How to start a business in California in 14 steps (2025 guide)

California is where big goals meet endless opportunities, making it the ultimate place to bring your business vision to life. Whether you're a lifelong resident or new to the Golden State, starting a business here is an exciting opportunity. From securing funding and registering your business to exploring insurance options and uncovering tax incentives, we provide the tools and resources you need to succeed as an entrepreneur in California.

Why start a business in California in 2025?

California has more small businesses than any other state—over 4.1 million as of 2024. It’s also the nation's leader in business startups, playing a pivotal role in industries like aerospace, electronics, and zero-emission vehicles. The state also launched the Technical Assistance for Capital Readiness Program, supported by $25.3 million from the U.S. Treasury, to help small businesses and underserved communities thrive. With its diverse population, strategic location, and strong transportation infrastructure, California offers access to both national and international markets, making it an ideal environment for business success. Wondering how to start a business in California? Our small business guide will walk you through the steps.

Here are the topics we’ll cover in this step-by-step guide: 

• 14 steps to starting a business in California
• Step 1: Decide what type of industry is best for your business
• Step 2: Conduct industry research
• Step 3: Create a business plan
• Step 4: Choose your business entity: Types of business entities in California
• Step 5: Secure funds: California small business funding, loans, and grants
• Step 6: Choose your California business name and California DBA
• Step 7: Pick a business location in California
• Step 8: Find a California registered agent 
• Step 9: Get a California EIN and file your tax and employer identification documents 
• Step 10: Register as a small business in California 
• Step 11: Register for your business license and permits in California
• Step 12: Secure insurance for your California small business 
• Step 13: Prepare to pay taxes on your business in California
• Step 14: Set up your business bank account
• Additional resources to get your business started
• Frequently asked questions

14 steps to starting a business in California

Starting a business in California is an exciting journey, but it requires thorough planning and preparation to set yourself up for success. From creating a business plan to navigating the state's unique regulations, each step plays a key role in building a solid foundation for your venture. Whether you're launching a tech startup in Silicon Valley or opening a local café, knowing the best course of action is essential. 

We’ve got you covered with California-specific small business resources and a breakdown of the key steps you should take on your path to entrepreneurship in the Golden State.

Step 1: Decide what type of industry is best for your business

To decide on a business type and industry in California, start by assessing your skills, interests, and expertise to align your business with your strengths. Research market demand to ensure there’s a need for your product or service. California thrives in industries like technology, entertainment, agriculture, and tourism, so consider leveraging the state’s economic strengths. Evaluate competition, potential growth opportunities, and any regulatory requirements unique to California. Combining personal alignment with market viability will set a solid foundation for success.

Not sure where to start? Begin by exploring a variety of small business ideas to spark inspiration.

Step 2: Conduct research in your industry

Launching a successful business in California starts with understanding the state's dynamic market and identifying your niche. Research industry trends, conduct a competitive analysis, and pinpoint your unique selling proposition to ensure your business stands out in California's vibrant economy. For support and guidance, tap into resources like the California Chamber of Commerce and local business development centers to gather relevant data and insights.

Step 3: Create a business plan

Outline your business goals, strategies, target market, financial projections, and operational plans in a comprehensive business plan. A business plan is an essential document that acts like a roadmap for your entrepreneurial journey. It guides your decisions, helps you secure funding, and keeps you on track to achieve your goals. It tells your business's story, showcases its potential, and outlines its path to success.

Here's a breakdown of the key components:

• Executive summary: A snapshot of your business, highlighting its mission, goals, and key strategies.
• Company description: A deeper dive into your company's background, values, and aspirations.
• Market research and potential: An exploration of your target market, industry trends, and opportunities for growth.
• Competitive analysis: A comparison of your business to its competitors, highlighting your unique strengths and advantages.
• Products and services: A showcase of your offerings, emphasizing their value and benefits to customers.
• Marketing and sales: Your plan for reaching your target audience and generating revenue.
• Business financials: A projection of your financial performance, including income statements and cash flow forecasts.
• Management and leadership: An overview of your team's expertise and how they contribute to your business's success.
• Funding request: If you're seeking funding, a clear explanation of your needs and how you'll use the funds.
• Appendix: Supporting documents that provide additional context and evidence for your plan.

Investing the time to create a detailed business plan is important and can be a game-changer at this beginning stage. Use a free business plan template to get started, and reach out to the experts at your local Small Business Development Center who offer valuable business resources and free guidance and training.

Step 4: Choose your business entity: Types of business entities in California

There are several types of business entities available in California. Each type has certain registration requirements, tax implications, and compliance obligations.

