How to Start a Business in California: 13-Step Checklist (2025)

This content doesn’t contain and isn’t meant to provide legal, tax, or business advice.*

Starting a business in California can be a great way to be your own boss while bringing new products, services, and ideas to your community. If you start a business in California, you help give back to your community. According to the US Small Business Administration of Advocacy, 99.9% of businesses in the state are small businesses, and as of 2024, 47.1% of state employees work for small businesses. 

“With the 2028 Olympics approaching and the heightened focus on clean energy, Southern California presents unique opportunities for entrepreneurs to expand or launch a new business,” says Dr. Pamela S. Williamson, president and CEO of Women’s Business Enterprise Council West.

Here are some resources that will teach you how to start a small business in California. 

How to start a business in California

1. Choose a business idea
2. Name your business
3. Create a business plan
4. Choose a business structure
5. Find funding
6. Register a fictitious name
7. Get an EIN
8. Choose a registered agent and register your business with the state
9. Pay state taxes
10. Obtain a business license and permits
11. Examine insurance options
12. Set up a business bank account
13. Market your business

1. Choose a business idea

Coming up with a great idea is one of the most important steps in starting a business in California. If you already have something unique and commercially viable in mind, you’re halfway there. If not, there are business resources available to help you work through the process of understanding what products to sell and who to market them to.

According to Pamela, there are certain types of businesses poised for success within the state. Based on 2024 sourcing requests from California corporations, some businesses ideas tailored for success in Southern California include:

• Electric vehicle (EV) infrastructure development
• Green construction and sustainable building materials
• Renewable energy solutions

2. Name your business

Naming your business is important for branding it, but it’s also an essential step in the process of registering your new entity. Most regulatory agencies ask for your business name on forms, so if you don’t have a name yet, get ideas using a business name generator. 

Once you narrow down your options, search online for any other businesses with that name. Next, visit the US Patent and Trademark Office to check if any businesses have already trademarked your preferred name. From there, consult the California Secretary of State Business Entity Name Regulations to ensure your name is compliant.

Before you commit to a business name, check to see if a corresponding domain name for your website is available. Once you’ve found a name you like, reserve your business name with the California Secretary of State.

3. Create a business plan

Most successful businesses start with a business plan. A solid plan can help you stay organized and goal-oriented throughout the startup process. Having a business plan is also often required as part of the application process for obtaining a business loan. So if you know you’re going to need funding, set yourself up for success by having a thoughtful business plan ready to share.

4. Choose a business structure

When starting a small business in California, it’s important to choose the right structure for your operation. Three common types of business structures are sole proprietorships, limited liability companies (LLCs), and corporations. Each one has advantages and disadvantages. 

Looking for more detail on the various business types? Here’s a summary, as well as and initial steps to setting up your business.

• Sole proprietorship. A sole proprietorship is an unincorporated business owned by one person, and it’s the simplest structure available. This type of business is easy to set up and inexpensive to get started. The downside: It doesn’t offer the legal protection afforded by an LLC or corporation, which means you could be personally liable for debts and lawsuits. 
• Limited liability company. A limited liability company (LLC) offers some legal protection from debts and liabilities. This hybrid model delivers advantages of sole proprietorships and corporations. 
• Corporation. A corporation separates the individual owners from the business, protecting personal assets from financial and legal liabilities. Corporations can issue stock, allowing businesses to raise funds from investors for expansion, development, and more. 
• Limited liability partnership. A limited liability partnership (LLP) is a business structure where partners have limited personal liability for the debts and actions of the partnership, protecting their personal assets. It combines elements of a partnership and a corporation.

5. Find funding 

Most businesses require some sort of capital to get the ball rolling (although, alternatively, there are plenty of low-investment business ideas). If you need to secure funding for your business, you have options for how to proceed. 

Before you pursue funding, just make sure you’ve polished a business plan to show potential investors. They’ll be most interested in details like your financial projections, market research, and overall business strategy.

