How to Start a Business in California
There are several matters of importance when investigating how to start a business in California. Some of these include:
Once you have made the decision to start a business in California, your first step should be to decide which legal structure is right for you. There are four main types of business structures: sole proprietorship, partnership, corporation and limited liability company.
After you have determined the legal structure for your business, your next step in starting a business in California requires picking a name for your business and/or your products and services. The name should be catchy, and not too general. Once you have come up with three to five potential names for your business, check with the proper entity, either the county (if you are using a DBA) or the Secretary of State (for corporations and LLCs) to make sure the name is available. If your company name is also being used as a trademark, or service mark, you should prepare to have it filed with California and the USPTO as soon as you begin selling.
Choosing the product or service is critical to the success of your new business. Things to consider include:
- Is there a demand for the product or service you are marketing?
- What price are people willing to pay for the product or service you are marketing?
- Taking price into considerations, is the demand large enough for you to make a profit?
- Is the demand concentrated enough so you can advertise, sell and deliver the product at a reasonable cost?
- Is there a real need for the product or service in today’s market?
- Is your new product or service better than anything else currently available?
- What are the three ways that your product is superior to your competition?
- Is your product lower priced or of better quality than anything else that is available?
For a product or service to succeed, it must be the right product, being sold at the right time, to the right customer, in the right market.
Some of the most common licenses and permits small-business owners may need when starting a business in California are:
- City Business License: When you file your license application, the city planning or zoning department will check to make sure your area is zoned for the purpose you want to use it for.
- Fire Department Permit: You may need to get a permit from your fire department if your business uses any flammable materials or if your premises will be open to the public.
- City Sign Permit: Some cities and suburbs have sign ordinances that restrict the size and location, and sometimes the lighting and type of sign you can use outside your business.
- County Permit: County governments often need essentially the same types of permits and licenses as cities. If your business is outside any city or town’s jurisdiction, you may need a County Permit.
- State License: States usually require licensing for auto mechanics, plumbers, electricians, building contractors, collection agents, insurance agents, real estate brokers, repossessors, and anyone who provides personal services (i.e., barbers, cosmetologists, doctors and nurses). Contact your state government offices to get a complete list of occupations that require licensing.
- Federal License: A few types of businesses need federal licensing, including meat processors, radio and TV stations, and investment advisory services. The Federal Trade Commission can tell you if your business requires a federal license.
- Sales Tax License: Any business selling taxable goods and services must pay sales taxes on what it sells. Depending on the state, both the parts and labor portions of your bill may be taxable.
- Health Department Permit: If you plan to sell food, either directly to customers as in a restaurant or as a wholesaler to other retailers, you’ll need a county health department permit. The Heath Department will also want to inspect your business premises.
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