Choose one of these structures for your business: 

Sole Proprietorship

A business owned and operated by one person, with no legal distinction between the owner and the business.  

General Partnership

A business owned by two or more people who share profits, losses, and management responsibilities.

Corporation 

A legal entity separate from its owners, with shareholders who have limited liability for the company's debts and obligations.

Limited Liability Company (LLC)

A hybrid business structure combining the limited liability of a corporation with the tax flexibility of a partnership. Learn more about LLCs.

Step 5: Secure funds: California small business funding, loans, and grants

Starting a business in California comes with a variety of costs that can vary widely depending on the business type, industry, required permits, and other factors. Startup expenses typically range from $500 to several thousand dollars, covering essentials like filing fees, licenses, permits, initial marketing, and professional services. Additional investments, such as premium office spaces, specialized equipment, or inventory, can significantly increase these amounts.

To manage these costs effectively, it’s important to explore the best funding solutions for your needs. Options might include loans, small business grants, or other financing strategies. Here’s a breakdown of common funding approaches to consider:

Expanding on the above funding options are California-specific resources such as the following: 

State and local programs

In California, resources such as the California Infrastructure and Economic Development Bank provide financial assistance and loan guarantees to help small businesses secure loans and grow their operations. Other state-specific funding resources include:

California Grants Portal

The California Grants Portal is a comprehensive resource designed to streamline the process of finding and applying for grants within the state.

California Small Business Loan Guarantee Program (SBLGP)

The California Small Business Loan Guarantee Program (SBLGP) is designed to help small businesses secure loans by guaranteeing lenders for a portion of the loan.

California Capital Access Program (CalCAP)

The California Capital Access Program (CalCAP) helps small businesses in California obtain financing by providing loan loss reserve accounts to participating lenders.

Step 6: Choose your California business name and California DBA

Choose a name that reflects your brand's identity and resonates with your target audience. The name should comply with California’s naming regulations, prohibiting names similar to existing businesses. To ensure your desired name is unique, start by conducting a name search through the California Secretary of State’s online database to verify its availability. 

Reserve your business name

Once you have confirmed the name’s availability, you can reserve it for 60 days by filing a Name Reservation Request Form and paying the required fee. For faster service, you can reserve your name online at bizfileOnline.sos.ca.gov. 

Filing a fictitious business name or DBA (Doing Business As)

A DBA, or "Doing Business As," is a trade name under which a business operates that differs from its legal, registered name. In California, a DBA is also known as a Fictitious Business Name (FBN).

If you wish to have a DBA, conduct a search in the county where your business is located to ensure the name is not already in use. Then, file a Fictitious Business Name Statement with the county clerk’s office in the county where your principal place of business is located. Once filed, the FBN statement must be published in a local newspaper of general circulation once a week for four consecutive weeks.

If you intend to use a fictitious name that includes terms related to accountancy or suggests that the business is engaged in providing accounting services, it must register the name with the California Board of Accountancy (CBA).

Step 7: Pick a business location in California

California offers diverse opportunities for entrepreneurs, whether you're establishing a freelance LLC in a scenic town like Carmel or securing a retail space in a major city such as Los Angeles or San Francisco to tap into a large customer base.

The location you choose for your business will affect everything from operating costs and tax obligations to market reach and a skilled talent pool in your industry.

Before selecting a location, be sure to check with your local municipality about required licenses and permits. Depending on your business type, you might consider operating from home to reduce expenses. If you're exploring options in larger metropolitan areas, factor in local business regulations, zoning requirements, and potential incentives offered by specific cities or regions. 

Here’s an overview of key business hubs in California to help guide your decision.

Los Angeles

With a population of nearly 4 million people, Los Angeles offers a vast market for goods and services. The city is an ideal location for establishing film, music, and media production businesses. Consider the impact of Los Angeles’ traffic on your business operations and logistics.

San Diego

The military and defense sector heavily influence San Diego's economy, which can present business opportunities in related industries. The city’s proximity to the Mexican border also makes it a strategic location for companies involved in cross-border trade.

San Francisco

San Francisco is a global tech hub ideal for tech-driven businesses. Proximity to Silicon Valley offers access to venture capital and a skilled workforce. The city has a high cost of living, which impacts wages, rent, and overall business expenses.

Sacramento

Compared to other major California cities, Sacramento offers a more affordable cost of living and lower operational costs. The city’s economy includes strong agriculture, education, healthcare, and technology sectors. As the state capital, Sacramento offers business opportunities in consulting, legal services, lobbying, and government contracting industries.

Step 8: Find a California registered agent

By law, corporations, limited liability companies, limited partnerships, and limited liability partnerships must appoint a registered agent.