Consider these potential funding sources for your new business:

• Personal savings and bootstrapping. Many entrepreneurs meet initial financial business needs by using their own savings or reinvesting early profits. This route can be a struggle at times, but it does help you avoid high interest rates. 
• Small business loans. The US Small Business Administration (SBA) offers loan programs. Many California-based banks and credit unions also provide business financing to small businesses.
• Grants and state programs. Look into programs like California’s IBank Small Business Finance Center, which offers loans for local startups.
• Angel investors and venture capital. If you’re in the tech or innovation space, California has a thriving investor ecosystem worth looking into, particularly in Silicon Valley and Los Angeles.

6. Register a fictitious name

As part of the startup process, you may want to register a fictitious name. This is also sometimes called a DBA (doing business as), assumed name, or trade name.

For instance, if you’re a sole proprietor, but you don’t want to publicly operate under your own name, a DBA allows you to choose a unique name for your business. The same goes for a corporation or an LLC; if you don’t want to include the word “Incorporated” or “LLC” in your public-facing business name, you can use a DBA.

Registering a fictitious business name is meant to connect the true identity of a business owner with the name of the business they own. That way, stakeholders are able to pursue legal action or debt collection as needed. A fictitious name must register with the California Board of Accountancy (CBA). There is no fee for the application.

7. Get an EIN

Employer identification numbers (EIN) are distributed by the Internal Revenue Service (IRS). This number is similar to your personal Social Security number (SSN)—except it’s for identifying a business, not an individual person. The IRS provides a simple application process. You will need your SSN or individual taxpayer identification number (ITIN) in order to complete your EIN application with the IRS.

8. Choose a registered agent and register your business with the state

A registered agent, or an agent for service of process, is a person or corporation who you designate to receive court documents in the event that your LLC or corporation is subject to legal action. You cannot be your own registered agent in California. The California Secretary of State provides valuable FAQs on registered agents and how to find one.

9. Pay state taxes

Businesses in California are required to pay an annual $800 franchise tax, with some exceptions. The state income tax rate for corporations and LLCs taxed as corporations is 8.84%. LLCs may be subject to additional fees, depending on their total income. Sole proprietorships file as individuals using Form 540 for taxes, so state income tax rates may vary.

All employers in California have to collect and pay payroll taxes. There are four main types of California state taxes you’ll be responsible for paying:

• Unemployment insurance (UI): This funds unemployment benefits for workers who lose their jobs. It’s paid from employer contributions and has a maximum tax of $434 per employee.
• Employment training tax (ETT): This tax has a flat rate of 0.1% on the first $7,000 of each employee’s wage. It’s also paid from employer contributions. 
• State Disability Insurance (SDI): This tax provides disability benefits for employees temporarily unable to work due to health conditions. As of 2025, the SDI withholding rate is 1.2% of an employee’s wages. 
• California pPersonal income tax (PTI): Employers withhold this tax from employees’ wages and remit it to the state.

10. Obtain a business license and permits

Obtaining any necessary business licenses and permits is next on your checklist. Regardless of business structure, you may need a business license, permits, or both to operate in the Golden State.

For example, if your business sells alcohol, you’ll need an alcohol beverage control (ABC) license. The California Governor’s Office of Business and Economic Development maintains a handy search tool to help you find which licenses and permits may be required for your operation. 

If you are in business selling tangible goods in California, you will need a seller’s permit. Contact your city or county agency responsible for business licensing.

The California Department of Tax and Fee Administration also provides license and permit information, as well as an easy registration portal.

11. Examine insurance options

Having business insurance is a best practice for any business, even if you have the protections of an LLC or corporation. The California Department of Insurance offers plenty of guidance on what types of insurance you might need for your operation, including:

• General liability
• Professional liability
• Workers’ compensation

12. Set up a business bank account

It’s easy for your business and personal finances to get messy as an entrepreneur. You can prepare to start operating your business by opening a business bank account, applying for a business credit card, and possibly even contracting a business accountant. 

Taking these steps will help keep your business finances organized. While a business bank account can help, if you struggle to keep your business and personal finances separate, consider hiring an accountant. 

