Firstly, ask yourself:
● What makes California a suitable place to establish my business?
● Which process do I need to use to ensure success?
● What funding options are available in California?
● How do I get a California small business license?
How to start a new business in California
Here are three easy steps to help you address how to start a small business:
1. California small business registration
Here are the registration requirements for different business structures in California:
● Sole proprietorship - you are not required to file any business documents. However, if you use a different name than your own, (like, John Jacob’s Pizza) the California Secretary of State does recommend that you file a Fictitious Business Name Statement in the county in which you operate your business.
● LLC or corporation - you will have to file the Articles of Organization or Articles of Incorporation with the state. You can file these documents through the California Secretary of State website. You’ll have to pay a $70 fee to file your Articles of Organization for an LLC. But the fee will increase to $100 if you are filing Articles of Incorporation for a corporation. In both cases, you’ll have to appoint a registered agent with a California address.
As an LLC, you will have to file a Statement of Information within 90 days of incorporation. After that, LLCs and corporations will need to file Statements of Information every other year. The cost to file this paperwork is $20, although there are heft late fees. Corporations need to file a Statement of Information within 90 days, and annually thereafter.
Some industries have additional licensing requirements. If you have questions about the registration process, see the California Small Business Development Center.
2. Explore your funding options
Small businesses owners often need an influx of capital to kickstart their idea. If you’ve crafted a realistic business plan, you likely have a good estimate of the amount of capital you’ll need.
Here are some ways to obtain funding for your business and address the issue of how to raise capital for a startup:
● Apply for any grants you may qualify for through the state.
● Seek out venture capital from investors. Although billions of dollars in venture capital are available in California, obtaining this type of funding is still challenging.
● Apply for a small business loan. With the right small business loan, you can access the funds you need for your business startup costs at competitive rates while maintaining control of your business.
Torro offers competitive small business loans with minimal hassle.
3. California business tax
California has a reputation for imposing significant taxes on its business owners. Setting up shop in this state requires additional steps to get your tax documents in order.
Here are the three different ways the state of California imposes taxes on its businesses:
● Franchise tax
● Corporate tax
● Alternative minimum tax
Depending on your business, you may have to pay all three fees. Additionally, you will have to collect and submit sales tax on most sales within the state.
If you aren’t sure what taxes your business is responsible for, explore the California Department of Tax and Fee Administration. You should determine whether or not your new business can afford the tax burden placed on California businesses.
California small business statistics
The Golden State offers small businesses a robust economy. The state of California has a GDP of $2.94 trillion, making it the fifth-largest economy in the world.
Currently, 3.9 million small businesses operate in California. Small businesses are a key part of this economy because small businesses employ over 7 million people. Although accommodation and food services represent the biggest sectors of the Californian economy, many other industries find opportunities within this large state.
Venture capital also draws in entrepreneurs. According to the Chamber of Commerce, 548 companies in California collected $15.6 billion in venture capital funding in the 3rd quarter of 2019. That funding represented 57% of the total venture capital funding in the entire nation in the same quarter.
If you decide to start a new business in California, the possibilities are limitless. The sheer volume of venture capital flowing through the state represents an exciting opportunity for entrepreneurs everywhere.
But the possibilities don’t end there! You can tap into good loans to start your business in the Golden State. Explore your small business startup loan options today.