was an information technology entrepreneur and inventor. He was the co-founder, chairman, and chief executive officer (CEO) of Apple Inc.; CEO and largest shareholder of Pixar Animation Studios; a member of The Walt Disney Company’s board of directors following its acquisition of Pixar; and founder, chairman, and CEO of NeXT Inc.

“Being the richest man in the cemetery doesn’t matter to me. Going to bed at night saying we’ve done something wonderful, that’s what matters to me.” – Steve Jobs

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Which type of legal structure is best for my business in California?

At bizHUMM, we strongly recommend you incorporate, but you must consider the tax, legal, and liability implications carefully before deciding on the right legal structure for your business.

Here are 5 helpful steps to determine the best structure for your business:

Click one of the buttons below to learn more about the different types of business legal structures and how to start them in the state of California.
LLC (Limited Liability Company)
An LLC is a hybrid business organization that combines the pass-through taxation of a sole proprietorship or partnership with the limited liability of a corporation. Each owner of an LLC has limited liability, like a stockholder of a corporation.

Steps to starting an LLC in California:

  • Step 1 — Give your LLC a name.
  • Step 2 — File an Articles of Organization with the Secretary of State.
  • Step 3 — Find a registered agent.
  • Step 4 — Prepare an Operating Agreement.
  • Step 5 — Comply with necessary publication requirements.
  • Step 6 — File a Statement of Information.
  • Step 7 — Pay your state tax.
  • Step 8 — Comply with other tax requirements.
  • Step 9 — Comply with other regulatory requirements.
  • Step 10 — Register foreign LLCs doing business in California.

For help forming your LLC in California we recommend CorpNet (they have fees for their service). Alternatively, visit the California Secretary of State website.

Other California resources for LLCs:

Secretary of State Business Name Database: Search for your LLC name here.
Reserve your LLC name here.
Additional information on name availability here.

Secretary of State Forms: File your Articles of Organization here. File your Statement of Information here.

Private Service Companies: A list of private service companies that can act as your Registered Agent (not all companies are on this list).

State of California Franchise Tax Board: For state tax requirements.
CalGold: Search here for permits that may be required of your business.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your LLC. If your LLC has more than one member, even if it has no employees, you will need an EIN.

California State Board of Equalization: If you will be collecting sales tax, you’ll need to register with this site.

California Employment Development Department: For information on employer taxes.

California Department of Consumer Affairs: To see if your business service requires a state license.

Sole Proprietorship
A sole proprietorship is a one-person business that is very popular among individual self contractors or business owners. Even though there aren’t complicated start-up requirements for establishing a sole proprietorship, there may be local registration, business license, or permit laws you need to comply with to make your sole proprietorship legitimate. The owner of the sole proprietorship is entitled to all profits, and is responsible for all the business’s debts, losses, and liabilities.

Steps to starting Sole Proprietorship in California:

  • Step 1 — Choose a business name
  • Step 2 — File a Fictitious Business Name Statement with the county recorder.
  • Step 3 — Obtain licenses, permits, and zoning clearance.
  • Step 4 — Get an Employer Identification Number (EIN).

For help forming your sole proprietorship in California we recommend CorpNet (they have fees for their service). Alternatively, visit the California Secretary of State website.

Other California resources for Sole Proprietorship:

Secretary of State Business Name Database: Search for your business name here, if you choose to use a name other than your personal name.

California State Association of Counties: A list of county websites where you will file your Fictitious Business Name Statement.

U.S. Patent & Trademark Office: Federal site for your business name search. Click on the “TESS” link.

CalGold: Search here for permits and licenses that may be required for your sole proprietorship.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your sole proprietorship here. If you do not have employees, you won’t need an EIN. You may want one anyway — some banks require one to open a business bank account, and it can also reduce the risk of identity theft.

California Employment Development Department: For information on employer taxes.

Partnership
A partnership is a single business where two or more people share ownership. Each partner contributes to all aspects of the business, including money, property, labor, or skill. In return, each partner shares in the profits and losses of the business.

Steps to starting Partnership in California:

  • Step 1 — Give your partnership a name.
  • Step 2 — File a Fictitious Business Name Statement with the county recorder.
  • Step 3 — Create a partnership agreement.
  • Step 4 — Obtain licenses, permits, and zoning clearance.
  • Step 5 — Get an Employer Identification Number (EIN).

For help forming your partnership in California we recommend CorpNet (they have fees for their service). Or, visit the California Secretary of State website.

Other California resources for Partnership:

Secretary of State Business Name Database: Search for your business name here. In California, a partnership can use the surnames of the partners, or can use a fictitious business name.

California State Association of Counties: A list of county websites where you will file your Fictitious Business Name Statement.

U.S. Patent & Trademark Office: Federal site for your business name search. Click on the “TESS” link.