A registered agent is responsible for receiving legal documents, tax notices, and official state correspondence on behalf of the business. To find a registered agent, search online for professional registered agent services, which offer reliable services for a fee.

You can represent yourself as a registered agent in California, provided you have a physical address in the state and maintain regular business hours.

Step 9: Get a California EIN and file your tax and employer identification documents

An EIN (Employer Identification Number) is a nine-digit number the IRS uses to identify your business for tax purposes. Although California doesn't require a state EIN, you'll need one to file payroll taxes and federal tax returns, open a business bank account, and apply for loans. You can apply for a free EIN through the IRS website.

Step 10: Register as a small business in California

Registering a business in California involves several steps, including choosing a business structure, registering the business with the California Secretary of State (if required), obtaining necessary licenses and permits, and registering for state taxes.

Here is an overview of how to register different types of business entities in California.

Step 11: Register for your business license and permits in California

Starting a business in California involves obtaining the necessary licenses and permits to ensure compliance with state and local regulations. Here’s an overview of the typical process:

Choose your business structure (sole proprietorship, LLC, corporation, etc.) and ensure your business name is unique and registered if necessary. Depending on your business structure, you may need to file formation documents with the California Secretary of State.

Register with the California Department of Tax and Fee Administration (CDTFA) for state taxes such as sales tax. You can register online through the CDTFA Online Services.

Do You Need a Business License in California?

While there is no statewide general business license in California, most cities and counties require businesses to obtain a local business license. Depending on your business activities, you may need specific licenses and permits. Common licenses and permits include:

• Seller’s Permit: Required for businesses selling tangible personal property in California. Apply through the CDTFA.
• Alcohol Beverage Control (ABC) License: Necessary for businesses selling alcoholic beverages, regulated by the California Department of Alcoholic Beverage Control.
• Health Permits: These are required for businesses handling food, providing personal care services, etc. Local health departments typically issue these permits.
• Professional Licenses: Required for certain professions such as contractors, cosmetologists, and medical professionals.

Check with your city or county government for specific requirements and application processes. The CalGold database is a helpful resource for identifying license and permit requirements based on your business type and location.

Step 12: Secure insurance for your California small business

Business insurance is crucial for protecting your business from risks that could result in significant financial loss. It provides a safety net for unforeseen events such as accidents, natural disasters, lawsuits, and other liabilities.

Common types of California small business insurance

Step 13: Prepare to pay taxes on your business in California

While California's tax rates are higher than some other states, the state offers a dynamic business environment, a skilled workforce, and access to diverse markets, making it an attractive location for businesses seeking growth and innovation.

It is important to understand your tax responsibilities as a business owner.

Corporate tax rates

California levies a corporate income tax rate of 8.84% on net taxable income for C corporations and LLCs that elect to be treated as corporations.

Franchise tax

LLCs, LLPs, and corporations must pay an annual minimum franchise tax of $800, even if they are not actively doing business or generating income. S-Corporations must pay a franchise tax that is the greater of 1.5% of their net taxable income or the $800 minimum franchise tax.

Alternative Minimum Tax (AMT)

California’s AMT applies to C corporations and is set at a rate of 6.65% of alternative minimum taxable income. This tax is designed to ensure that corporations pay a minimum amount of tax regardless of deductions or credits, and it must be paid if it exceeds the regular corporate tax liability calculated at the standard 8.84% rate.

Payroll taxes

In California, employers are required to withhold and pay state payroll taxes, including Unemployment Insurance (UI), Employment Training Tax (ETT), State Disability Insurance (SDI), and California Personal Income Tax (PIT). Accounting software can aid with those tasks.

Other unique California tax situations

California’s Proposition 13 limits the annual increases in assessed value of real property to 2% per year unless there is a change in ownership or new construction. This affects businesses that own property in California.

Keep in mind that tax laws change. Consult with a tax professional for the most up-to-date and personalized advice.

Federal taxes

In addition to state and local taxes, all businesses must pay applicable federal taxes, including:

• Federal income tax
• Self-employment tax (for sole proprietors and partners)
• Employment taxes (if you have employees), including the Federal Unemployment Tax Act (FUTA tax)
• Excise taxes (for certain industries)

To ensure you understand your federal tax obligations, check out these IRS resources: Publication 334, Tax Guide for Small Business and Publication 583, Taxpayers Starting a Business and Keeping Records.

Tax credits and incentives for California employers

California offers various tax credits and incentives, which may help reduce your overall tax liability. A few of the incentives available include:

California Competes Tax Credit (CCTC): This income tax credit is available to businesses that want to locate in California or stay and grow in California. It's administered by the Governor's Office of Business and Economic Development and is available through a competitive application process.