13. Market your business

As you prepare for launch, it’s key to market your business to the public. Here are the steps to take:

• Brand your business. Branding helps potential customers recognize the value and personality your business brings to the marketplace. Branding includes visual elements like a logo and brand colors, as well as brand tone and voice.
• Build a website. Shopify makes it easy to build a website for your business. With website-building tools that don’t require coding or design skills, a variety of educational resources, and quality support, you’ll be debuting and growing your brand online in no time. 
• Promote your business. Promotion is key to effectively selling online. Focus your promotional efforts by creating a marketing plan to get your product in front of your ideal customers. This process keeps your marketing strategy on track and ensures your brand is being leveraged to the fullest. 
• Do your research. Doing a SWOT analysis can help you identify what you’re doing right and what needs refinement. Market research helps support your understanding of your industry, potential customers, and competitors. Insights from that process help you figure out more successful ways to market your products, grow brand awareness, and even attract investors.

Examples of California businesses 

P.F. Candle Co.

Los Angeles–based candle brand P.F. Candle Co. not only got its start in California, but many of its products are inspired directly by its home state. What began as founder Kristen Pumphrey’s Etsy shop in 2008 has since grown into a thriving business that sells directly to customers through its Shopify website, as well as wholesale to major retailers like West Elm. Everything from its product operations to its mission is proudly Californian. 

Brightland

Artisanal olive oil brand Brightland began in 2018 as a one-woman quest to learn everything about what makes quality olive oil. Today, it’s a viral brand that’s even been named as one of Oprah’s Favorite Things. Brightland’s founder Aishwarya Iyer has built a thriving business that sells directly through its Shopify store and can be found in food retailers across the US. The brand is quintessentially Californian, focused on quality local sourcing and production, sustainability, and other values that capture the essence of what Brightland refers to as “living in a golden state.”

OSEA

Founded in 1996, family-owned-and-operated skin care brand OSEA has grown from a Malibu-based business to a beloved worldwide presence. One reason why OSEA has been able to sustain long-term growth is by adapting to the age of ecommerce. It sells directly to consumers on its Shopify website as well as through major retailers and spas. The mother-and-daughter-founded brand is deeply inspired by California’s coast, which shows up in everything from its seaweed-based products and ocean-focused branding to its commitment to sustainability and clean beauty standards.

Resources and tips for starting a business in California

Pamela works closely with women business enterprises that provide tools, resources, and networking opportunities through WBEC-West. She’s identified three best practices for any entrepreneur starting or expanding into a new business: research, research, and more research. 

To set your business up for success, Pamela specifically advises business owners take the following steps.

Research the market

Before launching a business, you must have a clear picture in mind of who your potential customers are. Conduct market research to determine who is most likely to buy your product or service, where they are located, and what their needs are. This insight will help you shape your marketing strategy and refine your product or service offerings.

If you need help with market research, there are resources available to you. TheCalifornia Small Business Development Centers (SBDC) provides free or low-cost consulting, market research assistance, and business plan guidance. SCORE also offers free mentoring, workshops, and tools to help entrepreneurs develop effective business strategies.

Research the top competition

Understanding the competitive landscape is essential for success. Identify businesses that already offer the type of product or service you want to sell and analyze their strengths and weaknesses. This can help you identify market gaps and areas where you can differentiate your business.

Many California cities have local chambers of commerce that provide industry insights, networking opportunities, and business directories. You can also use the California Secretary of State Business Searchto find information on registered businesses in California.

Research your competitors’ products

Beyond identifying competitors, take a deeper dive into their products and services. Conduct a competitive analysis to determine their pricing, customer reviews, and unique selling points. Identify what differentiates your business from theirs and how you can position yourself effectively in the market.

California GO-Biz, the state’s official business portal, is a great resource to turn to when analyzing your competitors’ products. GO-Biz provides market research tools, funding resources, business expansion assistance, and other valuable resources. 

“By doing the three Rs, you will identify your business’s unique value proposition, which is a powerful tool to have,” explains Pamela. “It is what sets you apart from your competitors.”