Scaling your idea or venture into a registered, recognized, fully functioning business is an arduous but rewarding journey—and one that comes with inevitable obstacles.

When you’re touting your products or services to the world and working diligently to prove yourself, the last thing you want to worry about is paperwork and legal problems eating up your time and preventing you from succeeding.

It’s critical to take the necessary steps at the outset to assure your business is protected and legitimately recognized here in our Golden State, be it as a sole proprietorship, partnership, corporation, or LLC.

Our team at Figueroa Law has boiled down the 7 essential steps to correctly launch your business without leaving any loose ends.

“The daily rattle and commotion of running a small business is especially demanding. You don’t want to add legal issues to your plate. By working with a trusted local firm to strategically set up your business early on, you’ll avoid potential liabilities along the journey and maintain a protected business for years to come.” - Tyler Sprague

Step 1: Hire Local, Not Digital

It feels effortless and inexpensive to sign up for a service like LegalZoom… but there’s a reason it’s so effortless and inexpensive.

You will receive adequate stock documents that cover most of the obvious bases, but they won’t cover the specifics of your business or the unique city you’re operating in. A deli with 800° industrial ovens and a small unit of cooks and cashiers operating in close quarters will have different concerns and liabilities than a single-person boutique sharing space with a book store.

By hiring a local firm, you’re ensuring that every unique aspect and potential liability is accounted for. Aside from the contracts and documents, a premier firm will consider local politics, moods, and norms associated with opening a business in your city.

You want your business to be a lively, inviting asset to your community, not a potential liability.

Step 2: Your (Unique) Business Name

*Photo by* *Mike Petrucci* *from unsplash.com*

You’ll need to come up with a thoughtful, original name for your business, both for professional and casual purposes. Be intentional in naming your business. Your name can work to propel your business presence, or sound clunky, clichéd, and unmemorable.

Write a list including both simple and out-of-the-box names. Circle the potential winners and cross out the others. Before you fall in love with a name, make sure it’s available in the State of California by entering it into the California Business Search Page.

Step 3: Select a Business Structure

Next, you will need to decide on a business structure. The four most common types are:

Sole proprietorship
Partnership
Corporation
LLC

These four structures were created to best accommodate the many differing types of businesses.

In a sole proprietorship, you’re the sole business owner and operator and no separate legal entity is created. This makes you responsible and liable for all business activities.

*Photo by* *Cytonn Photography* *on unsplash.com*

A partnership is just like a sole proprietorship, only with two or more people acting as the business operators who share the liability and responsibility of anything that occurs to or by the business.

In California, a corporation is typically a larger, multi-faceted structure with numerous branches and involvements. A corporation might represent a business with dozens of employees that is actively raising capital and aggressively growing.

Lastly, an LLC is a massively popular hybrid structure that offers the benefits of both a corporation and a sole proprietorship or partnership. In California, an LLC is a tremendous option for a small business owner seeking personal liability protection and tax benefits.

If you aren’t totally sure which structure suits your business the best, book an appointment with us and we can quickly determine this for you and help get you set up properly.

Step 4: Register With the Secretary of State

Of course, there are certain fees required to officially get your business off the ground. To assure your business is recognized by the state of California, you must register with the Secretary of State.

If you’re not working with a local law firm, you’ll need to visit the Secretary of State website to retrieve business formation documents and other forms needed to register your business.

Step 5: Get Your EIN Number

Next, you will need to apply for an Employer Identification Number (EIN). The same way every person in the US has a social security number to identify them from everyone else for tax, security, and financial purposes, every business must have its own identification number.

Your EIN allows the IRS to track your business for tax purposes and assure your business is in good standing, among many other processes.

Head over to the IRS EIN online application site to get this process started.

Step 6: Licenses and Permits

Your location and industry will determine if you need to obtain licenses or permits. California is an enormous state with local laws differing based on cities and regions. Some industries have more rigid laws than others which will dictate your need for specific permits or permissions to operate.

This is why we believe it’s critical to work with local law firms that understand the lay of the land and how business is conducted in any given city.

If you’re curious about licensing and permit information in your city and within your industry, conducting a few targeted online searches should present you with useful information for your specific business.

Go to CA.gov to apply for business licenses and permits.

Step 7: Taxes

*Photo by* *Olga DeLawrence* *on unsplash.com*

If your business is registered in the state of California, you’ll have to pay taxes to remain in good standing both with our Golden State, and with the federal government.

It might sound daunting, but there are 4 agencies in California that handle our state’s taxes: California Franchise Tax Board, California Department of Tax and Fee Administration, California Employment Development Department, and California State Board of Equalization.

All of these entities administer different taxes such as income, business, payroll, fuel, sales, and alcohol taxes.

When your business is up and moving, meet with your accountant to determine which taxes apply to you.

That’s Your Guide

Did you learn a few of the critical steps involved in incorporating your business in California? Each business, in each city, in each industry will function differently. Do your due diligence upfront and consider working with a local firm to set up your business for success in the long-term.

Launching Your Business in California: The 7-Step Guide