san diego shopping district
With its bustling cities and temperate weather, there are many benefits to starting and growing a business in California. — Getty Images/MasaoTaira

California is the country’s Golden State, and it may be the gold standard if you’re starting a small business. Sure, the sun and style are alluring, but beneath the surface, there are many economical and professional reasons why the state is a great place to start a business.

Considering starting a business in California? Here are some advantages and steps to getting started.

[Read: Location, Location, Location: How to Decide Where to Start Your Business]

Benefits of starting a business in California

There are many benefits to starting your business in California, including:

  • Networking opportunities. Because of its large population and consistent, calm weather, California is an ideal destination for companies to conduct businesses. Cities like San Diego and Anaheim are popular for companies to hold their conferences and conventions. Whether you’re starting a business in a large or niche industry, California hosts plenty of similarly minded people and events that can help you grow.
  • Booming economy. According to Fora Financial, from 2016 to 2017, California’s gross domestic product rose from $127 billion to over $2.7 trillion. If the state was its own country, its economy would be the fifth largest in the world. The California economy is growing and benefitting its unique population from tech giants to agricultural farmers. By starting your business there, you have the advantage of clients with consistent income.
  • Diverse industries. California gets its thriving economy from being host to two cities that are the capitals of their industry. Los Angeles is the entertainment mecca of the world, while San Francisco and the surrounding Bay Area has its grasp on the tech industry. Of course, if you work outside of these industries, there are plenty of others that keep the California economy running.
  • Temperate weather. Good weather may be more of a nice perk than a requirement on your list of priorities for where you should start your business. However, if your business would be affected by inclement weather that would slow down productivity, then it may be better to seek your sights out west. Depending on the area, California enjoys mild weather year-round, especially in Southern California, where it is typically sunny and rarely rains or snows.
  • Large talent pool. Of course, the most populated state has the largest talent pool of employees. California is gaining wealthier and more educated citizens, meaning you’ll be able to choose from a highly competitive field of well qualified candidates.

[Read: Startup Checklist: 20 Things to Do Before You Start Your Business]

California gets its thriving economy from being host to two cities that are the capitals of their industry.

What are the steps to starting a business in California?

  1. Choose a business structure, such as a DBA (“doing business as,” also known as a trade name), corporation or LLC.
  2. Decide on a business name.
  3. Register your business with the state.
  4. Apply for your Employer Identification Number (EIN).
  5. Open a business bank account to separate your personal and business finances.
  6. Apply for all necessary business licenses and permits.
  7. Prepare for ongoing requirements, such as estimated taxes (if you’re required to pay them), where and how to file annual state reports, etc.

Opening a business in California: Frequently asked questions

Some common questions that arise when starting a business in California include:

What business licenses are required?

The type of business license you need depends on your location and the type of business you’re operating. To find the appropriate business licensing office, visit CalGold, find your licensing office and submit an application. Licenses typically cost between $50 and $100.

How do I get a DBA?

Many companies use a “doing business as” (DBA) name that differs from the name of their official LLC. If you plan on using a DBA, you must register the name within 40 days of opening the business. You can find which office to register your DBA in through the California State Association of Counties.

What is a California corporate number?

Once you obtain a business license and register your DBA, you’ll be assigned a California corporate number. Corporations are given a seven-digit number that starts with a C, and LLCs are assigned a 12-digit corporate number that begins with the four digits of their year of inception.

Is a California corporate number the same thing as an EIN?

Your California corporate number differs from your California state employer ID number or EIN, which is used for tax purposes and to identify your business in documents.

How do I register as an LLC?

California LLC businesses must file the LLC-1 Articles of Organization. This can be done online or through the mail and costs $70 plus $5 for a certified copy. There is also an annual minimum tax of $800 that California LLCs must pay. It is tax deductible.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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Published March 03, 2020