You’re ready to start your new business in California. Steps to launching a business in the state will vary according to the type of business you will be setting up and the city and county it will be located in. Here’s a business startup checklist to help you:
Step 1: Decide on a Business Structure
The business structure (or entity type) you choose will have an effect on things such as your personal liability, how your business and its participants are taxed, the ability to obtain financing, transfer assets and more. You should consult a legal professional and tax accountant for guidance to help you determine the best structure for your business’ needs.
There are several business structure options to choose from in California, including, but not limited to:
- Limited Liability Companies (LLC)
- Limited Partnerships (LP)
- Limited Liability Partnerships (LLP)
- General Partnerships
- Sole Proprietorships
Step 2: Pick a Business Name
Selecting a business name should be pretty straightforward, right? However, compliance to statutory name requirements will apply to corporations, LLCs, LPs and LLPs and should be reviewed before selecting a name for your business. Additional requirements may apply to business that include activities that require professional or vocational licenses. Business names already in use may have trademark or trade name ramifications; a preliminary search of business names in use can be done here.
Step 3: Register the Business
Forms required to form your California business will depend on the structure you’ve selected. Go to the Secretary of State website for information on what forms are needed. Prior to submitting formation documents to the Secretary of State, you should consult with a legal professional to be sure all issues are addressed properly.
Step 4: Obtain your Federal Employer Identification Number
Obtaining a Federal Employer Identification Number (EIN) will also depend on the business structure/entity type you have chosen. To apply, go to Apply for an Employer Identification Number (EIN) Online. Your EIN is provided immediately after validations are completed.
Step 5: Obtain Business Licenses and Permits
After you have formed or registered your business with the California Secretary of State, you must obtain the required licenses and/or permits in order to conduct business in California. A business license is typically required to be issued from the city in which the business operates. California Governor’s Office Office of Business and Economic Development has a very helpful online wizard on their CalGold website that will provide a list of permit and license requirements, and resources available.
Be sure to check the county and city your business will be located in for specific rules and regulations and other agency requirements regarding zoning, licensing, employment, permits and taxes. There may be recurring reporting, fees, taxes, etc. that your business must provide to local, state and federal agencies.
Step 6: Open Company Accounts: Bank and Credit Cards
Business and personal finance records should not be co-mingled. Opening a business bank account assists a business owner to track financial and business records. You can use your business checking account to manage payroll, expenses and necessary financial tasks for business operations. A business credit card is great for recurring charges, expenses purchased online, emergencies and miscellaneous items.
When choosing a bank for your business account, review the options different institutions offer. Here are things to consider:
- Fees – may be incurred if minimum balance requirements are not met.
- Sign-up bonuses – bank may offer a cash bonus for opening an account or maintaining a minimum balance; but be aware that these bonuses may be taxable.
- Account maintenance requirements – make sure you know if there is a daily minimum, monthly minimum or combined (multiple accounts) minimum requirement.
- Features – some banks may offer detailed analytics, mobile app to digitally deposit checks, business debit card, or minimum balance alerts; are these must-haves for you?
The documents typically needed to open a business account are listed below. Before your visit to the bank of choice to open your account, check with the account manager to be sure of what is required.
- Articles of incorporation (AI)
- Business license(s)
- DBA certificate
- Employer identification number (EIN)
- Personal identification documents
Business Bank Account Checklist: Documents You’ll Need
While not a required step in setting up a business, the use of accounting software, e.g., Quickbooks, FreshBooks, Sage and Quicken, can be invaluable for managing cash flow and running accounting and tax reports.
Step 7: Branding and Marketing
Now that you have your business officially established, you need to let the world know you are here. You’ll need to determine who your target market is and the best methods to reach them.
Having a logo and a website are typically good starting points. Please complete UmeWorks’ Request for Quote form if we can help you launch your business!