The Legal Steps to Starting a Business in California

California, the "Golden State," is known for its thriving economy and entrepreneurial spirit. If you are ready to embark on your business journey in California, understanding the legal steps involved is crucial. In this article, we will break down the essential steps to give you a solid foundation for starting a business in California.

Choose a Business Structure

One of the first major decisions is selecting the legal structure of your business.Common options in California include:

• Sole Proprietorship:The simplest form for an individual owner, but offers no personal liability protection. 
• Limited Liability Company (LLC): A popular choice that offers flexibility and shields personal assets from business liabilities. 
• Corporation: A more complex structure that provides limited liability, but can come with additional formalities and tax implications.

Consider the size, scope, and future goals of your business when making this choice. Consulting with a business lawyer can help you make an informed decision.

Register Your Business Name

Your business name is its identity. To ensure it's unique and legally available, run a search on the the California Secretary of State's business name database. You may need to file a "Fictitious Business Name" (DBA) or register your business name when forming your entity.

Register with the California Secretary of State

If you are forming an LLC or Corporation, you must file the necessary documents (like Articles of Organization or Articles of Incorporation) with the California Secretary of State. This officially establishes your business entity in the state.

Obtain Licenses and Permits

Businesses in California may require various licenses and permits depending on your industry and location. Contact your city or county government to understand the specific permits needed. 

You’ll also need to get a general business license, as most cities require businesses to obtain one.

You may also need to obtain professional or industry-specific licenses. Electricians, plumbers, healthcare providers are examples of professional service providers that often require specific licenses.

Secure a Federal Employer Identification Number (EIN)

If you have employees or form certain business structures, you will need an EIN from the IRS. This acts like a Social Security number for your business, used for taxes and other official purposes.

Open a Business Bank Account

Separating business finances from personal assets is essential. Open a business bank account under your legal business name to manage your business's income and expenses.

Ready to Get Going?

Starting a business in California is an exciting venture! These legal steps provide a framework for establishing your business, however, regulations and paperwork can be complex. It is highly advisable to consult with a business lawyer during the process of building your business. ThornCrest Law has years of business law experience in California, and we can guide you through specific requirements and ensure the protection of your business interests.