CalGold: Search here for permits and licenses that may be required for your partnership.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your partnership if you have employees. If you do not have employees, you won’t need an EIN.

California Employment Development Department: For information on employer taxes.

S Corporation
With an S corporation (or S corp), income and losses are passed through to shareholders and included on their individual tax returns. As a result, there's just one level of federal tax to pay. The shareholders must report the income or loss on their own individual income tax returns. An eligible domestic corporation can avoid double taxation (once to the corporation and again to the shareholders) by electing to be treated as an S corporation.

Steps to starting S Corporation in California:

  • Step 1 — Choose a corporate name.
  • Step 2 — Prepare and file Articles of Incorporation.
  • Step 3 — Appoint a registered agent.
  • Step 4 — Set up a corporate records book.
  • Step 5 — Prepare corporate bylaws.
  • Step 6 — Appoint initial corporate directors.
  • Step 7 — Hold your first Board of Directors meeting.
  • Step 8 — Issue stock.
  • Step 9 — Comply with California tax requirements.
  • Step 10 — Comply with other regulatory requirements.
  • Step 11 — File a Statement of Information.
  • Step 12 — Register foreign corporations doing business in California.

For help forming your S corporation in California we recommend CorpNet (they have fees for their service). Alternatively, visit the California Secretary of State website.

Other California resources for S Corporation:

Secretary of State Business Name Database: Search for your business name here. Your corporate name must not be too similar to an existing business name in California’s records.

Secretary of State Forms: File your Articles of Incorporation here.
File your Statement of Information here.

Private Service Companies: A list of private service companies that can act as your Registered Agent (not all companies are on this list).

State of California Franchise Tax Board: For state tax requirements.

CalGold: Search here for permits and licenses that may be required for your business.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your corporation here (required).

IRS S corporations: Specific instructions for your tax requirements as an S corp.

California Employment Development Department: For information on employer taxes.

C Corporation
A C corporation, under United States federal income tax law, refers to any corporation that is taxed separately from its owners. A C corporation is distinguished from an S corporation, which generally is not taxed separately. C corporations are subject to double taxation; that is, one tax at the corporate level on the corporation's net income, and another tax to the shareholders when the profits are distributed.

Steps to starting C Corporation in California:

  • Step 1 — Give your corporation a name.
  • Step 2 — Prepare and file Articles of Incorporation.
  • Step 3 — Appoint a registered agent.
  • Step 4 — Set up a corporate records book.
  • Step 5 — Prepare corporate bylaws.
  • Step 6 — Appoint initial corporate directors.
  • Step 7 — Hold your first Board of Directors meeting.
  • Step 8 — Issue stock.
  • Step 9 — Comply with California tax requirements.
  • Step 10 — Comply with other regulatory requirements.
  • Step 11 — File a Statement of Information.
  • Step 12 — Register foreign corporations doing business in California.

For help forming your C corporation in California we recommend CorpNet (they have fees for their service). Alternatively, visit the California Secretary of State website.

Other California resources for C Corporation:

Secretary of State Business Name Database: Search for your business name here. Your corporate name must not be too similar to an existing business name in California’s records.

Secretary of State Forms: File your Articles of Incorporation here.
File your Statement of Information here.

Private Service Companies: A list of private service companies that can act as your Registered Agent (not all companies are on this list).

State of California Franchise Tax Board: For state tax requirements.

CalGold: Search here for permits and licenses that may be required for your corporation.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your corporation (required).

California Employment Development Department: Information on employer taxes.

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Why choose California for my business?

  • 1

    Inc.com “Best and Worst States for Entreprenuers (2015)
    “Although California has both a high business tax rate and very high cost of living, it has the highest new business survival rate in the country, GOBankingRates found. Reasons for this may include ample availability of business loans and a high unemployment rate that may make it easier to build a quality team. And you'll have plenty of peers to rub elbows with, since the state boasts 141 startups per 100,000 residents.”

  • 2

    CPA Practice Advisor: “Ranking the Best States for Entrepreneurs, And The Worst” (2015)
    California ranks the #3 best state.

  • 3

    California Innovation Hub Initiative
    “The iHub program improves the state's national and global competitiveness by stimulating partnerships, economic development, and job creation around specific research clusters through state-designated iHubs.”

  • 4

    California Small Business Development Center
    “The California Small Business Development Center (SBDC) Program is the leader in providing small business owners and entrepreneurs with the tools and guidance needed to become successful in today's challenging economic climate.”

  • 5

    Tax and Business Incentives
    “The California Business Investment Services (CalBIS) Unit is comprised of a team of business development experts and specialists with in-depth insight into available resources, ongoing initiatives, and government programs that provide direct technical and financial assistance to companies that are interested in either locating or expanding in California.”

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