How to Start a Business in California

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California seemingly has everything. There are major cities (think: Los Angeles, San Francisco, and Sacramento), gorgeous beaches, land fertile enough for vineyards, and land dry enough to contain some of the United States’ largest deserts. It’s also home to some of the most successful tech companies in the world. While the Bay Area, and more specifically Silicon Valley, has skyrocketing rent costs, it’s become a worldwide hub for the tech industry.

If you’re wondering how to start a business in California, this guide can help put you on the right path.

Benefits of Opening a Business in California

California is one of the best places in the United States to start a small business because it’s home to a number of booming industries, from music and film to professional services and agriculture. The state boasts 25 million acres of farmland, and it’s the country’s leading producer of grapes, lemons, plums, avocados, strawberries, and peaches (yup, it even tops Georgia for that last one).

Beyond that, California boasts an astounding GDP. According to The Guardian, if Silicon Valley was its own country, it’d be one of the richest in the world with $128,308 per capita in annual gross domestic product. In other words: salaries are high. Overall, the area’s output is $275 billion, or more than the entirety of Finland.

Start an Entity in California

Search for a Business Name in California

The first critical decision prospective business owners will be required to make when forming a new business or registering a pre-existing entity from out-of-state, is to decide by which name the entity will be known. In order to guarantee that the desired name is legally unique, it is of the utmost importance that you search the California business database.

How to Register in California

Step 1- The first and arguably most important move you will have to make in registering a business in California or elsewhere is to choose by which name the entity is to operate under. California has a business search function that you can use for a quick reference as well as long-form name-inquiry and name-reservation processes.

Step 2- You must now provide your filing information into the PDF application that is associated with your business type.

Step 3- After completing whichever forms your entity requires for recognition, you will need to submit them to the office of the Secretary of State either by mail or in person (forms submitted in person carry with them a special handling fee which differs from form to form). Each form has its own associated fees (divulged below) and submission address. Applications sent by mail must be attached to a check made payable to the Secretary of State and sent to the address below.

Secretary of State Business Entities, P.O. Box 944260, Sacramento, CA 94244-2600

California Filing Fees

Corporation

  • Domestic General Corporation- $100
  • Domestic Professional Corporation- $100
  • Domestic Close Corporation- $100
  • Domestic Nonprofit Religious Corporation- $30
  • Domestic Nonprofit Public Benefit Corporation- $30
  • Domestic Nonprofit Mutual Benefit Corporation- $30
  • Domestic Common Interest Development Association- $30
  • Foreign General Corporation- $100
  • Foreign Nonprofit Corporation- $30
  • Foreign Professional Corporation- $100
  • Foreign Insurer Corporation- $100

Limited Liability Company

  • Domestic Limited Liability Company- $70
  • Foreign Limited Liability Company- $70

Partnerships

  • Domestic General Partnership- $70
  • Domestic Limited Partnership- $70
  • Domestic Limited Liability Partnership- $70
  • Foreign General Partnership- $25
  • Foreign Limited Partnership- $70
  • Foreign Limited Liability Partnership- $70
  • Sole Proprietorship- (fees vary)

California Name Reservation

In order to secure the rights to a given business name in California, the incorporator may reserve the entity name with the office of the Secretary of State. To do so one must download the PDF application and submit it via mail ($10 fee) or in-person ($20 fee) to the office of the Secretary of State in Sacramento.

To check the availability of a name officially you must submit a Name Availability Inquiry letter to the office of the Secretary of State. Otherwise, you can use the business directory for a simple check.

Certificate of Status

The Certificate of Status can be obtained by downloading the Business Records Entities – Order Form (available here), completing it, and submitting it along with all due fees (by mail: $4, in person: $4 + $10 special handling fee) to the office of the Secretary of State of California in Sacramento.

Agreements

Each of the entities above has corresponding documents that, though not necessarily required under California state law, are none-the-less integral to the continuing prosperity of any business, they being:

The general idea of each of these documents is to delineate in writing the interests (in percentage) of each partner/member of an entity, the general rules and regulations the entity is to follow, and any and all other items members want to be put forth as legally binding and irrevocable. Please select whichever of the links above corresponds to your entity to access a drafting tutorial for the document in question. We provide free templates for each document in both MS Word and Adobe formats.

Employer Identification Number

Once every other aspect of incorporation has been covered you may need to finalize the legality of your entity by applying for an EIN with the IRS via Online Application or through a PDF Application (SS-4). Once obtained it will enable your entity to perform advanced financial maneuvers as well as simple, routine actions such as applying for business credit cards or loans.

Register Your Business and Open Financial Accounts

You can’t launch your business without the proper administrative work. This means you’ll need to register your LLC or other business entity, open up a business bank account, obtain the proper insurance, and get the required permits and licensing. 

Calgold, a business web portal from the Governor’s Office of Business and Economic Development, can help you find the proper permits and licensing for your new company. Those collecting sales and use taxes will need a permit. In addition to obtaining a business license, you may also need to submit a statement of information to the California Secretary of State, which is typically required every one or two years.

As far as insurance, most businesses need general liability insurance. If you plan to hire employees, some insurances such as workers’ compensation are mandated by the federal government. Other specialized insurances, like commercial auto plans or liquor liability insurance, depending on your business idea.

Market Your California Business

A great marketing plan can help a new business soar. This includes crafting a comprehensive, cross-platform social media plan on outlets like Twitter, Facebook, Instagram, and YouTube. You can even look at specialized communities within Facebook and LinkedIn while developing an SEO campaign for your webpage.

Word of mouth is important, but that has a more local focus. Give it a boost by signing up for Yelp, Google My Business, and local business registrations as well as advertising in local papers and bulletins. Connect with a California marketing partner for help.

Examples of Good Businesses to Start in California

California is a leader when it comes to agriculture and tech so those are great places to start. Overall, the state has 4 million small businesses that employ half of the workforce, which lends itself to more business-to-business (B2B) operations and those that help professional workers, like finance, software, and education.

Manufacturing is also a large industry, and this sector already employs 9.4% of the state’s workforce. Mostly, it’s focused on software development, computers, and electronics or aerospace (notably Lockheed Martin Corp and Hewlett Packard Enterprises). Companies that serve that sector can carve out a niche.

Bottom Line

California is large and diverse enough that there are a wealth of business opportunities across the state, particularly in the world of tech, agriculture, and professional services. Though starting a business takes careful planning, California’s business portal can point new entrepreneurs in the right direction.

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