Research & Development (R&D) Tax Credit: California offers a tax credit for qualified research expenses. The credit amount is 15% of the excess of current year research expenditures over a computed base amount, or 24% of basic research payments.

New Employment Credit (NEC): The NEC is a tax credit available to businesses that hire full-time employees within designated geographic areas. The credit is based on qualified wages paid to these new hires.

Work Opportunity Tax Credit (WOTC): The Work Opportunity Tax Credit helps people gain on-the-job experience and achieve better employment outcomes. It offers federal tax credits to employers as an incentive to hire employees in several specific target groups.

Each tax credit and incentive has specific eligibility requirements, application processes, and limitations. Consult with tax professionals or the relevant state agencies for detailed information on how these credits apply to your specific situations.

Step 14: Set up your business bank account

Open a business bank account to separate your personal and business finances. This helps streamline bookkeeping, simplify tax filing, and support effective financial planning. Here’s how to get started:

1. Collect all your business paperwork, including your EIN, business formation documents, registrations, permits, and licenses to open your small business bank account. 
2. Choose a bank or credit union that offers products and services you need, whether loan offerings, checking, or high-yield savings accounts. 
3. Establish business credit using a bank credit card for business-related purchases and expenses. 
4. Set up your financial records by selecting the right accounting software for your organization. 
5. Hire a professional accountant well-versed in local tax codes and your industry to help with financial and other bookkeeping services.

Additional resources to get your business started 

There are several state and federal resources that can support your business with guidance, training, potential funding, and more. 

State resources

California Office of the Small Business Advocate (CalOSBA): CalOSBA provides resources and assistance to California small businesses and advocates for equitable access to capital, markets, and networks. 

California Small Business Development Center (SBDC) Network: The SBDC offers free, one-on-one advising and training to help small businesses with capital access, business development, and marketing, through a network of centers statewide.

Governor's Office of Business and Economic Development (GO-Biz): GO-Biz offers free consultations to business owners, providing services for business attraction, retention, and expansion, including site selection, permit streamlining, navigating regulatory challenges, small business support, international trade development, and assistance with state government.

California Secretary of State Business Programs Division: The Business Programs Division, the largest within the Secretary of State's office, aids California businesses by registering business entities and trademarks while helping secured creditors safeguard their financial interests.

Federal resources 

Small Business Administration (SBA): The SBA supports small businesses through various loan programs, including the 7(a) loan, provides resources for government contracting, and offers counseling and training programs to help entrepreneurs start and grow their businesses.

Grants.gov: This centralized platform simplifies the process of searching for and applying for federal grants across various sectors. It also provides grant writing tips and has a Grants Learning Center featuring the basics of grants, eligibility, and more. 

Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR): SBIR and STTR programs provide research and development funding to innovative tech companies. 

SCORE: SCORE is a national nonprofit organization that partners with the U.S. Small Business Administration (SBA) to provide free mentoring and educational resources to entrepreneurs and small business owners. While not a direct federal agency, SCORE is an independent organization with a network of volunteer business mentors across the United States.   

U.S. Department of Agriculture (USDA): The USDA website lists grants, loans, and other programs and resources for farmers and other businesses serving rural America.

Frequently asked questions

How long does it take to start a small business in California?

The time it takes to start a small business in California can vary based on several factors, including the type of business entity, the complexity of the business, and the efficiency with which you complete the required steps. The entire process can take anywhere from a few days to several weeks, depending on the complexity of your business.

Is it hard to start a business in California?

Starting a business in California can be challenging due to various factors, including regulatory requirements, high costs, and competition. However, it is entirely feasible with the proper preparation and understanding of the processes involved. The potential rewards from accessing a large market, ample funding opportunities, and a vibrant, innovative business environment can make it worthwhile.

How much is an LLC in California?

Forming an LLC in California involves several costs, including filing fees, annual taxes, and other potential expenses. The minimum cost is $70 to cover the processing fee for filing your LLC formation documents. The total cost will depend on several factors, including personal preferences and business needs.

Disclaimer: 

This content is for information purposes only and information provided should not be considered legal, accounting or tax advice or a substitute for obtaining such advice specific to your business. Additional information and exceptions may apply. Applicable laws may vary by state or locality. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer’s particular situation. Intuit Inc. does it have any responsibility for updating or revising any information presented herein. Accordingly, the information provided should not be relied upon as a substitute for independent research. Intuit Inc. cannot warrant that the material contained herein will continue to be accurate, nor that it is completely free of errors when published. Readers should verify statements before relying on them.